LICENSE ASSISTANCE AGREEMENT
This License Assistance Agreement (this "Agreement"), dated as of February
16, 1999, is entered into by and between ENERGY RESEARCH CORPORATION ("ERC"), a
New York corporation with its principal place of business at 0 Xxxxx Xxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxxxxx, and EVERCEL, INC. ("Evercel"), a Delaware
corporation and wholly-owned subsidiary of ERC with its principal place of
business at 0 Xxxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx.
WHEREAS, ERC has entered into a Cooperative Joint Venture Contract (the
"Joint Venture Contract"), and articles of association (the "Articles of
Association"), each dated as of July 7, 1998, with Xiamen Three Circles Co.,
Ltd. ("Xiamen"), which provides for the establishment of Xiamen Three
Circles-ERC Battery Corp., Ltd., a Sino-Foreign Manufacturing Joint Venture (the
"Joint Venture") to manufacture and sell nickel zinc ("Ni-Zn") batteries;
WHEREAS, the Joint Venture, Xiamen (formerly Xiamen Daily-Used Chemicals
Co., Ltd.) and ERC have entered into a Technology Transfer and License Contract
(the "License Contract"), dated as of May 29, 1998, pursuant to which ERC has
licensed certain of its Ni-Zn battery technology to the Joint Venture;
WHEREAS, the registered capital of the Joint Venture is US$6,100,000, of
which ERC has contributed US$3,080,500 in cash representing a 50.5% share of the
registered capital and cooperative conditions of the Joint Venture;
WHEREAS, Evercel is a wholly-owned subsidiary of ERC that has been formed
to develop the battery business of ERC following a spin-off of Evercel;
WHEREAS, ERC wishes to transfer to Evercel the principal assets and related
liabilities of its battery business in anticipation of the spin-off;
WHEREAS, ERC also wishes to assign its interests in the Joint Venture
Contract and the License Contract to Evercel in connection with the spin-off;
WHEREAS, such assignment of ERC's interest in the Joint Venture Contract
and the License Contract will require the consents of Xiamen and the Joint
Venture, respectively, and the approval of the appropriate examination and
approval authority of the People's Republic of China (the "PRC Approval
Authority");
WHEREAS, until such consents and approval are obtained and such assignments
are effectuated (such assignments collectively referred to herein as the
("Transfer")), ERC and Evercel desire that Evercel bear the obligations and
receive the benefits of ERC under the Joint Venture Contract and the License
Contract.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, ERC and Evercel hereby agree as follows:
1. Until the consents and approvals referred to in Section 5 and Section
6 below are obtained with respect to the Transfer and the Transfer is
completed, ERC and Evercel desire that Evercel bear the obligations
and receive the benefits of ERC under the Joint Venture Contract and
the License Contract. Therefore, to effectuate such intent, Evercel
shall provide to ERC, without charge or expense to ERC, all services
and assistance (including, without limitation, employee, technology,
machinery, equipment and materials selection, sales and marketing
assistance and financial assistance) necessary for Evercel to
effectively fulfill, on behalf of ERC, all of ERC's obligations under
the Joint Venture Contract and the License Contract. In return for
such services and assistance, ERC irrevocably agrees to pay to Evercel
an amount equal to the sum of all money, dividends, profits,
reimbursements, distributions (including liquidating distributions)
and payments actually paid to ERC in cash or in kind, or otherwise
accruing to ERC, pursuant to or in connection with the Joint Venture
Contract and the License Contract. ERC will provide to Evercel all
information that ERC receives from the Joint Venture pertaining to the
Joint Venture's annual income, losses, and operations sufficient to
enable Evercel to report on its annual U.S. federal and state tax
returns the allocable amount of taxable income, losses, deductions,
and credits to which ERC would otherwise be entitled absent this
Agreement. Further, ERC will cause and enable Evercel to have access
to all books and records of the Joint Venture or true and correct
copies thereof to which ERC is otherwise entitled.
2. Until the consents and approvals referred to in Section 5 and Section
6 below are obtained with respect to the Transfer and the Transfer is
completed, ERC agrees that, in the event of any vacancy in the Board
of Directors (the "Board") of the Joint Venture relating to a
directorship which ERC is entitled to appoint, or in the position of
Deputy General Manager of the Joint Venture, ERC will request a
nominee from Evercel to fill such vacancy. Within ten business days of
receipt of such request, Evercel will notify ERC in writing of its
nominee to fill such vacancy on the Board or as the Deputy General
Manager, as applicable. ERC will appoint Evercel's nominee to the
Board or as the Deputy General Manager, as applicable, unless ERC
raises a reasonable objection to such nominee. Upon ERC's reasonable
objection to a nominee, Evercel will notify ERC of a substitute
nominee, which substitute nominee (absent any further reasonable
objection by ERC) shall be appointed by ERC. In addition, in the event
that the Transfer has not taken place by the date that is six months
from the date hereof, upon the written request of Evercel, ERC will
replace its appointees to the Board with nominees specified by Evercel
in such notice (unless ERC raises a reasonable objection to such
nominee(s), in which case Evercel will
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notify ERC of substitute nominee(s)). ERC also agrees to exercise any
residual rights and powers in the Joint Venture interest, including,
but not limited to, voting rights, in accordance with Evercel's
instructions, provided that such instructions are not materially
adverse to ERC, in ERC's reasonable discretion. In the event of any
disagreement relating to the foregoing, ERC and Evercel will attempt
to work out a mutually agreeable solution.
3. This Agreement does not constitute an agreement for a partnership or
joint venture between ERC and Evercel. All expenses and costs incurred
by Evercel in meeting Evercel's obligations under this Agreement shall
be solely those of Evercel, and ERC shall not be liable for their
payment. All expenses and costs incurrred by ERC in meeting ERC's
obligations under this Agreement shall be reimbursed in full by
Evercel, provided that ERC, to the extent practical, agrees to notify
Evercel prior to incurring any costs or expenses pursuant to this
Agreement. Neither party to this Agreement shall have authority to
make commitments with third parties, including the Joint Venture, that
are binding upon the other party hereto without the other party's
written consent, and neither party to this Agreement shall in any way
hold itself out as having that power.
4. This Agreement is personal to both ERC and Evercel, and neither party
hereto can assign any rights or duties arising hereunder to a third
party, whether by contract or by operation of law, without the prior
written consent of the other party to this Agreement; any attempt to
do so shall be void.
5. Immediately following the execution of this Agreement by both parties,
ERC shall endeavor to obtain, pursuant to a contract (the "Transfer
Contract") to be entered into by and among ERC, Evercel, and the Joint
Venture, the written consent of Xiamen to the assignment of
obligations and benefits under the Joint Venture Contract and the
License Contract and the written consent of the Joint Venture in the
form of a unanimous resolution adopted by the Board approving the
Transfer and making application to the PRC Approval Authority, the
taking of all actions necessary to effectuate such Transfer and the
Amendment of the Joint Venture Contract, Articles of Association and
the License Contract of the Joint Venture pursuant to the Transfer
Contract.
6. Immediately upon receiving the consents and following the adoption of
the unanimous resolution by the Board of Directors of the Joint
Venture as set forth in Section 5 above, the parties to this Agreement
will endeavor to assist the Joint Venture in applying to the PRC
Approval Authority and any other appropriate governmental agency of
the PRC for approval of the Transfer Contract and of the corresponding
amendments to the Joint Venture Contract, Articles of Association and
the License Agreement. In connection
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therewith, the parties to this Agreement will endeavor to provide any
documents or any assistance reasonably requested by the Joint Venture.
7. Each of the parties will use its reasonable best efforts to take all
action and to do all things necessary, proper, or advisable in order
to carry out the intent of this Agreement as set forth in the
preambles to this Agreement.
8. Unless earlier terminated by mutual agreement of the parties to this
Agreement, the term of this Agreement shall commence on the date first
written above and continue until the consents and the approval set
forth in Section 5 above are obtained, at which time this Agreement
shall terminate and be of no further force or effect. During the term
of this Agreement, ERC agrees, in connection with any of its
activities related to the Joint Venture, to act in the best interests
of Evercel at all times. In the event that such consents and approval
are not obtained, the parties hereto agree that the contractual
obligations created hereby shall continue to exist coterminous with
the Joint Venture Contract.
9. ERC agrees that, except as specifically contemplated herein, it will
not enter into any amendment or modification to the Joint Venture
Contract, Articles of Association or the License Contract without the
express written consent of Evercel.
10. For purposes of the disclosure of information under the
Confidentiality Agreement dated May 29, 1998 between ERC and Xiamen
attached to the License Contract, the parties hereto agree that
Evercel is a legally authorized agent of ERC.
11. This Agreement shall be governed by the laws of the State of
Connecticut, without regard to choice of law considerations.
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IN WITNESS WHEREOF, and intending to be legally bound, the duly authorized
representatives of each party hereto have signed this Agreement as of the date
first written above.
ENERGY RESEARCH CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
----------------------
Name/Title: Xxxxx X. Xxxxxxx
President and Chief Executive
Officer
EVERCEL, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------
Name/Title: Xxxxx Xxxxxxx
Executive Vice President and
Chief Operating Officer
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