Exhibit 10-18
Option Agreement
THIS AGREEMENT is made November 8, 2002
BETWEEN:
XXXXXXX POWER SYSTEMS INC., a Canadian Corporation having an office at
0000 Xxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
("Ballard")
AND:
MILLENNIUM CELL, INC., a Delaware Corporation having an office at
0 Xxxxxxxxxx Xxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx, XXX 00000
("Millennium Cell")
WHEREAS:
(A) Xxxxxxx and Millennium Cell entered into a Joint Development Agreement
dated October 27, 0000 (xxx "XXX"); and (B) the joint development program under
the JDA has concluded and the parties wish to restructure their business
relationship by, amongst other things, entering into this Agreement for the
grant by Millennium Cell to Xxxxxxx of an option to license the Millennium Cell
IPR on the terms and conditions set forth in this Agreement;
WITNESSES THAT the parties agree as follows:
Part 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement, including the recitals, except as otherwise
provided or unless the context otherwise requires,
Affiliate means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly Controls, or is under the Control of,
or is under common Control with, such first Person,
Business Day means any day that is not a Saturday, a Sunday or a holiday in
Burnaby, British Columbia, Canada or Eatontown, New Jersey, United States of
America,
Confidential Information means, in relation to a party, information known or
used by the party in connection with its business or technology that is
confidential to it and includes the party's Intellectual Property, customer
information, financial information, marketing information and information as to
business opportunities, strategies and research and development,
Control of a corporation, limited liability corporation or other body corporate
by a Person is deemed to occur, if
(a) its securities to which are attached more than 50% of the votes
that may be cast to elect its managing directors or members of its
board of directors or other governing body, or other rights to elect a
majority of such managing directors or members are held, other than by
way of security or pledge only, by or for the benefit of that Person,
and
(b) the votes attached to those securities are sufficient, or such
rights are sufficient, if exercised, to elect a majority of its
managing directors or members of its board of directors or other
governing body,
and any derivative thereof has a similar meaning,
Disclosing Party has the meaning ascribed to it in ss.4.1,
Dispute has the meaning ascribed to it in Paragraph6.1,
Effective Date means the date set forth on top of page 1 of this Agreement,
Encumbrance means any mortgage, charge, pledge, hypothecation, lien, security
interest, assignment, option, claim or other encumbrance or charge, whether or
not registered or registrable and whether or not consensual or arising by law,
statutory or otherwise,
Event of Default in relation to a party means an event of default arising by
reason that the party is subject to, or the subject of, one or more of the
following circumstances:
(a) an order is made or a resolution is passed or a petition is
filed by the party for its liquidation, dissolution or winding-up;
(b)a material breach of its obligations under Part 4;
(c)the party commits a material breach in observing or performing any
other material covenant, agreement or condition of this Agreement on
its part to be observed or performed and does not rectify or cure such
breach within 30 days after receipt of written notice from the other
party specifying the breach;
(d) an execution, sequestration or any other process of any court
becomes enforceable against the party or any distress or analogous
process is levied upon any material part of its property, assets or
undertaking and the process is not stayed or otherwise suspended by a
court of competent jurisdiction within 30 days and has, or could have,
a material adverse effect on the business or condition, financial or
otherwise, of the party;
(e) the party commits an act of bankruptcy, makes an assignment or
bulk sale of its assets, is adjudged or declared bankrupt or makes an
assignment for the benefit of creditors, consents to a proposal or
similar action under any bankruptcy or insolvency legislation
applicable to it, or commences any other proceeding relating to it
under any reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction whether
now or hereafter in effect, or consents to any such proceeding;
(f) a custodian, liquidator, receiver, receiver and manager,
receiver-manager, trustee or any other Person with similar powers is
appointed for the party or in respect of any material part of its
property or assets and not discharged within 30 days after the
appointment and before any action is taken in respect of such property
or assets that will materially affect the rights of the parties
thereto;
(g) a final, non-appealable, decision of any judicial, administrative,
governmental or other authority or arbitrator is made that enjoins or
restrains, or renders illegal or unenforceable, the performance or
observance by the party of any material term of this Agreement; and
(h) in the case of Xxxxxxx, if Xxxxxxx fails to make a good faith
effort to develop a Portable Power Module within three years after the
date of the grant of the Millennium Cell License,
Executive Officer has the meaning ascribed to it inss.6.2,
Exercise Notice has the meaning ascribed to it in Paragraph2.3,
Fuel means hydrogen produced from sodium borohydride utilizing a chemical
process,
Fuel System means a system incorporating the Millennium Cell IPR that includes
Fuel and an appropriate Fuel storage device and process device that supplies
Fuel for a Portable Power Module,
Government Authority means, as applicable, the government of Canada, the
government of the United States of America, the government of a Canadian or
United States province, territory or state and a ministry, department,
commission, board, bureau or other agency of or municipality, regional
district, or other local governing body established by, any such government,
Intellectual Property means a patent, patent application, industrial design,
invention, design, trade secret, idea, work, methodology, technology,
innovation, creation, concept, moral right, development drawing, research,
analysis, know-how, experiment, copyright, data, formula, method, procedure,
process, system and/or technique,
IPR means rights to Intellectual Property,
JDA has the meaning ascribed to it in Recital (A),
Millennium Cell Group means, collectively, at any particular time,
Millennium Cell and its Affiliates,
Millennium Cell Improvement means each customization, revision, modification,
improvement or enhancement of or to the Millennium Cell IPR that is
(a) owned or controlled by any of the Millennium Cell Group at any time
during the period commencing on the Effective Date and ending on the date of
expiry or earlier termination of the Millennium Cell Royalty Term, and
(b) relevant to the research, design, development, manufacture, use or
sale of Portable Power Modules,
Millennium Cell IPR means, collectively,
(a) all IPR concerning Fuel Systems owned or controlled as at the
Effective Date by any one or more of the Millennium Cell Group, and
(b) subject to Paragraph 2.4, all Millennium Cell Improvements owned or
controlled by any one or more of the Millennium Cell Group from and after the
Effective Date,
Millennium Cell License has the meaning ascribed to it in Paragraph 3.1,
Millennium Cell Royalty Rate means the royalty payable by Xxxxxxx to Millennium
Cell in connection with commercial sales of Target Products during the
Millennium Cell Royalty Term as determined pursuant to Paragraph 3.2(a),
Millennium Cell Royalty Term means the period commencing on the effective date
of the Millennium Cell License and ending on the date of the expiry of the last
to expire of the United States patents comprising the Millennium Cell IPR
licensed to Xxxxxxx under the Millennium Cell License,
Net Selling Price means with respect to a Portable Power Module, the total
amount invoiced by Xxxxxxx attributable to the commercial sale of a Portable
Power Module less bad debts and the following deductions, without duplication,
to the extent actually incurred or allowed based upon the sale of such Portable
Power Module:
(i) credits, allowances, discounts and rebates to, and chargebacks from the
account of, the purchaser for spoiled, damaged, out dated and returned
Portable Power Module to the extent consistent with the normal practice
in the industry;
(ii) freight and insurance costs for transporting such Portable Power Module,
to the extent invoiced to the purchaser;
(iii) sales, value-added and other direct taxes on the sale of the Portable
Power Module;
(iv) customs duties, surcharges and other governmental charges incurred in
connection with the exportation or importation of such Portable Power Module;
(v) trade, cash, and quantity discounts off the invoiced price and similar
promotional discounts off the invoiced price, all to the extent consistent
with normal practice in the industry;
(vi)amounts reflecting retroactive price adjustments on sale of Portable
Power Modules to the extent not previously deducted to the extent
consistent with the normal practice in the industry; and
(vii) rebates or chargebacks made on the sale of such Portable Power Module,
to the extent consistent with the normal practice in the industry,
Notice has the meaning ascribed to it in Paragraph 8.8,
Option has the meaning ascribed to it in Paragraph 2.1,
Option Term has the meaning ascribed to it in Paragraph 2.2,
PEM Fuel Cell means a polymer electrolyte membrane fuel cell or fuel cell
stack including components, devices, materials and subsystems thereof
necessary or desirable for the functioning of the fuel cell or fuel cell stack,
including for sealing, venting of gases, vibration isolation, electromagnetic
shielding, the supply, recirculation and removal of gases and fluids,
inlet gas conditioning, humidification, monitoring, and for control logic
and interface logic for the safe and optimal performance of the fuel cell or
fuel cell stack, definition of control interfaces between the fuel cell and
the fuel cell system control system, and further including structural
elements, housings and interfaces with an associated fuel cell system or
components thereof,
PEM Fuel Cell System means a PEM Fuel Cell together with the components
assembled or designed for assembly around a PEM Fuel Cell such as, but not
limited to, the supply subsystem, fuel processor, air supply subsystem, cooling
subsystem, control subsystem and electronic interfaces,
Person means an individual, corporation, body corporate, firm, limited
liability company, partnership, syndicate, joint venture, society, association,
trust or unincorporated organization or Government Authority or any trustee,
executor, administrator or other legal representative,
Portable Power Module means a portable PEM Fuel Cell System that utilizes a
Fuel System and which has a rated power output anywhere from and including 200
Xxxxx to and including 35 kW, but excludes a generating system which is
connected or attached to a mobile station such as a car or truck to which it
delivers power,
Recipient has the meaning ascribed to it in Paragraph 4.1,
Recipient's Agents has the meaning ascribed to it in Paragraph 4.1(a),
Renewal Period has the meaning ascribed to it in Paragraph 2.2,
Stationary Power Module means a stationary internal combustion electric
generator that utilizes a Fuel System and which has a rated power output of
anywhere up to and including 100 kW, and
Subsidiary means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly is under the Control of such first
Person.
Interpretation
1.2 In this Agreement, except as otherwise expressly provided or unless the
context otherwise requires,
(a) "this Agreement" means this Option Agreement, including the schedules
hereto, as from time to time supplemented or amended by one or more agreements
entered into pursuant to the applicable provisions hereof,
(b) the headings in this Agreement are inserted for convenience only and are
not intended to interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof,
(c) the word "including", when following any general statement or term, is
not to be construed as limiting the general statement or term to the
specific items or matters set forth or to similar items or matters, but
rather as permitting the general statement or term to refer to all other items
or matters that could reasonably fall within its broadest possible scope,
(d) a reference to currency means currency of the United States of America,
(e) a reference to a statute includes all regulations made thereunder, all
amendments to the statute or regulations in force from time to time, and
any statute or regulation that supplements or supersedes such statute or
regulations,
(f) a reference to an entity includes any successor to that entity,
(g) a word importing the masculine gender includes the feminine or neuter,
a word in the singular includes the plural, a word importing a corporate entity
includes an individual, and vice versa,
(h) a reference to "approval", "authorization" or "consent" means written
approval, authorization or consent, and
(i) a reference to a Part is to a Part of this Agreement and the word Paragraph
followed by a number or some combination of numbers and letters refers to the
section, paragraph, subparagraph, clause or subclause of this Agreement so
designated.
Schedule A
1.3 Schedule A, Royalty Determination Criteria, is incorporated into this
Agreement by reference and forms a part hereof.
Part 2
Option
Option Grant
2.1 As part consideration for Xxxxxxx'x agreement to restructure its business
relationship with Millennium Cell, Millennium Cell hereby grants to Xxxxxxx an
option (the "Option") to license the Millennium Cell IPR in accordance with the
terms of the Millennium Cell License set forth in Part 3.
Option Term
2.2 The term of the Option (the "Option Term") will be three years commencing on
the Effective Date; provided, however, that if the Option Term expires without
Xxxxxxx having exercised the Option and without Millennium Cell having provided
Xxxxxxx with notice to the contrary no earlier than 180 days and no later than
90 days before the expiry of the Option Term, the Option will be renewed
automatically for consecutive periods (each a "Renewal Period") of one year
each. Millennium Cell may, by notice given to Xxxxxxx no earlier than 180 days
and no later than 90 days before the end of the then current Renewal Period,
terminate the automatic renewal process for the Option.
Exercise of Option
2.3 Xxxxxxx may exercise the Option at any time during the Option Term by
providing Millennium Cell with written notice (the "Exercise Notice")
specifying its exercise of the Option. The Millennium Cell License will be
effective the date on which the Exercise Notice is given or deemed given as
provided in Paragraph 8.9. Immediately upon the exercise of the Option by
Xxxxxxx, Millennium Cell will restate to Xxxxxxx its representations and
warranties set forth in Paragraph 5.1 as at the effective date of the
Millennium Cell License.
No Impairment
2.4 During both the Option Term and the term of the Millennium Cell License,
Millennium Cell will not, and it will ensure that no other member of the
Millennium Cell Group will, directly or indirectly, sell, dispose of or
encumber the Millennium Cell IPR without the prior written consent of Xxxxxxx,
such consent not to be unreasonably withheld or delayed, or otherwise deal with
the Millennium Cell IPR in a manner that could adversely affect Xxxxxxx'x
rights to such IPR. Nothing in this Paragraph 2.4 will be construed to prevent
Millennium Cell from entering into collaboration agreements or joint
development agreements with independent third parties for development of IPR;
provided, however, that Millennium Cell will use all commercially reasonable
efforts to ensure that such agreements do not restrict the Millennium Cell
Group from licensing such IPR (to the extent relevant for Portable Power
Modules) to Xxxxxxx under the Millennium Cell License.
Exclusivity License
2.5 During the Option Term, Millennium Cell will not, and it will ensure that
no other member of the Millennium Cell Group will, directly or indirectly,
grant to any Person, other than Xxxxxxx, an exclusive (even as to the
Millennium Cell Group) or sole license to any of the Millennium Cell IPR to
research, design, develop, make, have made, use or sell Portable Power Modules.
During any Renewal Period, Millennium Cell will not, and it will ensure that no
other member of the Millennium Cell Group will, directly or indirectly, grant
to any Person an exclusive license to any of the Millennium Cell IPR to
research, design develop, make, have made, use or sell Portable Power Modules
without first offering Xxxxxxx the right (the "Offer") to license the
Millennium Cell IPR on an exclusive basis for such purposes. The Offer so made
must
(a) be in writing and must remain open for acceptance for a period of 30
Business Days after the date on which it was made,
(b) state that it is being made pursuant to the provisions of this Paragraph
2.5, and
(c) set forth, in detail the terms and conditions of the proposed exclusive
license, including, but not limited to, the term of such license and
the royalties payable thereunder, such that upon acceptance of the Offer, an
unconditional license agreement binding on both the parties would result.
The Offer will be governed by the following rules:
(d) Xxxxxxx must accept or reject the Offer before the expiry of the period
specified in Paragraph (a). Failure by Xxxxxxx to accept or reject the Offer as
aforesaid will be considered a rejection by Xxxxxxx of the Offer;
(e) if Xxxxxxx accepts the Offer, a binding license agreement will result on
the terms and conditions specified in the Offer;
(f) if Xxxxxxx rejects the Offer, and provided that Xxxxxxx had not
exercised the Option before receipt of the Offer under this Paragraph 2.5,
Millennium Cell may license the Millennium Cell IPR on an exclusive
basis to another Person but only on terms and conditions which, when
considered as a whole, are no more favourable to such Person than those
contained in the Offer; provided, however, that the provisions of this
Paragraph 2.5 will again become applicable if no Person has been licensed the
Millennium Cell IPR on an exclusive basis as aforesaid within 180 days
after the date that Xxxxxxx rejected the Offer, and
(g) effective upon the grant of an exclusive license to such other Person
in compliance with the process specified in this Paragraph 2.5, Xxxxxxx'x
right to exercise the Option will expire.
Disclosure During Validity of Option
2.6 During the period that the Option is exercisable, Millennium Cell will
disclose, or cause to be disclosed, to Xxxxxxx
(a) each Millennium Cell Improvement before its disclosure to independent third
parties,
(b) quarterly, on the last day of each calendar quarter, a summary report of
all Millennium Cell Improvements generated during such calendar quarter, and
(c) promptly upon written request from Xxxxxxx, all technical documents,
plans, information, blueprints and other materials and information
relating to the Millennium Cell IPR, including each Millennium Cell
Improvement, that are necessary to enable Xxxxxxx to make a fully informed
decision as to whether or not to exercise the Option.
Part 3
LICENSE
Millennium Cell License Grant
3.1 Effective upon delivery of the Exercise Notice to Millennium Cell,
Millennium Cell will be deemed to have granted to Xxxxxxx a non-exclusive,
world-wide, royalty-bearing license (the "Millennium Cell License") to practise
the Millennium Cell IPR to research, design, develop, make, have made, use and
sell Portable Power Modules. Xxxxxxx may not sublicense the Millennium Cell IPR
for such purpose to any Person (except to subcontractors for the sole purpose
of having Portable Power Modules or components thereof made for Xxxxxxx and to
Xxxxxxx'x Subsidiaries) without the prior written consent of Millennium Cell,
such consent not to be unreasonably withheld or delayed.
Term and Royalty Payments
3.2 The following provisions will apply in respect of the term of the
Millennium Cell License and the Millennium Cell Royalty Rate:
(a) Millennium Cell and Xxxxxxx will negotiate in good faith to determine
the Millennium Cell Royalty Rate and the term of the Millennium Cell License
within 90 days after the Millennium Cell License comes into effect.
In determining the Millennium Cell Royalty Rate the parties will utilize, inter
alia, the criteria set forth in Schedule A. If the parties cannot agree on the
Millennium Cell Royalty Rate or the term of the Millennium Cell License before
the expiry of the 90-day period, such royalty rate and/or term will be
determined by arbitration pursuant to Paragraph 6.4, or Xxxxxxx may, at its
option, terminate the Millennium Cell License. For and so long as such
arbitration is in the process, the Millennium Cell License will be
deemed to have a term of 20 years and the Royalty Rate will be deemed
to be an amount equal to 2% of the Net Selling Price received by
Xxxxxxx from commercial sales of Portable Power Modules. The parties
will retroactively make such adjustments as may be necessary following
the arbitration determination to reflect such determination including
but not limited to adjustments to the term of the Millennium Cell
License, the Millennium Cell Royalty Rate and payments thereunder.
Xxxxxxx will use all reasonable efforts to verify the credit worthiness
of its customers who purchase Portable Power Modules;
(b) Xxxxxxx will pay to Millennium Cell, within 30 days after the end of
each calendar quarter during the Millennium Cell Royalty Term, a
royalty payment equal to the Millennium Cell Royalty Rate for such
calendar quarter. For greater certainty, sales of Portable Power
Modules among Xxxxxxx, its Affiliates, agents and sublicensees will not
be subject to royalty payments. However, Xxxxxxx will be liable for
payment of royalties to Millennium Cell at the Royalty Rate, deemed or
determined by the parties or by arbitration pursuant to Paragraph (a), upon
the sale of Portable Power Modules by Xxxxxxx, its Affiliates, agents
or sublicensees, to an independent arm's length third party;
(c) each such payment must be accompanied by a quarterly report, signed
and certified as accurate and complete by the Chief Financial Officer,
or equivalent, of Xxxxxxx, indicating the royalty payment calculated for such
calendar quarter. In addition, upon at least 10 Business Days' prior written
notice to Xxxxxxx, Xxxxxxx will permit Millennium Cell and its certified public
accountants to have full access to the books, records and facilities of
Xxxxxxx pertaining to its activities pursuant to the Millennium Cell License
solely to verify and audit the royalties payable and to make copies of the
relevant books and records at Millennium Cell's expense; provided, however,
that if the audit identifies an underpayment of 10% or more of the quarterly
royalties due to Millennium Cell, then Xxxxxxx will reimburse Millennium Cell
its reasonable costs of the audit. Millennium Cell and its certified public
accountants will have such access at all reasonable times and from time to time
during normal business hours during the term of the Millennium Cell Royalty
Term;
(d) Xxxxxxx will make all royalty payments in United States currency by
wire transfer or cheque to such bank or account as Millennium Cell may
from time to time specify in writing. Overdue payments will bear
interest at the rate of 6% per annum or the highest annual rate of
interest then permitted by applicable law, whichever is less,
compounded monthly, with interest on overdue interest at the same rate
from the due date to the date of payment; and
(e) payments of royalties and other amounts will be free and clear of all
taxes, duties, levies, fees or charges, except for withholding taxes
(to the extent applicable). Any tax which Xxxxxxx is required by law to
withhold with respect to royalty or other payments to be made to
Millennium Cell will be deducted from the amount otherwise due to
Millennium Cell.
Disclosure During Term of Millennium Cell License
3.3 From the effective date of the Millennium Cell License until expiry of the
Millennium Cell Royalty Term, Millennium Cell will disclose to Xxxxxxx
(a) each Millennium Cell Improvement before its disclosure to independent third
parties,
(b) quarterly, on the last day of each calendar quarter, a summary report of
all Millennium Cell Improvements generated during such calendar quarter, and
(c) promptly upon written request from Xxxxxxx, the Millennium Cell IPR,
including each Millennium Cell Improvement, and all technical
documents, plans, information, blueprints and other materials and
information relating to the Millennium Cell IPR, including each
Millennium Cell Improvement, that are necessary or reasonably desirable
to enable Xxxxxxx to exploit the Millennium Cell IPR, including
Millennium Cell Improvements, pursuant to the Millennium Cell License,
including,
(i) general planning, layouts and sources of supply for the manufacture and
handling of Fuel and Fuel Systems,
(ii) information as to the kind, type and source of necessary machinery and
equipment that is applicable for use in the manufacture of Fuel Systems, and
(iii) information concerning detailed engineering and design of
plant process, machinery and equipment to assure satisfactory operation and
performance of the manufacturing equipment that is applicable for the m
anufacture of Fuel Systems.
Infringement Claims
3.4 Millennium Cell will have sole responsibility to
(a) take all actions, including the institution of legal proceedings,
which, in the reasonable judgement of Millennium Cell, are calculated
to terminate infringements of, or otherwise to enforce its rights with
respect to, the Millennium Cell IPR licensed to Xxxxxxx. Millennium
Cell will promptly notify Xxxxxxx of any suit or action involving
Millennium Cell which directly or indirectly relates to the
infringement of such IPR and will, from time to time, keep Xxxxxxx
informed of the status of such suit or action. Xxxxxxx will, at
Millennium Cell's cost, fully co-operate, and not interfere, with any
action taken by Millennium Cell to enforce Millennium Cell's rights in
such IPR; provided, however, that if
(i) Millennium Cell fails, refuses or is no longer pursuing good
faith efforts to enforce its rights in any particular jurisdiction to prevent
infringement by a third party of any particular Intellectual Property
comprising such IPR after Xxxxxxx has requested Millennium Cell to enforce such
rights, and
(ii)the results of Millennium Cell's failure or refusal to enforce
its rights described in Paragraph (i) effectively permits the infringer to
practise such Intellectual Property in any jurisdiction on a royalty-free basis
in a manner which could adversely affect the business of Xxxxxxx,
Xxxxxxx'x obligations to pay royalties to Millennium Cell in respect of
sales of Portable Power Modules in that jurisdiction will be suspended
until the first to occur of the following:
(iii) Millennium Cell and such third party infringer have entered
into a license agreement on terms and conditions which, when considered in
their entirety, are not materially more favourable to the third party than
Xxxxxxx;
(iv) such third party has ceased to practise such Intellectual Property;
or
(v) the parties otherwise agree to a new royal rate in that
jurisdiction having regard to the spirit and intent of Paragraph 3.5
and utilizing, inter alia, the criteria set forth in Schedule
A. If the parties cannot agree on such new royalty rate within
90 days after the date Xxxxxxx'x obligation to pay royalties
is suspended, either party may refer such royalty rate matter
for determination by arbitration pursuant to Paragraph 6.4. The
parties will retroactively make such adjustments as may be
necessary to reflect such agreement or arbitration
determination, and
(b) promptly defend all legal actions asserting the invalidity of any
of the Millennium Cell IPR licensed to Xxxxxxx. Millennium Cell will have
control of such defence and Xxxxxxx will, at Millennium Cell's cost, fully
co-operate, and not interfere, with Millennium Cell's defence of such actions.
Xxxxxxx will promptly notify Millennium Cell of each suit or action wherein
Xxxxxxx is named as a party and which is directed to the validity of the
Millennium Cell IPR. If the ability of Xxxxxxx to exploit such IPR pursuant to
the Millennium Cell License is adversely affected as a result of such action or
other proceeding invalidating any of such IPR, then, without prejudice to any
of the rights or remedies that Xxxxxxx may have against Millennium Cell,
Xxxxxxx'x obligations to pay royalties to Millennium Cell will be suspended
until such time as the parties otherwise agree or an arbitration award
otherwise determines. Where the matter is to be determined by arbitration, the
arbitrator(s) will be required to take into account, inter alia, the costs and
expenses of Xxxxxxx incurred as a result of any such action asserting
invalidity. At the request of Xxxxxxx, Millennium Cell will fully cooperate
with Xxxxxxx in its efforts to conduct clearance searches or other due
diligence regarding the validity of the Millennium Cell IPR or as to
whether the Millennium Cell IPR, as licensed to and used by Xxxxxxx, infringes
the patent rights of any third party.
Most Favoured Nations Licensee
3.5 If during the term of the Millennium Cell License, Millennium Cell or any
other member of the Millennium Cell Group licenses any of the Millennium Cell
IPR to any Person on terms and conditions which, when considered in their
entirety, are more favourable to such Person than those provided to Xxxxxxx
under the Millennium Cell License, the terms and conditions of the Millennium
Cell License will be automatically changed to the terms and conditions of the
license granted to such Person effective the date of the grant of such license
to the other Person. Xxxxxxx will have the right, in its sole and reasonable
discretion, to determine whether or not the terms and conditions of the license
granted to such Person are materially more favourable to such Person than those
set forth in the Millennium Cell License. Millennium Cell will provide or cause
to be provided to Xxxxxxx all necessary particulars of third party licenses of
the Millennium Cell IPR concerning Portable Power Modules promptly after their
grant in order to enable Xxxxxxx to make its determination as aforesaid.
Millennium Cell will not enter into any agreement that would restrict or
prevent the intent of this Paragraph 3.5.
Stationary Power Modules
3.6 The parties acknowledge that with regard to Stationary Power Modules,
Millennium Cell or other members of the Millennium Cell Group may not have the
right to xxxxx Xxxxxxx a license due to pre-existing relationships with third
parties. However, if at any time during the Option Period or any Renewal Period
Millennium Cell or any other member of the Millennium Cell Group is free to
xxxxx Xxxxxxx such a license, Millennium Cell will offer, or will cause to be
offered to Xxxxxxx, the right to license the Millennium Cell IPR to Xxxxxxx to
research, design, develop, make, have made, use and sell Stationary Power
Modules. The terms and conditions of such license will initially be no less
favourable to Xxxxxxx than those relating to the Millennium Cell License but
will be subject to mediation/arbitration in the same manner as provided in
Paragraph 3.2(a). Millennium Cell will provide, or will cause to be provided, to
Xxxxxxx a reasonable time within which to review any such offer before
presenting any offer concerning the licensing of such IPR for any such purpose
to any other Person. Any offer to any other Person must be on terms and
conditions which, when taken as a whole, are no more favourable to the other
Person than those offered to Xxxxxxx.
Perpetual License
3.7 Effective upon the expiry of the last to expire of the United States
patents comprising the Millennium Cell IPR licensed to Xxxxxxx and provided
that the Millennium Cell License is then in effect, Millennium Cell will be
deemed tohave granted to Xxxxxxx an irrevocable, perpetual, non-exclusive,
world-wide, royalty-free license to practise the Millennium Cell IPR existing
as at the effective date of such expiry to research, design, develop,
manufacture, have manufactured, use and sell Portable Power Modules with the
right to sublicensesuch Millennium Cell IPR.
Part 4
CONFIDENTIALITY
Non-Disclosure
4.1 Each party (the "Recipient") that receives Confidential Information
disclosed to it by the disclosing party (the "Disclosing Party")
(a) must hold and keep, and must ensure that each of its directors,
officers, employees and agents (collectively, the "Recipient's Agents") hold
and keep, the Confidential Information in confidence for the Disclosing Party,
(b) must not, and must ensure that the Recipient's Agents will not,
directly or indirectly, disclose, use, reproduce, deal with or otherwise
exploit the Confidential Information or permit it to be disclosed, used,
reproduced, dealt with or otherwise exploited, except to the extent strictly
necessary for the legitimate exercise by the Recipient of its rights under this
Agreement,
(c) must disclose the Confidential Information only to those of the
Recipient's Agents that have a definable need to know such information
in connection with the legitimate exercise of the Recipient's rights
under this Agreement, and who are informed of the confidential nature of such
information,
(d) must, if required to do so by the Disclosing Party, cause the
Recipient's Agents to execute confidentiality agreements in favour of
the Disclosing Party in form and substance reasonably satisfactory to
the Disclosing Party, and
(e) must, and must ensure that each of the Recipient's Agents will, protect
the Confidential Information of the Disclosing Party against wrongful
disclosure, misuse, espionage and theft.
Exceptions
4.2 This Agreement imposes no obligation on the Recipient with respect to
Confidential Information of the Disclosing Party,
(a) that is or becomes public knowledge through no fault of the Recipient or
the Recipient's Agents,
(b) that was legitimately possessed by the Recipient or the Recipient's
Agents before its disclosure by the Disclosing Party to the Recipient as
evidenced by prior written records,
(c) that is independently obtained by the Recipient or the Recipient's
Agents from a source that was not, at the relevant time, prohibited
from disclosing it to the Recipient under any legal, contractual or
fiduciary obligation,
(d) that is the same as information that is developed by the Recipient or
the Recipient's Agents independently without reference to the
Confidential Information of the Disclosing Party as evidenced by prior
written records,
(e) that, subject to Paragraph 4.3, is required to be disclosed by applicable
law, regulation, policy or legal process, or (f) to the extent and in the manner
approved by the Disclosing Party in writing.
Legal Requirement to Disclose
4.3 If the Recipient or any of the Recipient's Agents is required by applicable
law, regulation or legal process to disclose any of the Confidential
Information of the Disclosing Party, the Recipient will notify the Disclosing
Party promptly so that the Disclosing Party may seek a protective order or
other appropriate remedy or waive compliance with the terms of this Agreement.
If no such protective order or other remedy is obtained or the Disclosing Party
does not waive compliance with the terms of this Agreement, the Recipient or
the Recipient's Agent
(a) will furnish only that portion of the Confidential Information of the
Disclosing Party which the Recipient is advised by counsel is legally required
to be disclosed, and
(b)will exercise all reasonable efforts to obtain reliable assurances that
confidential treatment will be accorded such Confidential Information.
Reasonable Restrictions
4.4 Each party acknowledges the competitive and technical value, and the
sensitive and confidential nature of the other party's Confidential Information
and agrees that monetary damages alone may be inadequate to protect the other
party's interests against any actual or threatened breach of this Agreement.
Accordingly, each party consents to the granting of specific performance and
injunctive or other equitable relief to the other party in respect of any
actualor threatened breach of this Agreement, without proof of actual damages.
No Obligation to Disclose
4.5 Nothing in this Agreement obligates Xxxxxxx to disclose any of its C
onfidential Information.
Survival of Covenants
4.6 The covenants and agreements set forth in this Part 4 are separate and
distinct covenants and agreements and will be enforceable with respect to the
Confidential Information received from the Disclosing Party, whether prior to
or after the date of this Agreement, and will survive the termination of this
Agreement.
Part 5
WARRANTIES, REPRESENTATIONS AND COVENANTS
Millennium Cell Warranties, Representations and Covenants
5.1 Millennium Cell represents and warrants to Xxxxxxx that as at the
Effective Date,
(a) Millennium Cell has, and during the Option Term Millennium Cell will
have, all necessary legal and corporate power, authority and capacity
to execute and deliver this Agreement and to perform its obligations
hereunder and to grant the Millennium Cell License to Xxxxxxx free and
clear of all Encumbrances and this Agreement constitutes a valid and
binding obligation of Millennium Cell,
(b) no Millennium Cell Group member has any knowledge of any actual or
alleged infringement, misuse or other violation by any Person of the Millennium
Cell IPR,
(c) to the knowledge of the Millennium Cell Group, the Millennium Cell IPR
does not infringe upon the IPR of any Person and Millennium Cell has no
knowledge of any existing, or reasonably anticipated, claim, action,
proceeding, dispute or suit which would affect its ability to perform
any aspect of this Agreement or to use any of its Intellectual Property
or any other matter which might affect the validity, use, continuance,
ownership or value of the Millennium Cell IPR,
(d) no Millennium Cell Group member has any knowledge of any bona fide
third party restrictions prohibiting or limiting it from making the
disclosures contemplated in Paragraph 2.6 and Paragraph 3.3 and covenants that
it will use, or cause to be used, commercially reasonable efforts to
ensure that neither it nor any other Millennium Cell member will, both
during the Option Term and the term of the Millennium Cell License,
enter into any agreement that contains any restrictions or limitations
that would prevent or limit Millennium Cell from meeting its
obligations under Paragraph 2.6 and Paragraph 3.3,
(e) no Millennium Cell Group member is a party to, bound by or subject to
any indenture, mortgage, lease, agreement, instrument, statute,
regulation, order, judgment, decree or law which would be violated,
contravened or breached by or under which any default would occur as a
result of the execution and delivery by Millennium Cell of this
Agreement or the performance by Millennium Cell of any of the terms
hereof, and
(f) no member of the Millennium Cell Group has any obligation to obtain any
authorization, consent or approval from any third Person in order to
enter into this Agreement and to perform its obligations and covenants
hereunder.
Xxxxxxx Warranties and Representations
5.2 Xxxxxxx represents and warrants to Millennium Cell that as at the
Effective Date,
(a) Xxxxxxx has all necessary legal and corporate power, authority and
capacity to execute and deliver this Agreement and to perform its
obligations hereunder and this Agreement constitutes a valid and
binding obligation of Xxxxxxx,
(b) Xxxxxxx is not a party to, bound by or subject to any indenture,
mortgage, lease, agreement, instrument, statute, regulation, order,
judgment, decree or law which would be violated, contravened or
breached by or under which any default would occur as a result of the
execution and delivery by Xxxxxxx of this Agreement or the performance
by Xxxxxxx of any of the terms hereof, and
(c) Xxxxxxx has no obligation to obtain any authorization, consent or
approval from any third Person in order to enter into this Agreement
and to perform its obligations and covenants hereunder.
Survival of Warrants and Representations
5.3 The warrants and representations set forth in Paragraph 5.1 and Paragraph
5.2 will survive the execution and implementation of this Agreement.
Part 6
DISPUTE RESOLUTION
Initiation of Process
6.1 If, at any time, there is a dispute, controversy or claim (each a
"Dispute") between the parties with respect to any matter arising out of or
Dispute must give notice to the other party outlining the nature of the
Dispute and the resolution proposed by the claimant and requiring that such
Dispute be resolved pursuant to this Part 6.
Referral to Executive Officers
6.2 If notice is given pursuant to Paragraph 6.1, each party will designate
one of its senior officers (each an "Executive Officer") forthwith to initiate
discussions with a view to settling the Dispute.
Officers' Decision Binding
6.3 A resolution reached by such Executive Officers and communicated by them in
writing to the parties will be binding on the parties and will be implemented.
Submission to Arbitration
6.4 If a Dispute is not resolved between the parties within 30 days (or
such longer period as is agreed to by the parties in writing) after the date of
the notice pursuant to Paragraph 6.1, either party will be entitled to refer
the Dispute to arbitration by a single arbitrator in accordance with the
commercial arbitration rules of the American Arbitration Association (the
"Rules") as modified by the provisions herein.
Place of Arbitration
6.5 The arbitration will take place in the English language in New York,
New York.
Acceptance and Implementation
6.6 Each party will accept as final and binding and proceed in good faith
diligently to implement the award or decision of the arbitrator.
Legal Proceedings
6.7 A legal proceeding commenced by a party in respect of an issue or Dispute
that may be arbitrated under this Agreement (a) will be stayed until the time
during which an arbitration may be initiated has expired or, if an arbitration
is initiated, a decision on the arbitration is delivered or the
arbitration process has otherwise ended, and (b) will be discontinued following
the award or decision of the arbitrator on the arbitration unless the award or
decision concludes the arbitration and the Dispute remains unresolved.
Exclusions
6.8 This Part 6 will not apply to any action under Part 4 or for the grant of
injunctions, restraining orders, specific performance and similar remedies.
Part 7
TERMINATION
Termination of Agreement
7.1 This Agreement will automatically terminate if the Option Term expires
without a Renewal Period being in force and Xxxxxxx has not exercised the
Option before such expiry.
Termination of Millennium Cell License
7.2 The Millennium Cell License may be terminated
(a) by either party forthwith by written notice to the other if the other party
is the subject of an Event of Default,
(b) by Xxxxxxx forthwith by written
notice to Millennium Cell if the parties cannot agree on the Millennium Cell
Royalty Rate or the term of the Millennium Cell License within the time period
specified in Paragraph 3.2(a), or
(c) by Xxxxxxx without cause upon 30 days' written Notice to Millennium Cell.
Effect of Termination of Millennium Cell License
7.3 Upon termination of the Millennium Cell License,
(a) unless Paragraph 3.7 is applicable, Xxxxxxx and its sublicensees, if
any, will immediately cease all use of the Millennium Cell IPR and Millennium
Cell's Confidential Information and at Millennium Cell's option, Xxxxxxx will
either return to Millennium Cell or destroy, and cause each of its sublicensees
to either return to Xxxxxxx or destroy, as applicable, all of Millennium Cell's
Confidential Information in the possession or under the control of Xxxxxxx and
its sublicensees, if any, and provide to Millennium Cell a certificate of a
senior officer of Xxxxxxx certifying such return or destruction; provided,
however, that notwithstanding the foregoing, Xxxxxxx and its sublicensees will
be entitled to practise their rights under the Millennium Cell License or the
Sublicense granted by Xxxxxxx, as applicable, to sell on the royalty basis set
forth herein, their then existing inventory of Portable Power Module and
components incorporating the Millennium Cell IPR,
(b) Millennium Cell will immediately cease all use of Xxxxxxx'x
Confidential Information and at Xxxxxxx'x option, either return to
Xxxxxxx, or destroy, all of Xxxxxxx'x Confidential Information in its
possession or under its control and provide to Xxxxxxx a certificate of
a senior officer of Millennium Cell certifying such return or
destruction, and
(c) all royalty payments, accrued pursuant to Paragraph 3.2 as at the
effective date of the termination of the Millennium Cell License will become due
and payable by Xxxxxxx within 30 days after such date and Xxxxxxx'x
obligation to pay Millennium Cell such accrued royalty payments will
survive the termination of the Millennium Cell License.
Part 8
GENERAL PROVISIONS
Entire Agreement
8.1 This Agreement constitutes the entire agreement between the parties and
supersedes every previous agreement, communication, expectation, negotiation,
representation or understanding, whether oral or written, express or implied,
statutory or otherwise, between the parties with respect to the subject matter
of this Agreement.
Severability
8.2 If any provision of this Agreement is at any time unenforceable or invalid
for any reason it will be severable from the remainder of this Agreement and,
in its application at that time, this Agreement will be construed as though
such provision was not contained herein and the remainder will continue in full
force and effect and be construed as if this Agreement had been executed
without the invalid or unenforceable provision.
Waiver and Consent
8.3 No consent or waiver, express or implied, by either party to, or of any
breach or default by the other party of, any or all of its obligations under
this Agreement will, (a) be valid unless it is in writing and stated to be a
consent or waiver pursuant to this Paragraph 8.3, (b) be relied upon as a
consent to or waiver of any other breach or default of the same or any other
obligation, (c) constitute a general waiver under this Agreement, or
(d) eliminate or modify the need for a specific consent or waiver pursuant to
this ss.8.3 in any other or subsequent instance.
Amendments
8.4 This Agreement may not be amended except in writing signed by the
parties.
Assignment
8.5 Millennium Cell will not assign this Agreement or its rights or obligations
hereunder except with the prior written consent of Xxxxxxx, and any purported
assignment without such consent will be null and void.
Governing Law
8.6 This Agreement for all purposes will be governed exclusively by and
interpreted, construed and enforced in accordance with the laws prevailing in
the State of New York.
Attornment
8.7 Subject to Part 6, each party hereby irrevocably and unconditionally
attorns to the exclusive jurisdiction of the United States District Court for
the District of New York, and the courts having appellate jurisdiction
thereover for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby; provided, however,
that
(a) nothing herein will affect a party's right to record and enforce in any
jurisdiction outside the State of New York a judgment or award that is granted
by the United States District Court for the District of New York or a court
having appellate jurisdiction thereover or an award or decision that is made by
arbitrators pursuant to an arbitration conducted under Part 6, and
(b) the parties may take proceedings in any court of competent jurisdiction in
order to enforce their rights under Part 4.
Notice
8.8 Every notice, request, demand or direction (each, for the purposes of
Paragraph 8.8, Paragraph 8.9 and ss.8.10, a "Notice") to be given pursuant to
this Agreement must be in writing and must be delivered by hand (e.g. Federal
Express or other courier service) or sent by facsimile transmission or other
similar form of written transmission by electronic means, in each case
addressed as follows:
(a) If to Xxxxxxx, at:
0000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: Corporate Secretary
(b) If to Millennium Cell, at:
0 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx
X.X.X. 00000
Facsimile: (000) 000-0000
Attention: President
or to such other address or transmission receiving station in British Columbia,
Canada or New Jersey, United States of America as specified by a party by
Notice to the other party.
Deemed Receipt
8.9 Any notice delivered or sent by facsimile transmission or other similar
form of electronic transmission will be deemed conclusively to have been
effectively given on the day notice was delivered or sent as aforesaid if it
was delivered or sent on a day that was a Business Day at the place of the
intended recipient or on the next day that is a Business Day at such place if
it was delivered or sent on a day that was not a Business Day at such place.
Change of Address
8.10 A party may at any time, by Notice to the other, change its address to
some no less convenient address and will so change its address whenever its
address ceases to be suitable for delivery by hand.
Further Assurances
8.11 Each party will execute and deliver, and where necessary, will cause to be
executed and delivered, such further agreements and other documents and do such
further acts and things as the other party reasonably requests to evidence,
carry out or give full force and effect to the intent of this Agreement.
Binding Effect
8.12 This Agreement will enure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
Survival
8.13 All rights and obligations of the parties occurring before the effective
date of termination of the Millennium Cell License and all rights and
obligations expressly stated to continue after, or accrue as a result of, such
termination are separate and distinct rights and obligations binding on the
parties, will survive its termination and will continue in full force and
effect and nothing herein will affect the enforceability of such provisions.
No Partnership
8.14 Nothing herein will or will be deemed to create any partnership or joint
venture between the parties or to give either party any right or authority to
act as the agent of or to pledge the credit of the other party.
No Publicity
8.15 Save as required by applicable securities laws or other requirements of
applicable Government Authorities, neither party will reveal the subject matter
of this Agreement in any press release, advertisement or other publicity
whatsoever without the prior written consent of the other party.
Release
8.16 Effective the date of this Agreement, the Joint Development Program under
the JDA is hereby terminated, the rights and obligations of Xxxxxxx and
Millennium Cell to and between each other under the JDA, including, but not
limited to, any obligations of Millennium Cell to exclusively license its IPR
to Xxxxxxx, are hereby terminated and at an end except that (a) the
Confidentiality Agreement (referred to in the JDA) or any other confidentiality
obligations of the parties to one another will continue in force,
(b) Paragraph 4.1, Paragraph 4.2 and Paragraph 4.3 of the JDA will continue
in force until two years after the date of this Agreement, (c) if and to the
extent applicable, ss.5.7 will continue in force, and (d) Part 1, Part 8,
Part 9 (but only with respect to disputes arising pursuant to the JDA) and
Part 10 will continue in force.
Counterparts
8.17 This Agreement may be executed in any number of counterparts or by
facsimile, each of which will together, for all purposes, constitute one and
the same instrument, binding on the parties, and each of which will together be
deemed to be an original, notwithstanding that all of the parties are not
signatories to the same counterpart or facsimile.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date.
XXXXXXX POWER SYSTEMS INC.
By: /s/ Xxxxxxx Xxxxx
Its: Vice-President, Strategic Development
By: /s/ Xxxxxx Xxxxxxxx
Its: President and Chief Operating Officer
MILLENNIUM CELL, INC.
By: /s/ Xxxx X. Xxxxxx
Its: Vice President, Business Development for Distributed Generation
Schedule A
ROYALTY DETERMINATION CRITERIA
1. the impact of the licensed IPR on future sales successes of the licensee's
product;
2. the total market size or potential revenue for foreseeable products
incorporating the IPR so licensed;
3. the specific markets that are realistically addressable by products e
mbodying the IPR so licensed;
4. competing processes available to the licensee and the advantages of using
the IPR over other processes;
5. the possible duration of any competitive advantage to the licensee by using
the IPR so licensed;
6. the development cost to the licensee of an alternative to the IPR so
licensed;
7. opportunity costs to the licensee of assets deployed;
8. the opportunity cost to the licensor of third party exclusive licensing
opportunities;
9. the risks to the licensee of investment in manufacturing and
commercialization of the licensee's products using the IPR so licensed;
10. the incremental financial investment to be made by the licensee for
manufacturing, marketing and distribution functions;
11. cost of intangible and intellectual capital to be employed by the licensee;
12. the economic life of the product embodying the licensee's technology;
13. the incremental resources required from the licensor to transfer technology
to the licensee;
14. the length of time required to commercialize the licensee's products;
15. the strength of the IPR so licensed;
16. the need for the licensee to license third party IPR in order to
commercialize its products using the licensor's IPR; and
17. the existence and scope of any warranty or indemnity granted by the
licensor with respect to the licensed IPR.
