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EXHIBIT 10.2
[Form
of]
JOINT DEVELOPMENT AGREEMENT
By and Between
MILLENNIUM CELL INC.
and
THE DOW CHEMICAL COMPANY
TABLE OF CONTENTS
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1.
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Definitions
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2
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2.
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Milestones.
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2
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2.1.
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Purpose
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2
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2.2.
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Milestones
1, 2, 3 and 4
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2
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2.3.
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Steering
Committee
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2
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2.4.
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No
Restrictions
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3
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3.
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Intellectual
Property.
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3
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3.1.
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MCEL-Contributed
IP
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3
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3.2.
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Cross
Licensing Agreement
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3
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4.
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Development
Obligations of MCEL.
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4
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4.1.
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MCEL
Obligations Generally
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4
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4.2.
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MCEL
Obligations Per Milestone
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4
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5.
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Development
Obligations of Dow.
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7
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5.1.
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Dow
Obligations Generally.
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7
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5.2.
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Dow
Obligations Per Milestone
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8
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6.
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Compensation
to Dow Upon Achievement of Milestones
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9
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6.1.
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Compensation
Per Milestone
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9
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6.2.
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Limitations
on Compensation.
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10
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7.
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Representations
and Warranties By MCEL
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11
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7.1.
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General
Representations and Warranties.
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11
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7.2.
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MCEL’s
Commitment
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12
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7.3.
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MCEL-Contributed
Intellectual Property
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12
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7.4.
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Disclaimer.
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13
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7.5.
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JDA
Intellectual Property
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13
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7.6.
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Disclaimer.
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15
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8.
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Representations
and Warranties By Dow
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15
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8.1.
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General
Representations and Warranties.
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15
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8.2.
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Disclaimer
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16
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9.
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Other
Agreements Relating to the Joint Development
Activities.
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16
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9.1.
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Confidential
Information
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16
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9.2.
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License
and Supplier Arrangements with Third Parties.
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18
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9.3.
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Non-Solicitation
of Employees
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19
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9.4.
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Costs
and Expenses Related to Joint Development
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19
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9.5.
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Determination
of Milestone and Objectives under the Milestone
Table.
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19
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9.6.
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Publicity/Press
Releases
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20
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9.7.
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Records
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20
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9.8.
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Insurance
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20
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10.1.
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Survival
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21
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10.2.
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Indemnification
by MCEL
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21
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10.3.
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Indemnification
by Dow
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22
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10.4.
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Limitation
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22
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10.5.
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Procedures.
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22
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10.6.
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Additional
Obligations with respect to Intellectual Property
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24
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10.7.
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Exclusivity
of Remedies
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24
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11.
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Term
and Termination.
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24
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11.1.
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Term
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24
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11.2.
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Termination
by Either Party
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25
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11.3.
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Termination
By Dow
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25
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11.4.
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Termination
by MCEL
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25
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11.5.
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Effect
of Termination.
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26
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11.6.
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Survival
of Certain Provisions
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26
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12.1.
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Alternative
Dispute Resolution
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26
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13.
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General
Provisions.
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27
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13.1.
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Relationship
of the Parties
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27
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13.2.
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Transfer;
Successors and Assigns
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27
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13.3.
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Governing
Law
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27
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13.4.
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Counterparts
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27
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13.5.
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Construction
of Certain Terms
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27
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13.6.
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Notices
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28
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13.7.
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Amendments
and Waivers
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29
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13.8.
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Severability
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29
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13.9.
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Delays
or Omissions
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29
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13.10.
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Entire
Agreement
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29
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Exhibit
A Definitions
Exhibit
B Milestones
Schedule
1 MCEL-Contributed
Intellectual Property
Schedule
2 Excluded
Intellectual Property
JOINT DEVELOPMENT AGREEMENT
THIS
JOINT DEVELOPMENT AGREEMENT
(this
“
Agreement ”)
is made and entered into on this __ day of __________, 2005 (the
“
Effective Date ”)
by and between THE DOW CHEMICAL COMPANY, a Delaware corporation
(“
Dow ”)
and MILLENNIUM CELL INC., a Delaware corporation (“
MCEL ”).
Dow and MCEL also may be referred to herein individually as a
“
Party ”
or collectively as the “
Parties .”
Recitals
WHEREAS,
the Parties entered into that certain Stock Purchase
Agreement, dated as of February 27, 2005 (the “
Stock Purchase Agreement ”),
pursuant to which, among other things, at the First Closing (as
defined in the Stock Purchase Agreement), the Parties are to enter
into this Agreement;
WHEREAS,
the First Closing has occurred and, simultaneously therewith,
the Parties are entering into this Agreement pursuant of the
Stock Purchase Agreement;
WHEREAS,
simultaneously with the entering into of this Agreement, Dow
and MCEL have also entered into that certain Cross Licensing
and Intellectual Property Agreement, dated as of the Effective
Date (the “
Cross Licensing Agreement ”);
WHEREAS,
MCEL is engaged in the business of developing fuel systems for
the safe storage, transportation and generation of hydrogen
for use as an energy source and, in connection therewith, has
developed and patented the proprietary system called
Hydrogen on Demand ®,
whereby the energy potential of hydrogen is carried in the chemical
bonds of sodium borohydride, which in the presence of a catalyst,
releases hydrogen;
WHEREAS,
among other things, Dow is engaged directly and indirectly in
developing technologies addressing the increasing need for
energy for portable electronics devices;
WHEREAS,
the Parties wish to jointly develop portable energy solutions
through the production of hydrogen gas for use by fuel cells
within the Field of Use (as defined below) and within the
Application (as defined below), using certain processes
currently being developed by MCEL, as further described in
this Agreement;
WHEREAS,
in connection with the joint development arrangement described
above, and pursuant to the terms and conditions of the Stock
Purchase Agreement and this Agreement, MCEL and Dow have
agreed that MCEL will (i) upon the execution of this
Agreement, issue certain shares of Series A Preferred Stock
(as defined below) and (ii) upon the achievement of Milestones
1, 2, 3 and 4 (each as defined below), issue certain shares of
Series A Preferred Stock in consideration for Dow providing
its commercial and technical services pursuant to this
Agreement, as further described in this Agreement and the
Stock Purchase Agreement; and
WHEREAS,
pursuant to the terms and conditions of the Stock Purchase
Agreement, MCEL and Dow have agreed that, upon the achievement
of Milestones 1, 2, 3 and 4, MCEL will offer to sell, and Dow
may purchase, certain shares of Series B Preferred Stock in
consideration for Dow’s equity investments into MCEL, as
further described in this Agreement and the Stock Purchase
Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the Parties agree
as follows:
1.
Definitions .
Capitalized terms used in this Agreement shall have the meanings
set forth in
Exhibit A (Definitions).
Capitalized terms that do not appear in
Exhibit A shall
have the meanings given such terms as provided for in this
Agreement.
2.1.
Purpose .
The Parties have entered into this Agreement for the purpose of
jointly developing portable energy solutions through the production
of hydrogen gas for use by fuel cells using certain processes
currently being developed by MCEL. In connection therewith, MCEL
shall use reasonable best efforts to, among other things, perform
the MCEL Military Tasks and the MCEL Consumer Tasks and Dow shall
use commercially reasonable efforts when requested by MCEL to
perform the Dow Military Tasks and the Dow Consumer Tasks in
accordance with this Agreement. By performing these obligations,
MCEL will seek to cause the occurrence of the Military Objectives
and the Consumer Objectives (if any) contained in the four (4)
milestones described in this
Article 2 (each,
a “
Milestone ”
and, collectively, the “
Milestones ”)
and, as a result of the occurrence of all the Military Objectives
or the Consumer Objectives in any such Milestone, will achieve such
Milestone as set forth in the Milestone Table. Upon the achievement
of each Milestone, Dow will be entitled to receive Series A
Preferred Stock and to purchase Series B Preferred Stock and
receive Warrants, subject to the terms and conditions of this
Agreement and the other Transaction Agreements.
2.2.
Milestones 1, 2, 3 and 4 .
Each of the four (4) Milestones (“
Milestone 1 ,”
“
Milestone 2 ”,
“
Milestone 3 ”
and “
Milestone 4 ”,
respectively) shall be achieved upon the occurrence of either (i)
all of the Military Objectives or (ii) all of the Consumer
Objectives, in either case, corresponding to such Milestone in the
Milestone Table set forth on
Exhibit B of
this Agreement (the “
Milestone Table ”).
Notwithstanding anything to the contrary set forth in the Milestone
Table, (i) if Milestone 2 is achieved prior to the achievement of
Milestone 1, then Milestone 1 will be deemed to have been achieved
upon the achievement of Milestone 2, (ii) if Milestone 3 is
achieved prior to the achievement of Milestone 1 and/or Milestone
2, then any prior Milestone that has not been achieved at such time
(Milestone 1 and/or Milestone 2, as the case may be) will be deemed
to have been achieved upon the achievement of Milestone 3, (iii) if
Milestone 4 is achieved prior to the achievement of Milestone 1,
Milestone 2 and/or Milestone 3, then any prior Milestone that has
not been achieved at such time (Milestone 1, Milestone 2 and/or
Milestone 3, as the case may be) will be deemed to have been
achieved upon the achievement of Milestone 4. In any such event,
all of the Closings (as defined in the Stock Purchase Agreement)
preceding the applicable Milestone shall occur
simultaneously.
2.3.
Steering Committee .
The Parties shall establish and maintain a steering committee (the
“
Steering Committee ”)
that will oversee the development activities under, and all other
aspects of the relationship contemplated by, this Agreement and
facilitate the relationship between Dow and MCEL as explicitly set
forth this Agreement. The Steering Committee shall consist of four
(4) individuals (each, a “
Committee Member ”),
two (2) of which shall be appointed by Dow at its sole discretion
and two (2) of which shall be appointed by MCEL at its sole
discretion. The initial Committee Members shall be as follows (a)
two MCEL-appointed Committee Members shall be: (i) Adam Briggs and
(ii) John Battaglini and the two-Dow appointed Committee Members
shall be: (i) Director Emerging Energy Platform and (ii) another
representative to be appointed in the future;
provided ,
however ,
either Party may replace such Party’s Committee Members at
any time by providing written notice to the other Party. During the
Term, the Steering Committee will meet from time to time and in the
manner as the Committee Members shall agree. Any action made by the
Steering Committee under this Agreement shall only be enforceable
if at least seventy-five percent (75%) of the Committee Members
agree to such action in writing. Notwithstanding anything to the
contrary set forth herein, in no event shall the Steering Committee
have the right to modify, amend, supplement, change or waive any
provision or term of this Agreement.
2.4.
No Restrictions .
In no event shall the obligations of the Parties contained in this
Agreement, the Stock Purchase Agreement, the other Transaction
Agreements or transactions contemplated hereby or thereby prevent
or in any way prohibit or restrain the either Party from engaging
in any activities (including without limitation, development
activities, joint development activities, investment activities or
otherwise) which may be deemed to be directly or indirectly
competitive with the other Party, the current operations of the
other Party or the future business plans of the other Party, it
being understood that each Party may by itself or in combination
with other third parties, develop, manufacture, produce or sell
hydrogen fuel cell products;
provided, however ,
each Party’s rights under this
Section 2.4 shall
be subject to all agreements and restrictions of the Parties with
respect to (i) Dow Intellectual Property, MCEL-Contributed
Intellectual Property (as defined below) and Joint Development
Intellectual Property under this Agreement, the
Cross Licensing Agreement and all other Transaction
Agreements, (ii) the specific representations, warranties,
covenants and agreements contained in the Transaction Agreements
and (iii) confidentiality and non-solicitation obligations of the
Parties under this Agreement.
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3. |
Intellectual Property . |
3.1.
MCEL-Contributed IP .
MCEL hereby acknowledges and agrees that all patents, copyrights,
trade secrets, technical data, designs, concepts, processes,
formulae, know-how and information of MCEL as of the date of this
Agreement to be used by MCEL in furtherance of the purpose of this
Agreement, including without limitation the patents, copyrights and
other intellectual property set forth on
Schedule 1 ,
and all know-how and trade secrets embodied therein shall
collectively be, “
MCEL-Contributed Intellectual Property ”;
provided ,
however ,
neither (i) the intellectual property set forth on
Schedule 2 of
this Agreement nor (ii) the JDA Intellectual Property shall be
deemed MCEL-Contributed Intellectual Property. MCEL shall use the
MCEL-Contributed Intellectual Property to the extent necessary to
meet its obligations under this Agreement.
3.2.
Cross Licensing Agreement .
Simultaneously herewith, the Parties acknowledge and agree that the
Parties have entered into the Cross Licensing Agreement with
respect to the intellectual property matters related to the
transactions contemplated by this Agreement.
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4. |
Development Obligations of MCEL .
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4.1.
MCEL Obligations Generally .
During the Term, MCEL shall use its reasonable best efforts to
achieve each of the Military Objectives and each of the Consumer
Objectives as expeditiously as possible;
provided, however, that
in the event the Board of Directors of MCEL determines in good
faith that it is in the best interests of MCEL to primarily pursue
only the Military Objectives or the Consumer Objectives in respect
of MCEL’s efforts to achieve the unachieved Milestones (such
determination being a “
One-Track Determination ”),
then MCEL shall (i) promptly inform Dow that MCEL has made such
One-Track Determination and (ii) for the remainder of the Term MCEL
shall use its reasonable best efforts to achieve only the Military
Objectives or the Consumer Objectives, as the case may be,
applicable to such unachieved Milestones.
4.2.
MCEL Obligations Per Milestone .
Without limiting the generality of
Section 4.1 ,
MCEL shall perform, at a minimum, each of the incomplete MCEL
Military Tasks and the incomplete MCEL Consumer Tasks on the terms
set forth in this
Section 4.2 regardless
of the Milestone that has been achieved for purposes of the
Milestone Table;
provided, however, if
a Milestone has been achieved under the Milestone Table due to the
occurrence of all Military Objectives, on the one hand, or Consumer
Objectives, on the other hand, contained in such Milestone, then
for the purposes of this
Section 4.2 ,
the Military Objectives or the Consumer Objectives, as applicable,
contained in all preceding Milestones shall be deemed to have
occurred;
provided, further, if
MCEL has made a One-Track Determination, then MCEL will only be
required to perform such incomplete MCEL Consumer Tasks or such
incomplete MCEL Military Tasks, as applicable.
(a)
MCEL Military Tasks - Throughout Ter
m For
the time period commencing on the date hereof and ending upon the
earlier of the achievement of the Military Objectives contained in
Milestone 4 or the expiration of the Term, MCEL shall (i) identify
potential opportunities with military and/or government entities to
become Military Customers party to a Military Contract,
Production-Ready Military Contract and/or Military P.O. and
exercise reasonable best efforts through marketing and business
development activities to enhance such potential opportunities;
(ii) exercise best efforts to comply with any then-effective
Military Contract, Production-Ready Military Contract or Military
P.O.; and (iii) prepare the filings for all government/regulatory
approvals necessary and appropriate for the use of NaBH
4 for
the military applications contemplated by the Military Objectives,
make such filings if and when applicable, and follow up with
specific government/regulatory bodies and exercise reasonable best
efforts to respond to further application issues as appropriate
(the obligations described in this clause (iii) being the
“
Military NaBH
4
Approval Process ”).
(b)
MCEL Military Tasks - Milestone 1 .
From the date hereof until the achievement of the Military
Objectives contained in Milestone 1, MCEL shall (i) develop
proposed Military Prototype specifications to meet military needs
for a fuel cell power source and develop proposed terms for a
future Military Contract; (ii) develop and test the proposed
Military Prototype and exercise reasonable best efforts to make the
appropriate improvements thereto prior to the execution of the
Military Contract; (iii) exercise reasonable best efforts to
negotiate and execute a bona fide proposed Military Contract; and
(iv) exercise reasonable best efforts to test, develop, manufacture
and deliver a Military Prototype meeting the specifications of the
executed Military Contract.
(c)
MCEL Military Tasks - Milestone 2 .
From the date of achievement of the Military Objectives contained
in Milestone 1 until the achievement of the Military Objectives
contained in Milestone 2, MCEL shall (i) perform an evaluation of
the Military Prototype and MCEL’s performance under the
Military Contract to identify areas of improvement; (ii) develop
and test the proposed production-ready Military Prototype and
exercise reasonable best efforts to make the appropriate
improvements thereto prior to execution of the Production-Ready
Military Contract; (iii) exercise reasonable best efforts to
negotiate and execute a proposed Production-Ready Military
Contract; (iv) seek to become the preferred provider or the
exclusive provider of the production-ready Military Prototype to
the Military Customer under the Production-Ready Military Contract;
and (v) exercise reasonable best efforts to test, develop,
manufacture and deliver the Military Prototypes meeting the
specifications of the executed Production-Ready Military
Contract.
(d)
MCEL Military Tasks - Milestone 3 .
From the date of achievement of the Military Objectives contained
in Milestone 2 until the achievement of the Military Objectives
contained in Milestone 3, MCEL shall (i) perform an evaluation of
the production-ready Military Prototype and MCEL’s
performance under the Production-Ready Military Contract to
identify areas of improvement; (ii) develop a manufacturing plan
for a Military Product; (iii) if applicable, identify and exercise
reasonable best efforts to engage in discussions with potential
licensees and suppliers of intellectual property, raw materials and
products necessary or helpful for the manufacture of the
production-ready Military Product and seek access thereto in
anticipation of the Military P.O.; (iv) if applicable, exercise
reasonable best efforts to negotiate and enter into appropriate
license agreements and supplier agreements in anticipation of the
Military P.O.; (v) if applicable, exercise reasonable best efforts
to acquire required technology (by merger, acquisition, purchase or
otherwise) to perform a proposed Military P.O.; (vi) develop and
test the proposed Military Product and exercise reasonable best
efforts to make the appropriate improvements thereto prior to the
execution of the Military P.O.; and (vii) exercise reasonable best
efforts to negotiate and execute a proposed Military P.O.;
provided, that
clauses (iii) and (iv) of this
Section 4.2(d) shall
be subject to
Section 9.2 .
(e)
MCEL Military Tasks - Milestone 4 .
From the date of achievement of the Military Objectives contained
in Milestone 3 until the achievement of the Military Objectives
contained in Milestone 4, MCEL shall exercise reasonable best
efforts to test, develop, manufacture and deliver the Military
Products meeting the specifications of the executed Military
P.O.
(f)
MCEL Consumer Tasks - Throughout Term .
For the time period commencing on the date hereof and ending upon
the earlier of the achievement of the Consumer Objectives contained
in Milestone 4 and the expiration of the Term, MCEL shall (i)
identify potential opportunities with OEMs to be party to a
Consumer Contract and/or Consumer P.O. and exercise reasonable best
efforts through marketing and business development activities to
enhance such potential opportunities; (ii) exercise best efforts to
comply with any then-effective Consumer Contract or Consumer P.O.;
and (iii) prepare the filings for all government/regulatory
approvals necessary and appropriate for the use of NaBH
4 for
the consumer applications contemplated by the Consumer Objectives,
make such filings if and when applicable, and follow up with
specific government/regulatory bodies and exercise reasonable best
efforts to respond to further application issues as appropriate
(the obligations described in this clause (iii) being the
“
Consumer NaBH
4
Approval Process ”).
(g)
MCEL Consumer Tasks - Milestone 1 .
From the date hereof until the achievement of the Consumer
Objectives contained in Milestone 1, MCEL shall (i) develop
proposed Consumer Prototype specifications to meet consumer needs
for a fuel cell power source and develop proposed terms for any
future Consumer Contract; (ii) develop and test the proposed
Consumer Prototype and exercise reasonable best efforts to make the
appropriate improvements thereto; (iii) exercise reasonable best
efforts to solicit letters of support from potential OEMS with
respect to the Consumer Prototype; and (iv) exercise reasonable
best efforts to attempt to negotiate and execute a bona fide
proposed Consumer Contract.
(h)
MCEL Consumer Tasks - Milestone 2 .
From the date of achievement of the Consumer Objectives contained
in Milestone 1 until the achievement of the Consumer Objectives
contained in Milestone 2, MCEL shall exercise reasonable best
efforts to test, develop, manufacture and deliver the Consumer
Prototypes meeting the specifications of the executed Consumer
Contract.
(i)
MCEL Consumer Tasks - Milestone 3 .
There are no MCEL Consumer Tasks to be performed in connection with
Milestone 3.
(j)
MCEL Consumer Tasks - Milestone 4 .
From the date of achievement of the Consumer Objectives contained
in Milestone 2 until the achievement of the Consumer Objectives
contained in Milestone 4, MCEL shall (i) perform an evaluation of
the Consumer Prototype and MCEL’s performance under the
Consumer Contract to identify areas of improvement; (ii) develop a
manufacturing plan for a Consumer Product; (iii) if applicable,
identify and exercise reasonable best efforts to engage in
discussions with potential licensees and suppliers of intellectual
property, raw materials and products necessary or helpful for the
manufacture of the Consumer Product and seek access thereto in
anticipation of the Consumer P.O.; (iv) if applicable, exercise
reasonable best efforts to negotiate and enter into appropriate
license agreements and supplier agreements in anticipation of
Consumer P.O.; (v) if applicable, exercise reasonable best efforts
to acquire required technology (by merger, acquisition, purchase or
otherwise) to perform a proposed Consumer P.O.; (vii) develop and
test the proposed Consumer Product and exercise reasonable best
efforts to make the appropriate improvements thereto prior to
execution of the Consumer P.O.; (viii) exercise reasonable best
efforts to negotiate and execute a proposed Consumer P.O.; and (ix)
exercise reasonable best efforts to comply with all terms of the
executed Consumer P.O.;
provided, that
clauses (iii) and (iv) of this
Section 4.2(j) shall
be subject to
Section 9.2 .
|
5. |
Development Obligations of Dow .
|
5.1.
Dow Obligations Generally .
(a)
Dow FTEs Per Milestone .
Dow shall, at the request of MCEL, use commercially reasonable
efforts to make available to MCEL at a maximum such number of FTEs
as follows:
(i)
from
the date hereof until the achievement of Milestone 1, Dow
shall, at the request of MCEL, make available at a maximum one
(1) FTE to use commercially reasonable efforts to (i) perform
each of the incomplete Dow Military Tasks set forth in
Section 5.2(a) and (b) and/or
incomplete Dow Consumer Tasks set forth in Section
5.2(f) and (g) ,
respectively, and (ii) provide commercial and technical services
from Dow’s current resources related to the characterization
of chemicals, chemical processes, plastics, and plastic parts with
respect to the then-applicable commercially reasonable efforts of
Dow under
Section 5.2 ;
(ii)
from
the date of achievement of Milestone 1 until the achievement
of Milestone 2, Dow shall, at the request of MCEL, make
available at a maximum three (3) FTEs to use commercially
reasonable efforts to (i) perform each of the incomplete Dow
Military Tasks set forth in
Section 5.2(a) and (c) and/or
incomplete Dow Consumer Tasks set forth in
Section 5.2(f) and (h) ,
respectively, and (ii) provide commercial and technical services
from Dow’s current resources related to the characterization
of chemicals, chemical processes, plastics, and plastic parts with
respect to the then-applicable commercially reasonable efforts of
Dow under
Section 5.2 ;
and
(iii)
from
the date of achievement of Milestone 2 until the achievement
of Milestone 4, Dow shall, at the request of MCEL, make
available at a maximum six (6) FTEs to use commercially
reasonable efforts to (i) perform each of the incomplete Dow
Military Tasks set forth in
Section 5.2(a), (d) and (e) and/or
incomplete Dow Consumer Tasks set forth in
Section 5.2(f), (i) and (j) ,
respectively, and (ii) provide commercial and technical services
from Dow’s current resources related to the characterization
of chemicals, chemical processes, plastics, and plastic parts with
respect to the then-applicable commercially reasonable efforts of
Dow under
Section 5.2 ;
provided, however, upon
the request of either Party upon the achievement of any Milestone,
the Steering Committee shall review whether to change the number of
FTEs that Dow shall make available under this
Section 5.1(a) ;
provided ,
further ,
that there shall be no modification of this
Section 5.1(a) or
the term “FTE” without the written agreement of the
Parties.
Notwithstanding
the foregoing, Dow shall only use such commercially reasonable
efforts that relate to a Dow Military Task for a Military
Objective or a Dow Consumer Task for a Consumer Objective for
which MCEL is using its reasonable best efforts to cause to
occur;
provided, further ,
if MCEL has made a One-Track Determination, Dow shall only be
required to use commercially reasonable efforts to perform the
incomplete Dow Military Tasks or Dow Consumer Tasks, as applicable,
that MCEL is continuing to pursue and otherwise on the terms of
this Article 5.
5.2.
Dow Obligations Per Milestone .
(a)
Dow Military Tasks - Throughout Term .
To the extent required by
Section 5.1 above,
throughout the Term, Dow Military Tasks shall include (i) assisting
MCEL in the identification of potential opportunities with military
and/or government entities to become a Military Customer party to a
Military Contract, Production-Ready Military Contract and/or
Military P.O and (ii) assisting MCEL in the Military NaBH
4 Approval
Process.
(b)
Dow Military Tasks - Milestone 1 .
To the extent required by
Section 5.1 above,
from the date hereof until the achievement of the Military
Objectives contained in Milestone 1, Dow Military Tasks shall
include assisting MCEL in its efforts to secure funding under and
enter into the Military Contract.
(c)
Dow Military Tasks - Milestone 2 .
To the extent required by
Section 5.1 above,
from the date of achievement of the Military Objectives contained
in Milestone 1 until the achievement of the Military Objectives
contained in Milestone 2, Dow Military Tasks shall include (i)
assisting MCEL to develop the Military Prototype and (ii) assisting
MCEL in its optimization of chemical systems within the Field of
Use and Application for the production of hydrogen.
(d)
Dow Military Tasks - Milestone 3 .
To the extent required by
Section 5.1 above,
from the date of achievement of the Military Objectives contained
in Milestone 2 until the achievement of the Military Objectives
contained in Milestone 3, Dow Military Tasks shall include (i)
assisting MCEL in development of manufacturing plan for Military
Product; (ii) assisting MCEL in its identification and discussions
with potential licensees and suppliers of intellectual property,
raw materials and products necessary or helpful for the manufacture
of the production-ready Military Product and seek access thereto in
anticipation of the Military P.O.; and (iii) assisting MCEL in its
negotiating and entering into appropriate license agreements and
supplier agreements with MCEL on mutually-satisfactory terms and/or
assisting MCEL in its negotiation of appropriate license agreements
and supplier agreements with third parties, if appropriate, in
anticipation of Military P.O.;
provided, that
clauses (iii) of this
Section 5.2(d) shall
be subject to
Section 9.2 .
(e)
Dow Military Tasks - Milestone 4 .
To the extent required by
Section 5.1 above,
from the date of achievement of the Military Objectives contained
in Milestone 3 until the achievement of the Military Objectives
contained in Milestone 4, Dow Military Tasks shall include
assisting MCEL in its establishing and utilizing manufacturing
capabilities and distribution ch a
in
for Military Products.
(f)
Dow Consumer Tasks - Throughout Term .
To the extent required by
Section 5.1 above,
throughout the Term, Dow Consumer Tasks shall include (i)
attempting to use corporate contacts within potential OEMs to
assist MCEL in its promotion of the Consumer Prototype and or the
Consumer Product and (ii) assisting MCEL in the Consumer
NaBH
4 Approval
Process.
(g)
Dow Consumer Tasks - Milestone 1 .
To the extent required by
Section 5.1 above,
from the date hereof until the achievement of the Consumer
Objectives contained in Milestone 1, Dow Consumer Tasks shall
include (i) providing market research developed by Dow with respect
to proposed technologies for Consumer Prototype, if any; and (ii)
assisting MCEL in its meetings with OEMs to promote Dow’s
plans and capabilities, if any, with respect to the Consumer
Prototype.
(h)
Dow Consumer Tasks - Milestone 2 .
To the extent required by
Section 5.1 above,
from the date of achievement of the Consumer Objectives contained
in Milestone 1 until the achievement of the Consumer Objectives
contained in Milestone 2, Dow Consumer Tasks shall include (i)
providing Consumer Prototype technology evaluation capabilities to
assist with technical due diligence thereof; and (ii) assisting
MCEL in its identification of manufacturing and quality control
assessment for the Consumer Prototype.
(i)
Dow Consumer Tasks - Milestone 3 .
There are no Dow Consumer Tasks to be performed in connection with
Milestone 3.
(j)
Dow Consumer Tasks - Milestone 4 .
To the extent required by
Section 5.1 above,
from the date of achievement of the Consumer Objectives contained
in Milestone 3 until the achievement of the Consumer Objectives
contained in Milestone 4, Dow Consumer Tasks shall include (i)
assisting MCEL to develop the Consumer Product; (ii) assisting MCEL
in development of manufacturing plan for Consumer Product; (iii)
assisting MCEL in its identification and discussions with potential
licensees and suppliers of intellectual property, raw materials and
products necessary or helpful for the manufacture of the Consumer
Product and seek access thereto in anticipation of the Consumer
P.O.; and (iv) assisting MCEL in its negotiating and entering into
appropriate license agreements and supplier agreements with MCEL on
mutually-satisfactory terms and/or assist MCEL in its negotiation
of appropriate license agreements and supplier agreements with
third parties, if appropriate, in anticipation of Consumer
P.O.;
provided, that
clauses (iii) and (iv) of this
Section 5.2(j) shall
be subject to
Section 9.2 .
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6. |
Compensation
to
Dow Upon Achievement of Milestones. |
6.1.
Compensation Per Milestone .
Subject to the Stock Purchase Agreement and this
Agreement:
(a)
First Closing .
In exchange for entering into this Agreement, the Parties
acknowledge and agree that MCEL has issued to Dow, and Dow has
accepted, such number of shares of Series A-0 Preferred (as defined
in the Stock Purchase Agreement) equal to a 3% Ownership Interest
as part of the First Closing (as defined in the Stock Purchase
Agreement);
(b)
Upon Achievement of Milestone 1 .
Upon the achievement of Milestone 1 and in the event Dow elects to
pay to MCEL at least the Minimum Series B Investment at the Second
Closing (as defined in the Stock Purchase Agreement), MCEL shall
issue to Dow, and Dow shall accept (subject to the terms of the
Stock Purchase Agreement), such number of shares of Series A-1
Preferred (as defined in the Stock Purchase Agreement) that equal,
when combined with such number of the Series B-1 Preferred (as
defined in the Stock Purchase Agreement) and Warrants, if any,
purchased by Dow at the Second Closing with the Minimum Series B
Investment, a 4% Ownership Interest.
(d)
Upon Achievement of Milestone 2 .
Upon the achievement of Milestone 2 and in the event Dow elects to
pay to MCEL at least the Minimum Series B Investment at the Third
Closing (as defined in the Stock Purchase Agreement), MCEL shall
issue to Dow, and Dow shall accept (subject to the terms of the
Stock Purchase Agreement), such number of shares of Series A-2
Preferred (as defined in the Stock Purchase Agreement) that equal,
when combined with such number of the Series B-2 Preferred (as
defined in the Stock Purchase Agreement) and Warrants, if any,
purchased by Dow at the Third Closing with the Minimum Series B
Investment, a 3% Ownership Interest.
(f)
Upon Achievement of Milestone 3 .
Upon the achievement of Milestone 3 and in the event Dow elects to
pay to MCEL at least the Minimum Series B Investment at the Fourth
Closing (as defined in the Stock Purchase Agreement), MCEL shall
issue to Dow, and Dow shall accept (subject to the terms of the
Stock Purchase Agreement), such number of shares of Series A-3
Preferred (as defined in the Stock Purchase Agreement) that equal,
when combined with such number of the Series B-3 Preferred (as
defined in the Stock Purchase Agreement) and Warrants, if any,
purchased by Dow at the Fourth Closing with the Minimum Series B
Investment, a 5% Ownership Interest.
(g)
Upon Achievement of Milestone 4 .
Upon the achievement of Milestone 4 and in the event Dow elects to
pay to MCEL at least the Minimum Series B Investment at the Fifth
Closing (as defined in the Stock Purchase Agreement), MCEL shall
MCEL shall issue to Dow, and Dow shall accept (subject to the terms
of the Stock Purchase Agreement), such number of shares of Series
A-4 Preferred (as defined in the Stock Purchase Agreement) that
equal, when combined with such number of the Series B-4 Preferred
(as defined in the Stock Purchase Agreement) and Warrants, if any,
purchased by Dow at the Fifth Closing with the Minimum Series B
Investment, a 4.9% Ownership Interest.
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6.2. |
Limitations on Compensation . |
(a)
Failure to Pay the Minimum Series B Investment
.
In the event Dow does not pay to MCEL at least the Minimum Series B
Investment in connection with the achievement of any Milestone at
the applicable Closing (as defined in the Stock Purchase Agreement)
pursuant to the Stock Purchase Agreement, the shares of Series A
Preferred Stock that MCEL is required to issue to Dow shall be
subject to reduction pursuant to the terms of the Stock Purchase
Agreement and
Section 11.4(ii) of
this Agreement shall apply.
(b)
Deferred Shares .
Subject to the terms of the Stock Purchase Agreement, in the event
that, in connection with the achievement of any Milestone, Dow
elects (in its sole discretion) not to accept, in whole or in part,
any Series A Preferred Stock that Dow is entitled to receive upon
such Milestone (the “
Deferred Securities ”),
MCEL shall hold such Deferred Securities in reserve for a period of
up to twelve (12) months from the date of non-acceptance by Dow
(the “
Deferral Period ”).
Dow shall have the right, at any time and from time to time, during
the Deferral Period to receive all or a portion of the Deferred
Securities upon the same terms and conditions that Dow would have
received the Deferred Securities at the time of original
issuance.
(c)
Excess Shares .
Subject to the terms of the Stock Purchase Agreement, if, at any
time, an issuance of Series A Preferred Stock or Series B Preferred
Stock (or shares of Common Stock issuable upon conversion thereof
or upon the exercise of Warrants) would result in Dow holding
greater than a 19.9% Ownership Interest in respect of Series A
Preferred Stock, Series B Preferred Stock and Warrants acquired
pursuant to the terms of the Stock Purchase Agreement, then the
amount of Series A Preferred Stock or Series B Preferred Stock in
excess of Dow’s 19.9% Ownership Interest (the “
Excess Shares ”)
shall be held in reserve by MCEL. Dow shall have the right, at any
time and from time to time, when Dow’s Ownership Interest is
less than 19.9%, to receive or purchase such Excess Shares, in
whole or in part, upon the same terms and conditions that Dow would
have received or purchased such Excess Shares at the time of the
initial offering of such Excess Shares.
(d)
No Additional Compensation .
In the event that Dow makes available more FTEs than specified
in
Section 5.1 or
provides services in addition to those described in
Section 5.2 ,
Dow shall not be entitled to receive compensation pursuant to this
Agreement that is in addition to the compensation described
in
Section 6.1 .
7.
Representations and Warranties By MCEL .
MCEL makes the representations and warranties set forth below in
this Article
7 .
7.1.
General Representations and Warranties .
(a)
Corporate Power and Authorization .
MCEL
has all requisite legal and corporate power and authority to enter
into this Agreement and perform its obligations in accordance with
the terms of this Agreement. The execution and delivery of this
Agreement by MCEL and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
action on the part of MCEL and no further action is required by
MCEL. This Agreement has been duly executed and delivered by MCEL
and constitutes the valid and binding obligation of MCEL
enforceable against MCEL in accordance with its respective terms
except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of
creditors’ rights generally and (b) as limited by laws
relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
(b)
Filings, Consents and Approvals .
MCEL
is not required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other
governmental authority or other Person in connection with the
execution, delivery and performance by MCEL of this Agreement in
accordance with its terms.
7.2.
MCEL’s Commitment .
This Agreement is made with MCEL in reliance upon MCEL’s
representation to Dow that MCEL is fully committed on the date of
this Agreement to focusing primarily upon the development
activities within the Field of Use and within the Application and
the other obligations of MCEL contemplated by this
Agreement. MCEL
acknowledges that Dow is presently engaged in other business
activities and may in the future be engaged in other business
activities.
7.3.
MCEL-Contributed Intellectual Property
. Except
as stated on
Schedule 7.3 :
(a)
No
MCEL-Contributed Intellectual Property or product or service
of MCEL related to MCEL-Contributed Intellectual Property is
subject to any proceeding or outstanding decree, order,
judgment, agreement, contract or stipulation restricting in
any manner the use, transfer or licensing thereof by MCEL, or
which may affect the validity, use or enforceability of such
MCEL-Contributed Intellectual Property. Each item of
registered MCEL-Contributed Intellectual Property is presumed
valid and subsisting. All necessary registration, maintenance
and renewal fees currently due in connection with registered
MCEL-Contributed Intellectual Property have been made and all
necessary documents, recordations and certifications in
connection with such registered MCEL-Contributed Intellectual
Property have been filed with the relevant patent, copyright,
trademark or other Government Authority for the purpose of
maintaining such registered MCEL-Contributed Intellectual
Property.
(b)
MCEL
owns and has exclusive title to, or has licenses (sufficient
for the conduct of the business of MCEL as currently conducted
and as proposed to be conducted) to, each item of
MCEL-Contributed Intellectual Property used in connection with
the conduct of the business of MCEL as currently conducted and
as proposed to be conducted free and clear of any lien, and
MCEL is the exclusive owner or exclusive licensee of all
trademarks and service marks, trade names and domain names
used in connection with the operation or conduct of the
business of MCEL, free and clear of all liens.
(c)
MCEL
owns exclusively all copyrighted works that are MCEL products
or which MCEL otherwise expressly purports to own, free and
clear of all liens.
(d)
To
the extent that any MCEL-Contributed Intellectual Property has
been developed or created by a third party for MCEL, MCEL has
a written agreement with such third party with respect thereto
and MCEL thereby either (i) has obtained ownership of and is
the exclusive owner of, or (ii) has obtained a license
(sufficient for the conduct of the business of MCEL as
currently conducted and as proposed to be conducted, including
MCEL’s development activities contemplated hereby) to
all of such third party’s MCEL-Contributed Intellectual
Property in such work, material or invention by operation of
law or by valid assignment.
(e)
All
contracts relating to the MCEL-Contributed Intellectual
Property are in full force and effect. The consummation of the
transactions contemplated by this Agreement will neither
violate nor result in a breach, modification, cancellation,
termination or suspension of any of such contracts. MCEL is in
compliance in all material respects with all such contracts
and has not breached
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