Exhibit 10.8
Confidential treatment has been requested for portions of this
document. Deleted portions are identified with a dotted line under
the deleted information.
TECHNOLOGY TRANSFER
AND
LICENSE AGREEMENT
FOR
Ni-Zn BATTERY TECHNOLOGY
BETWEEN
XIAMEN DAILY-USED CHEMICALS CO., LTD.
NAN YA PLASTICS CORPORATION
ENERGY RESEARCH CORPORATION
FEBRUARY 21, 1998
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
THIS AGREEMENT is made and entered into this 21st day of February, 1998, by
and between the JOINT VENTURE, a China corporation having a place of business
in Xiamen, Fujian, China (hereinafter "JV") owned jointly by the XiAMEN
DAILY-USED CHEMICALS Co., LTD. (XDC of China located in 000 Xxxxx Xxxx, Xxxxxx,
Xxxxxx, Xxxxx and NAN YA PLASTICS Corporation of Taiwan (NAN YA) located in 000,
Xxxx Xxx X. Xxxx, Xxxxxx, Xxxxxx and ENERGY RESEARCH CORPORATION, a New York
corporation having a place of business at 0 Xxxxx Xxxxxxx Xxxx, Xxxxxxx, XX
00000 (hereinafter "ERC").
INTRODUCTION
ERC has developed certain technology and technical know-how for a sealed
Nizn battery including technology for a fibrillated electrode, an improved zinc
electrode, and a light-weight nickel electrode that uses graphite. ERC has
represented to JV that such technology has been used to develop a NiZn battery
and has demonstrated and described this technology (subject to non-disclosure
agreements) to representatives of XDC and NAN YA and XDC and NAN YA have
determined to their satisfaction that they wish the JV to acquire the technology
substantially as described.
JV wishes to commercialize a NiZn battery using the know-how of ERC and for
that purpose wishes to enter into the license for such know-how set forth below.
ERC, in consideration of the payments and obligations described below, wishes to
enter into the license of its know-how to JV as set forth below for the purpose
of allowing JV to make, have made and sell or otherwise commercialize a NiZn
battery for certain uses and in certain territories as described below.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions set forth below and intending to be legally bound, the parties agree
as follows:
I. DEFINITION AND SCOPE OF THE AGREEMENT
As used in this Agreement, the following terms shall have the following
respective meanings which are intended to define the scope of the Agreement:
1.1 "JV" shall mean an entity which XDC and NAN YA have formed as a joint
venture, company or partnership.
1.2 "Effective Date" is the date set forth above, i.e., February 21, 1998.
1.3 "ERC Facility" shall mean the ERC facility located at 0 Xxxxx Xxxxxxx
Xxxx, Xxxxxxx, XX 00000.
1.4 "ERC Know-How" shall mean all of the technical information, know-how,
inventions (whether patented or not), trade secrets, and other technical,
engineering and design information and data, including without limitation, all
processes and techniques owned by ERC or in which ERC acquires a licensable
interest, during the term of this Agreement, useful for the commercial
manufacture of NiZn batteries within the Field, such as designs, drawings,
blueprints, flow sheets, reports, manuals, specifications, process descriptions,
operating procedures, materials and parts fists and other written or printed
materials that are owned by ERC and which may be useful or helpful to JV in the
development and production of NiZn batteries within the Field.
1.5 "Field Of the Agreement" or "Field" means the manufacture, use and
sale, lease or other transfer of NiZn batteries for electric or electric or
hybrid electric vehicles (i.e. vehicles powered solely by electricity but which
may rely on other means of providing electric power in addition to storage
batteries), including on the road passenger cars, trucks and buses, provided
however, that for the purpose of this Agreement, electric vehicles do not
include any two and three wheel vehicles, motor bikes and trikes, rickshaw,
industrial traction equipment, lawn care equipment, and off-road recreational
vehicles, regardless of how they may be powered. Examples of recreational
vehicles are golf carts, boats and all terrain vehicles (ATVs).
1.6 "Licensed Technology" shall mean ERC Know-How.
1.7 "Licensed Territories" means the Exclusive License Territory and
Non-Exclusive Territory. The "Exclusive Licensed Territory" shall mean Mainland
China, Taiwan, Hong-Kong, and Macao and the 'Non-Exclusive Licensed Territory".,
shall mean the other countries of Southeast Asia listed in Appendix A.
1.8 "Net Sales" means the sum of all sales at the Net Selling Price of the
NiZn batteries in the Field.
1.9 "Net Selling Price" means the gross invoice Price of NiZn batteries
manufactured by the JV hereunder and then sold by the JV in the Field in arms
length commercial transactions in the ordinary course of business, without any
deduction other than returns, rebates and refunds actually given and the
following items of expense to the extent to which they are actually given or
paid and expressly included in the gross invoice price-
1. Sales discounts;
2. Transportation insurance premiums
3. Transport expenses on sales.
For the purpose of computing the Net Selling Price for sales or other
transfers of the NiZn batteries to affiliates of the JV that do not represent
arms length commercial transactions in the ordinary course of business, the Net
Selling Price shall be unanimously determined by XDC, NAN YA and ERC.
2
1.10 "Party" means the JV or ERC, or when used in the plural, JV and ERC.
II LICENSE GRANT
2.1 License. ERC hereby grants to the JV, during the term stated in
Section 6. 1, an exclusive (even against ERC) license to use the Licensed
Technology solely within the Licensed Territory and within the Field, subject to
and in accordance with the terms and conditions of this Agreement; provided,
however, the foregoing license shall convert to a non exclusive license upon
JV's or ERC's election under Section 5.2. The JV, XDC and NAN YA agree that ERC
owns and retains all rights in the Licensed Technology, that the JV receives
only those rights expressly granted to it in this Agreement, and that the JV
shall make no use of any trade names or marks of ERC without ERC's express
written consent.
2.2 New Developments. During the period that the license granted the JV
under Section 2.1 remains exclusive, ERC or its assigns shall promptly from time
to time, but at least once a year, disclose to the JV any ERC or its assigns
Know-How or patents arising or issued after the Effective Date hereof and not
previously disclosed to the JV and if reasonably requested by the JV, provide
the JV from time to time with a list of all patent applications filed by ERC
relating in any way to the Field. Similarly, during the exclusive period, the JV
shall promptly disclose to ERC or its assigns any inventions, discoveries,
know-how, technical information, improvements or other developments, whether or
not patentable, relating to the Licensed Technology that it develops or in which
it acquires a licensable interest during the term of this Agreement; and ERC or
its assigns shall have a worldwide, perpetual royalty-free license to use these
new developments, for all purposes outside the Licensed Territory.
2.3 Compliance with Law. The JV shall comply with all applicable laws and
regulations when using the Licensed Technology, including any applicable U.S.
export control laws, and shall take all steps required to record and
authenticate this Agreement, or otherwise render it valid and enforceable,
within the Licensed Territory.
2.4 Other Agreements. During the period that the License granted under
Section 2.1 remains exclusive, ERC will not work with any other entity in the
Field in the Exclusive Licensed Territory.
III. PAYMENTS
3.1 Total Payments. Total payments for the Licensed Technology (excluding
royalties) is $5 million U.S. dollars. This amount is to be paid in U.S.
currency in three installments as defined below. These payments, and all royalty
payments due under Part V, shall be net of any applicable taxes, withholdings,
duties or the like owed by the JV or ERC (excluding only income or corporate
excise taxes imposed by the U.S. and its states and instrumentalities); thus all
payments made to ERC shall be grossed up as needed to ensure that the net
amounts actually received by ERC will not be less than the amount it would have
received if such taxes and the like were not required to be paid.
3
3.2 First Payment. The first payment, in the amount of $1.5 million,
is to be made within 30 days of signing of the license agreement.
3.3 Second Payment. The second payment of $2.0 million is to be made
within 30 days upon satisfactory completion of the Test Program as defined in
Appendix B. In the event the Test Program is not completed satisfactorily, ERC
will return $1.3 million to the JV within 30 days after all batteries sent to
the JV are returned to ERC in their original sealed state and all test data
obtained by the JV are also returned.
3.4 Final Payment. The final payment of $1.5 million is to be made
after duplication of the battery and the battery test results by JV based on the
Licensed Technology at its facilities. At ERC's option, all or part of the final
payment may be used to buy an equity interest in the JV. In the event the JV is
capitalized at less than { *** } (based on cash contributions), ERC
shall have the right to buy an equity interest greater than { *** }% or
to purchase a { *** }% interest and receive the balance in cash. For example,
if the cash capitalization of the JV is ${ *** }, ERC, at its option
could purchase a { *** }% equity position, or alternatively, buy a {
*** }% equity position and receive $ { *** } in cash. If the ERC
buys its equity right after Second Payment is made, ERC is obligated to pay
interest to JV at a fixed interest rate on the amount of the equity it buys
until Final Payment. The interest rate will. be unanimously determined by JV and
ERC through good faith negotiation and based on prevailing bank rates at the
time.
3.5 The Licensed Technology will be transferred to the JV for use in
the Field pursuant to this license agreement, after completion of activities
described in Section 3.3 and Appendix B.(See Article IV - Technology Transfer)
IV. TECHNOLOGY TRANSFER
4.1 Upon the satisfactory conclusion of the Test Program under Section
3.3 and Appendix B, ERC shall transfer all know-how as described in Section 1.4
to the JV for its use in the Field pursuant to this license agreement. Such
transfer shall take place at ERC Facilities in Danbury, CT to persons designated
by the JV. ERC will provide up to { *** } man hours to the transfer
process at no cost to the JV. Persons designated by the JV will have access to
all personnel and equipment at ERC's Danbury facility to facilitate the
transfer.
4.2 In the event final payment is not made under Section 3.4 by the JV,
the JV and XDC and NAN YA will return all information received under Section 4.1
or from prior disclosures. The JV, XDC and NAN YA agree not to use the Licensed
Technology for any purpose and ERC shall have the right to determine by any
means that the Licensed Technology is not being used.
V. ROYALTIES
5.1 Royalty Payments. As additional consideration for the license
granted herein, the JV shall pay to ERC a { *** } royalty on the Net
Sales of NiZn batteries it
4
manufactures or has manufactured and sells in the Field for a period of {
*** } beginning from the first commercial sales. The royalty payments will
commence with the product sales and will be payable quarterly 30 days after the
close of each calendar quarter in which products subject to royalty are sold
Royalties shall be payable in U.S. Dollars; where it is necessary to convert
from Renminbi to Dollars for this purpose, the exchange rate will be determined
by the rate published by the State Administration of Exchange Control, )Xiamen
Branch, P.R. China for the last day of the quarter for which payment is due.
5.2 Change to Non-Exclusive License. Either the JV or ERC may cause the
license in the Exclusived Territory to become non-exclusive. In no event can
this exclusive license become non-exclusive before { *** }. If either
party notifies the other after that date to change the license to become
non-exclusive, the royalty rate shall become { *** }% in all Licensed
Territories.
5.3 Royalty Records and report. The JV shall keep accurate, detailed
records and books of account containing all information reasonably required to
compute and verify royalties due under this Agreement. These records shall
include information concerning sales by both the JV and its affiliates and shall
be maintained for at least five (5) years after the year to which they relate.
When rendering payment of the foregoing royalties, the JV shall provide ERC with
a written report showing the calculation of the royalty, the number of products
to which the royalty is applicable and their Net Selling Price. At its expense,
ERC may, by its designated independent public accountants, audit once annually
all JV royalty records and books to confirm the accuracy of the JV's
calculations of the Net Selling Price and royalties due; provided however, that
in the event such an audit discloses that the actual royalty amount due under
this Agreement for the applicable period is more than five percent (5%) greater
than the royalty amount reported by the JV for such period, the JV shall pay the
reasonable costs of such audit incurred by ERC.
VI. DEFAULT, TERMINATION AND LIABILITY
6.1 Term and Termination for Default. The licenses granted to the JV
shall continue until terminated as provided in this Agreement. In the event that
a Party (the "defaulting Party") shall (a) fail to make any payment hereunder
when and as due, or (b) otherwise materially default in its obligations
hereunder and fail to remedy such default within thirty (30)days after such
default shall have been called to its attention by written notice from the other
Party, then, and in any such event, the other Party, at its option, may
terminate, upon thirty(30) days written notice, this Agreement and all its
obligations and any licenses to the Parties hereunder except as provided in
Section 6.5.
6.2 Non-Waive . No failure or delay on the part of either Party to
exercise any of its rights under this Article for any one or more defaults shall
be construed to prejudice its rights in connection with such or any subsequent
default.
6.3 Return of Information Upon Termination Upon termination of this
Agreement for any reason, the JV will deliver to ERC all technical information
it has received
5
from ERC or derived from the Licensed Technology.
6.4 Continuing Obligation . If the JV terminates the Agreement and
continues to manufacture or sell any NiZn batteries after such termination, the
JV shall continue to pay ERC royalty under the terms in this agreement but at
the non-exclusive rate of { *** }% unless the technology used for the
manufacture of the NiZn battery is unanimously determined not to belong to ERC's
Licensed Technology by the JV and ERC. Notwithstanding the earlier termination
of this Agreement, the Parties' obligations under Sections 3.3, 4.2, 5.3, 6.3
and Article VII and for payment of royalties on the Net Sales of NiZn batteries,
in the Field and subject to the license agreement under Sections 5. 1 or 5.2,
sold before such termination shall survive such termination.
6.5 Liability and Indemnity. ERC makes no warranties concerning any
products developed by the JV. Rather, the JV shall be responsible for all uses
it makes of the Licensed Technology, for complying with all laws and
regulations, and for any warranties or liabilities to purchasers of its NiZn
batteries; and the JV shall indemnify and hold harmless ERC and its affiliates
from any claims, suits, losses or liabilities of any kind or nature whatsoever
arising from or in connection with the JV's use of the Licensed Technology or
sale of NiZn batteries. Under no circumstances will ERC be liable to the JV for
any indirect, special or consequential damages, irrespective of the cause.
VII. CONFIDENTIAL INFORMATION
Subject to the exercise by the JV of its rights in the Licensed Technology
under Article 11, all written information marked "proprietary" or "confidential"
(or if oral, subsequently reduced to a writing so marked and delivered to the
receiving party within thirty (30) days of its oral disclosure)which any Party
discloses to the other in connection with Agreement whether contained in
blueprints, drawings, reports, letters or memoranda, process descriptions,
operating procedures or other recorded form, shall be treated as confidential
unless (a) such information shall have been in the possession of the receiving
Party prior to its receipt from the disclosing Party, (b) such information is or
becomes part of the public knowledge or literature through no fault of the
receiving Party, or (c) such information shall otherwise become available to the
receiving Party from a source other than the disclosing Party, and said source
not being in violation of any obligation of secrecy with respect to such
information. Information which is so considered to be confidential shall be held
by the receiving Party for its sole benefit and used only in accordance with
this Agreement. The receiving Party shall use all reasonable efforts to prevent
the use of all or any part of such confidential information belonging to the
disclosing Party in any other connection, or the transmission thereof to third
Parties, unless and until it has first obtained the written consent of the
disclosing Party specifically authorizing such use or transmission. The Parties
understand that information may be provided which is subject to a
confidentiality agreement with a third Party. The Parties agree that such
information shall be held in confidence in accordance with the terms of the
third Party confidentiality agreement. No Party shall be obligated to divulge
third Party confidential information to the other Party.
6
VIII. NOTICES
All notices required to be given hereunder shall be in writing and shall be
given by first class mail, postage prepaid, addressed to the Parties as follows:
To the JV: Xiamen Daily-Used Chemicals Co., LTD.
000 Xxxxx Xxxx,
Xxxxxx, Xxxxxx, P. R. China
Attention: Sheng Qi, General Manager
Tel: 0000-0000000
Fax: 0000-0000000
Nan Ya Plastics Xxxxxxxxxxx
000, Xxxx Xxx X. Xxxx
Xxxxxx, Xxxxxx
Attention: Xxxxx, Xxxx Lung, Vice President
Tel: 000-0-000-0000
Fax: 000-0-000-0000
To ERC: Energy Research Corporation
0 Xxxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, President
Tel: (000)-000-0000
Fax: (000)-000-0000
cc: Xxxx X. Xxxxxx, Manager, Contracts
& Assistant Secretary
or such other address as a Party shall by notice request.
IX. ENTIRE AGREEMENT
The terms and provisions herein contained constitute the entire Agreement
between the Parties and shall supersede all previous communications,
representations, agreements or the Parties hereto with respect to the subject
matter hereof, and no agreement or understanding varying or extending the same
will be binding upon either Party hereto unless in writing; and signed by duly
authorized officers or representatives of the respective Parties. This Agreement
is written in both the English and Chinese languages, both versions will be
equally valid.
7
X. MISCELLANEOUS
10.1 Plant Location. The Ni-Zn battery pilot plant and commercial
manufacturing facility will be initially located in Xiamen, China. If necessary,
the Ni-Zn battery can also be produced in Taiwan.
10.2 Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of new York as they apply to contracts entered into in
NewYork by parties residing there, notwithstanding any choice of law principles
to the contrary. The IV and JV Principals agree that the state and federal
courts of New York shall have jurisdiction over them with respect to all matters
arising under or in respect to this Agreement.
10.3 Legality. The parties each declare that, to the best of their
respective knowledge, as of the date first written above, there are no laws or
regulations in effect that materially limit or restrict their ability to My
Fully their obligations under this Agreement.
10.4 This Agreement may not be modified or amended except by a writing
duly signed by the authorized representatives of both Parties-
10.5 Effect of Unenforceable Provisions. In the event any one or more of
the provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, said provision(s) shall be deemed severed and
deleted herefrom and the validity, legality and/or enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
10.6 Government Information. Nothing in this Agreement shall authorize
the disclosure of, or access to, classified or restricted information, material
or know-how of the Government of the United States of America to persons not
authorized or licensed to disclose or receive such classified or restricted
information.
10.7 Relationship. The relationship of the Parties herein shall be that
of independent contractors and nothing herein contained shall be deemed to
create any relationship of agency.
10.8 Assignment. Neither Party may assign this Agreement without the
written consent of the other Party, except to a wholly-owned or majority-owned
subsidiary of the assigning Party.
8
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in a manner binding upon them by their duly authorized officers as of the date
first above written. This Agreement expires upon completion of { *** }
of royalty payments after the first commercial sales.
The undersigned JV, Xiamen Daily-Used Chemicals Co., LTD. and Nan Ya
Plastics Corporation accept their joint and several liability for all the
payment and performance obligations of the JV under this Agreement.
THE JV
XIAMEN DAILY-USED CHEMICALS CO., LTD.
By: /s/ Xxx Xx
-------------------------------------
Title: President
----------------------------------
NAN YA PLASTICS CORPORATION
By: /s/ Chin Lung Xxxxx
-------------------------------------
Title: Vice President
----------------------------------
ERC
ENERGY RESEARCH CORPORATION
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Title: President
----------------------------------
9
APPENDIX A
DEFINITION OF NON-EXCLUSIVE LICENSED
COUNTRIES IN SOUTHEAST ASIA
The purpose of this Appendix A is to define non-exclusive licensed countries in
Southeast Asia agreed by parties through good faith negotiation. The
non-exclusive licensed countries in the Southeast Asia are as follows:
(1) Brunei
(2) Myanmar (formerly known as Burma)
(3) Cambodia
(4) Indonesia
(5) Laos
(6) Malaysia
(7) Philippine
(8) Singapore
(9) Thailand
(10) Vietnam
10
APPENDIX B
TEST PROGRAM FOR NI-Zn BATTERY TECHNOLOGY
TRANSFER AND LICENSE AGREEMENT
The purpose of this Appendix B is to define agreement for Ni-Zn battery testing
conditions
reached by parties through good faith negotiation.
The parties agree as follows:
1. The testing will be conducted in parallel by Xiamen and Nan Ya, and testing
results from
either party have equivalent weight for determining battery performance.
2. One { *** } battery module and ten { *** } single cells
will be provided to Xiamen and Nan Ya each for testing, respectively.
3. Nan Ya will use it's own facility to conduct the testing in Taiwan, and
Xiamen will use ERC's testing facility to conduct the testing in US.
4. Nan Ya and Xiamen will use the same procedures agreed by a parties to conduct
the testing.
5. Whether or not the testing results meet the criteria will be unanimously
determined by Xiamen and NanYa.
6. If the testing from either parties does not meet the criteria, the testing
will be allowed to repeat, but in no event later than { *** } of the
Effective Date of the License
Agreement.
7. The testing parameters, testing conditions, and testing criteria are given in
Table I
11
TABLE 1.
TESTING PARAMETERS, CONDITIONS, AND TESTING
CRITERIA FOR Ni-Zn BATTERY
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
BATTERY FOR TESTING
PARAMETERS TESTING CONDITIONS TESTING CRITERIA COMMENT
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Specific Energy, Wh/kG [ *** ] discharge rate [ *** ] Module [ *** ]
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Energy Density (Wh/L) [ *** ] discharge rate [ *** ] Module [ *** ]
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Specific Power, W/kg [ *** ] [ *** ] Module [ *** ]
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Specific Power (regen), W/kg [ *** ] [ *** ] Module [ *** ]
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Power Density, W/L [ *** ] [ *** ] Module [ *** ]
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Recharge Time, h [ *** ] [ *** ] Module [ *** ]
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Fast Recharge Time (40% [ *** ] [ *** ] Module [ *** ]
to 80% SOC), min
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Life, Cycles (80% DOD) [ *** ] discharge rate [ *** ] Module [ *** ] (1)
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Power and Capacity [ *** ] [ *** ] Module [ *** ]
Degradation after 500
Cycles, % Rated
Specification
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Continuous Discharge in 1 [ *** ] [ *** ] Module [ *** ]
h (no failure), % rated
energy capacity
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Efficiency, % [ *** ] discharge rate [ *** ] Module [ *** ]
[ *** ] charge
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Self-Discharge, Capacity [ *** ] [ *** ] Single Cell [ *** ]
Degradation % Rated
Specification
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Maximum Operation [ *** ] [ *** ] Single Cell Capacity Degradation (2)
Temperature (Capacity [ *** ] Rated
Degradation, % Rated Specification
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
Minimum Operation [ *** ] [ *** ] Single Cell [ *** ] Rated (2),(3)
Temperature (Capacity Specification
Degradation, % Rated Capacity Degradation
Specification) [ *** ] Rated
Specification
------------------------------- ------------------------------- ------------------- ----------------------- ------------------
12
COMMENT:
(1) The discharge of each cycle will be cut-off at { *** } ; the
charge level and the charge process of each cycle will be defined in the testing
plan agreed by the all parties.
(2) Minimum and maximum operating temperature tests will be conducted on {
*** } single cells. The testing will determine the capacity
degradation (% rated specification) of the cell at the specified minimum and
maximum operating temperatures. Only discharge capacity will be measured at
the specified minimum and maximum operating temperatures. The discharge
capacity will be measured after the battery reaches specified temperatures.
The degradation of the discharge capacity at temperatures { *** }
is required to be between { *** } and { *** } rated
specification. The degradation of discharge capacity at { *** } is
not allowed to be greater than { *** } rated specification.
(3) { *** }
13
