EXHIBIT NO. 10.50
Confidential Treatment has been
Requested for portions of this
document, Deleted portions are
marked with an asterisk.
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 722 Xiahe
Road, Xiamen, Fujian, China and NAN YA PLASTICS Corporation of Taiwan
(NAN YA) located in 201, Tung Hwa N. Road, Taipei,Taiwan and ENERGY
RESEARCH CORPORATION, a New York corporation having a place of business
at 3 Great Pasture Road, Danbury, CT 06813 (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:
1. 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 3 Great Pasture Road,
Danbury, CT 06813.
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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.
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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.
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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 manufactures or has
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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 from ERC or derived from the Licensed
Technology.
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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.
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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.
722 Xiahe Road,
Xiamen, Fujian, P. R. China
Attention: Sheng Qi, General Manager
Tel: 0592-2074764
Fax: 0592-2022193
Nan Ya Plastics Corporation
201, Tung Hwa N. Road
Tiapei, Taiwan
Attention: Chang, Chin Lung, Vice President
Tel: 886-2-717-8268
Fax: 886-2-713-6411
To ERC: Energy Research Corporation
3 Great Pasture Road
Danbury, CT 06813
Attention: Jerry D. Leitman, President
Tel: (203)-792-1460
Fax: (203)-798-2945
cc: Ross M. Levine, 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.
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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/ Zhi Yi
Title: President
NAN YA PLASTICS CORPORATION
By: /s/ Chin Lung Chang
Title: Vice President
ERC
ENERGY RESEARCH CORPORATION
By: /s/ Jerry Leitman
Title: President
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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
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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 { *** }
W/kg
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
Degradation after 500
Cycles, % Rated
Specification { *** } { *** } Module { *** }
Continuous Discharge in 1
h (no failure), % rated
energy capacity { *** } { *** } Module { *** }
Efficiency, % { *** } discharge rate { *** } Module { *** }
{ *** } charge
Self-Discharge, Capacity
Degradation % Rated
Specification { *** } { *** } Single Cell { *** }
Maximum Operation { *** } { *** } Single Cell Capacity Degradation (2)
Temperature (Capacity { *** } Rated
Degradation, % Rated Specification
Specification
Minimum Operation { *** } { *** } Single Cell { *** } Rated
Temperature (Capacity Specification
Degradation, % Rated >Capacity
Specification) Degradation
{ *** } Rated
Specification (2),(3)
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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) { *** }
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