COLLABORATION
AGREEMENT
THIS AGREEMENT made the 11th day of October, 2006
BETWEEN:
CLEAN POWER TECHNOLOGIES
INC. , a company duly
incorporated pursuant to the laws of the State of Nevada and having
an office at 436 - 35 Avenue NW, Calgary, Alberta, Canada T2K
0C1
(“ CPTI ”)
AND:
MITSUI BABCOCK LIMITED
, a company duly registered pursuant to
the laws of England and Wales and having its registered head office
at 11, The Boulevard, Crawley, West Sussex RH10 1UX, United
Kingdom
(“ Mitsui Babcock
”)
WHEREAS:
A.
CPTI is a public company quoted on the
NASD OTC Bulletin Board in the United States of America and is
trading under the symbol “CPWE”;
B.
CPTI is involved in the research and
development of gas (petrol) and steam and diesel/steam hybrid fuel
technologies (the “ Hybrid Technologies
”);
C.
Mitsui Babcock is a multi-specialist
energy services company operating in the thermal power, nuclear,
petrochemical, oil and gas and pharmaceutical industries and is a
leading international steam generation OEM and supplier of clean
and efficient coal powered technology; and
D.
CPTI seeks the participation and
collaboration of Mitsui Babcock and Mitsui Babcock wishes to
participate and collaborate with CPTI to develop steam accumulator
technology (the “ Accumulator Technology ”) for
use in CPTI’s Hybrid Technologies;
NOW THEREFORE , in consideration of the mutual covenants and
agreements hereinafter set forth and other good and valuable
consideration, the parties hereby agree as follows:
1.
DEFINITIONS
(a)
“ Accumulator Technology
” has the meaning set out in Recital D of this
Agreement;
(b)
“ Affiliate ” of any
of the parties hereto means any corporation or entity which is
directly or indirectly controlled by the principal of that party or
the family member of the principal of that party, or any
corporation or entity which is controlled by such family member or
combination thereof, whether such control be direct or
indirect;
(c)
“ Agreement ” means
this agreement and all schedules hereto;
(d)
“ Business Day ” means
a day other than a Saturday, Sunday or a civic or statutory holiday
in Calgary, Alberta, Canada;
(e)
“ Collaboration Program
” means any and all research programs and associated
activities contemplated by CPTI and Mitsui Babcock during the term
of this Agreement, which program and activities shall, from time to
time, be attached to this Agreement as Schedule
“B”;
(f)
“ control ” includes:
(i) the right to exercise a majority of the votes which may be cast
at a general meeting of a corporation; and (ii) the right to elect
or appoint, directly or indirectly, a majority of the directors of
a corporation or other persons who have the right to manage or
supervise the management of the affairs and business of the
corporation;
(g)
“ CPTI Shares ” means
shares of common stock in the capital of CPTI;
(h)
“ Development Costs ”
means the costs incurred by Mitsui Babcock in relation to the
Collaboration Program for the development of the Accumulator
Technology;
(i)
“ Hybrid Technologies
” has the meaning set out in Recital B of this
Agreement;
(j)
“ ICC Rules ” has the
meaning set out in Section 9.1(d) of this Agreement;
(k)
“ including ” means
including without limitation or prejudice to the generality of any
preceding description, definition, term or phrase;
(l)
“ Intellectual Property
” means all technology rights and patents rights, which are
patented or patentable and developed and/or designed since November
2005 as set out in the attached Schedule “A” or
subsequent to the date hereof under this Agreement, including any
improvements, refinements, updates, discoveries or inventions
related to the Accumulator Technology developed by Mitsui Babcock
in the course of or within the Collaboration Program;
and
(m)
“ Subscription Agreement
” means the subscription agreement substantially in the form
attached as Schedule “C” for the subscription of CPTI
Shares.
2.
SCHEDULES
2.1
The following are the Schedules attached
to and incorporated in this Agreement by reference and deemed to be
part hereof:
(a)
Schedule A – Intellectual
Property;
(b)
Schedule B – Collaboration Program;
and
(c)
Schedule C – Subscription
Agreement.
3.
COLLABORATION
3.1
CPTI and Mitsui Babcock agree that the
aim of the Collaboration Program will be the development of an
Accumulator Technology and the process and technologies related
thereto for use in the Hybrid Technologies. The program and
activities comprising the Collaboration Program shall be attached,
and as amended from time to time, to this Agreement as Schedule
“B”;
3.2
Mitsui Babcock will provide all that is
necessary or as reasonably requested by CPTI, including scientists,
engineers, experts and other personnel, facilities, equipment and
materials, under the Collaboration Program to develop the
Accumulator Technology with CPTI for use in CPTI’s Hybrid
Technologies.
3.3
Mitsui Babcock will fund up to US$400,000
(or, for information purposes, approximately £200,000)
towards the Development Costs of the Accumulator Technology under
the Collaboration Program and as consideration CPTI will issue to
Mitsui Babcock 4,000,000 CPTI Shares. CPTI will issue to
Mitsui Babcock the 4,000,000 CPTI Shares within five Business Days
after Mitsui Babcock delivers to CPTI a duly executed Subscription
Agreement substantially in the form attached as Schedule
“C”.
3.4
Within eighteen months after the first
gas (petrol)/steam vehicle is publicly and formally unveiled by
either Mitsui or CPTI, Mitsui may, at its option, seek cash
reimbursement from CPTI of all or part of the Development Costs
that Mitsui has incurred up to US$400,000 (or, for information
purposes, approximately £200,000). Upon the
reimbursement of Mitsui by CPTI of the Development Costs amount
sought by Mitsui Babcock, Mitsui Babcock will return 3,000,000 CPTI
Shares to CPTI and CPTI will cancel such CPTI Shares.
3.5
If Mitsui Babcock provides funds toward
the Development Costs of the Accumulator Technology under the
Collaboration Program amounting to US$400,000 or more, Mitsui
Babcock will have the option to request from CPTI either: (i) cash
reimbursement from CPTI of the excess above US$400,000 or (ii)
subject to applicable securities laws, the number of CPTI Shares
equal in value to the excess above US$400,000 at a price to be
negotiated.
3.6
All technology and Intellectual Property
that are developed by Mitsui Babcock in connection with the
Collaboration Program or the Accumulator Technology and are
patentable and/or patented, or otherwise is or may be protected,
will at all times belong and be owed solely to CPTI. Mitsui
Babcock will not use such technology or intellectual property in
any way without the prior written approval of CPTI. Any
technology or intellectual property which is not patentable, or
otherwise protected, may be used by Mitsui Babcock without the
prior written approval of CPTI.
3.7
If CPTI is unable to reimburse Mitsui
Babcock in accordance with Sections 3.4 or 3.5 hereof, CPTI will
transfer an equal share of the intellectual property developed
under this Agreement, the Collaboration Program and the Accumulator
Technology, whether patented and/or patentable, to Mitsui Babcock,
so that such intellectual property will be jointly owned by CPTI
and Mitsui Babcock in equal parts.
3.8
Subject to applicable securities laws,
CPTI will issue up to 100,000 CPTI Shares, at the direction of
Mitsui Babcock, to key personnel or employees of Mitsui Babcock who
have participated in development of the Accumulator Technology.
Mitsui Babcock will cause such key personnel or employees to
execute and deliver to CPTI a Subscription Agreement substantially
in the form attached as Schedule “C” prior to the
issuance of the CPTI Shares to such persons.
3.9
CPTI will cause the appointment of
Richard Dennis (or such other person nominated from time to time by
Mitsui Babcock) to the Board of Directors of CPTI and the
appointment of Alastair Fraser (or such other person nominated from
time to time by Mitsui Babcock) to the Advisory Board of CPTI, and
cause the maintenance of such appointments, to the best of its
ability, for as long as Mitsui Babcock owns 2,000,000 shares in
CPTI. Both Richard Dennis and Alastair Fraser are
representatives of Mitsui Babcock.
4.
COOPERATION
4.1
Mitsui Babcock shall keep the Board of
Directors of CPTI and CPTI’s wholly-owned subsidiary, Clean
Power Technologies Limited, fully informed of the status of the
Collaboration Program. Mitsui Babcock shall cause its
scientists, engineers and experts to co-operate in the performance
of the Collaboration Program. Mitsui Babcock shall exchange
information and materials as necessary with CPTI to carry out the
Collaboration Program.
5.
EXPENSES
5.1
Each of CPTI and Mitsui Babcock will bear
their respective costs and expenses (including all of their legal
fees and expenses) in connection with this Agreement, the actions
contemplated by this Agreement and their participation in the
Collaboration Program.
6.
DISCLOSURE OF
INVENTION
6.1
Mitsui Babcock shall promptly inform CPTI
of all inventions that are conceived, made or developed in the
course of carrying out the Collaboration Program by its employees,
consultants or other personnel or those of its
Affiliates.
7.
FILING OF
PATENTS
7.1
CPTI will determine at its sole
discretion the patents to be filed on the Accumulator Technology or
other technology or intellectual property developed or acquired by
Mitsui Babcock under the Collaboration Program or this Agreement.
CPTI will determine at its sole discretion the jurisdiction
for such patent filing as it may deem appropriate and beneficial to
its overall corporate, business or scientific strategies and it
will be solely responsible for the actions (including the defense
of interferences and similar proceedings) of patent protection for
all intellectual property covered under this Agreement.
8.
TERM AND
TERMINATION
8.1
This Agreement shall continue in full
force and effect until terminated at the end of 36 calendar months
from the date hereto. Prior to the termination of this
Agreement, this Agreement may be extended by mutual agreement for a
further period as determined by the parties hereto upon mutually
agreed upon terms and conditions.
8.2
The parties may terminate this Agreement
as provided below:
(a)
CPTI and Mitsui Babcock may terminate
this Agreement by mutual written consent at any time;
(b)
CPTI may terminate this Agreement by
giving written notice to Mitsui Babcock at any time in the event
Mitsui Babcock has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect,
CPTI has notified Mitsui Babcock of the breach, and the breach has
continued without cure for a period of 30 days after the notice of
breach; and
(c)
Mitsui Babcock may terminate this
Agreement by giving written notice to CPTI at any time in the event
CPTI has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect,
Mitsui Babcock has notified CPTI of the breach, and the breach has
continued without cure for a period of 30 days after the notice of
breach.
8.3
Upon termination of the Agreement or if
any party terminates this Agreement pursuant to Section 8.2 above,
all rights and obligations of the Parties hereunder shall terminate
without any liability of any party to any other party (except for
any liability of any party then in breach); provided,
however , that the confidentiality provisions contained in
Section 10 and the non-competition provisions contained in Section
11 below shall survive termination.
9.
DISPUTE
RESOLUTION
9.1
If a dispute arises out of or relates to
this Agreement or its breach (the “Matter”), the
parties agree to resolve the Matter as follows:
(a)
a party shall submit written notice of
the Matter to the other parties and request negotiation;
(b)
the parties shall attempt in good faith
to resolve any Matter arising out of or relating to this Agreement
promptly by negotiation between representatives which the parties
may appoint;
(c)
if the Matter has not been resolved
within 60 days of a party’s request for negotiation, either
party may request that the Matter be submitted to a sole mediator
selected by the parties for mandatory mediation of not more than
five days’ duration; and
(d)
if the Matter has not been resolved
within 60 days of a party’s request for mediation, either
party may request that the Matter be submitted for binding
arbitration, to a sole arbitrator in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of
Commerce as in effect on the date hereof (the “ ICC
Rules ”), except where such ICC Rules conflict with the
provisions and spirit of this Agreement in which event the
provisions of this Agreement shall prevail.
9.2
If the parties fail to agree on the
appointment of the sole arbitrator within 20 days after one party
has served the other party a written notice to concur in the
appointment of the single arbitrator nominated by the serving
party, the sole arbitrator shall be appointed in accordance with
the rules governing the arbitration process in England and Wales.
The arbitrator shall have at least 10 years of experience in
corporate commercial or intellectual property law. The arbitrator
shall render a final award within 20 days following the completion
of evidence and arguments on the Matter.
9.3
The parties shall not be entitled to rely
on or introduce as evidence before any arbitral proceedings whether
or not such proceedings relate to the Matter that is the subject of
the negotiations:
(a)
views expressed or suggestions made by
another party in respect of a possible settlement of the
Matter;
(b)
admissions or proposals made by another
party in the course of negotiations; or
(c)
the fact that the other party had
indicated his willingness to accept a proposal for settlement made
by another party.
9.4
The mediation or arbitration shall be
held in London or Brighton in England. The parties, their
representatives, the mediator and the arbitrator shall hold the
existence, content and results of any negotiation, mediation or
arbitration in confidence unless disclosure is required by law or
regulation, and in such case the parties shall take reasonable
precautions to only disclose what is required by law or
governmental regulation.
9.5
Any award of the arbitration shall be
final and binding on the parties and shall be enforceable in any
Court having jurisdiction over the party from whom enforcement is
requested.
10.
CONFIDENTIAL
INFORMATION
10.1
Each party will treat and hold as such
all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement,
and deliver promptly to CPTI or destroy, at the request and option
of CPTI, all tangible embodiments (and all copies) of the
Confidential Information which are in its possession. In the
event that Mitsui Babcock is requested or required pursuant to oral
or written question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process to disclose any Confidential
Information, Mitsui Babcock will notify CPTI promptly of the
request or requirement so that CPTI may seek an appropriate
protective order or waive compliance with the provisions of this
Section 10.1. If, in the absence of a protective order or the
receipt of a waiver hereunder, Mitsui Babcock is, on the advice of
counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, Mitsui Babcock may
disclose the Confidential Information to the tribunal; provided,
however, that Mitsui Babcock shall use its reasonable best
efforts to obtain, at the reasonable request of CPTI, an order or
other assurance that confidential treatment will be accorded to
such portion of the Confidential Information required to be
disclosed as CPTI shall designate.
10.2
No party shall issue any press release or
make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other party;
provided, however , that any party may make any public
disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing party will use its
reasonable best efforts to advise the other party prior to making
the disclosure).
11.
NON-COMPETITION
11.1
For a period of t
