LHV Power Corporation

 

&

 

Flux Propulsion

 

Term Sheet

 

RECITALS

 

WHEREAS, LHV develops, manufactures and sells battery chargers for the electric
vehicle market.

 

WHEREAS, Flux develops, manufactures and sells a complete electric vehicle drive
system for the electric vehicle market.

 

WHEREAS, Flux desires to sell LHV’s battery chargers either with Flux’s electric
vehicle drive system or separately.

 

WHEREAS, LHV wishes to grant to Flux the right to sell LHV’s battery chargers.

 

Definitions

 

·“OEM” shall mean a party that is licensed to only distribute LHV’s battery
charger together with its own product.

 

·“Distributor” shall mean a party that has been given a license by LHV to
distribute LHV’s Products under their own name or under the LHV defined brand
together with its own products or separately.

 

·"Confidential Information" means information which if disclosed (i) in tangible
form, is clearly marked as "confidential" or "proprietary" at the time of
disclosure, or (ii) in intangible form (such as orally or visually), the
disclosing party identifies as "confidential" or "proprietary" at the time of
disclosure. Notwithstanding the foregoing marking requirements, the parties
agree that each respective party’s customer lists and customer data are
considered Confidential Information.

 

·“Customer Support” means the Support Services to be provided by Flux to the
user of LHV Products described herein.

 

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·"Statement of Work" or (“SOW”) means the development plan, including
deliverables and associated milestones and development schedule, as mutually
agreed and as set forth and attached hereto.

 

·“LHV Product(s)” means LHV’s battery charger.

 

TERMS

Flux Appointment.

 

·LHV hereby appoints Flux as a Distributor of LHV’s Products and grants flux a
license to distribute the LHV product as a Distributor.

 

·In the event LHV sells or distributes LHV Products to another Distributor LHV
shall pay Flux a fee of which will equal twenty percent (20%) of the LHV’s gross
profits sold to the other Distributor {the “Distribution Fee”}. Distribution Fee
shall not apply to sales to an OEM and/or sales to Flux. Distribution Fee shall
also be subject to the Maximum Royalty defined below.

 

·Parties agree that the electric vehicle market is a new market and will work
together to identify and further define distributors, retailers and OEM’s.

 

Statement of Work

 

·In consideration for LHV granting Flux a Distributor license Flux agrees to
perform the work under the attached Statement of Work.

 

·Statement of Work will include designing a microprocessor control board and
developing the associated software together named {the “MCB”} that enables the
LHV Product to intuitively charge batters.

 

·Statement of Work will also include any updates for error corrections in the
design and code, upgrades with additional functionality as requested by LHV in
the design and code, and Customer Support.

 

·LHV agrees to pay Flux a twenty dollar ($20) fee {“Royalty Fee”} per MCB that
only LHV sells subject to the terms defined herein. The Royalty Fee does not
apply to for sales made to Flux.

 

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Maximum Royalties

 

·LHV and Flux agrees that LHV’s obligation to pay the Distribution Fee and the
Royalty Fee terminate once the total payments made of the Distribution Fee and
the Royalty Fee equal two hundred thousand dollars ($200,000) in total the
{“Maximum Royalty”}. By nature this royalty provision shall survive and will
remain effect post termination or expiration of the Agreement. Once the Maximum
Royalty has been reached, Flux is no longer required to provide any support for
the MCB and both parties agree to negotiate a new support fee upon LHV’s
request.

 

·LHV may during the term of this Agreement request that Flux accept fee
adjustments for the Royalty Fee and the Distribution Fee in conjunction with
significant customer bids.

 

Flux Obligations:

 

·Flux accepts the appointment as a Distributor of LHV Products and agrees to use
best efforts to maximize distribution of the LHV Products.

 

·Flux agrees to submit purchase orders at a quantity of no less than 25 and
maintain an inventory of LHV Products of sufficient quantity, at LHV’s
Distribution pricing, to enable Flux to fully discharge all of its
responsibilities under this Agreement.

 

·Flux, its officers and agents agree to refrain from promoting, selling, or
offering for sale, either directly or indirectly any goods or articles that
compete with the LHV’s Product without offering LHV’s prior right of first
refusal to provide like product and price.

 

Marketing Plans & Reports:

 

·Each calendar quarter, Flux shall furnish LHV a point of sales and operation
report as it relates to LHV Product.

 

·Parties agree to use reasonable efforts to cooperatively market and advertize
LHV Product.

 

No Agency:

 

·Flux is an independent purchaser and seller of LHV Products and shall represent
itself only as an “Authorized Distributor” of the LHV Products.

 

Payment:

 

·All orders placed to LHV by Flux shall be at the price as set forth on LHV’s
then current LHV’s Distributor Price List for the LHV Products, and freight and
transportation costs for the LHV Products shall be the responsibility of Flux.

 

·Unless otherwise agreed to by LHV, all payments shall be made within thirty
(30) days as of the delivery of the LHV’s invoice, except that in the event Flux
fails to pay LHV as provided herein, LHV may, in its sole discretion, require
Flux to issue a standby irrevocable letter of credit in favor of LHV or LHV’s
designated subsidiary prior to the fulfillment or delivery of any further
orders.

 

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·Flux agrees to pay all taxes, duties, deposits, tariffs, and bonds of any kind
imposed upon LHV, Flux, or upon the LHV Products by any government or taxing
authority relating to the sale of LHV Products by Flux.

 

Orders:

 

·Upon LHV Product availability, Flux agrees to place a purchase order.

 

·All purchase orders must be in writing and are subject to acceptance by LHV and
LHV will issue a proforma invoice acknowledging the purchase order.

 

·On the first day of the term, and every thirty (30) days thereafter (the
“Forecast Period”) throughout the term, Flux shall deliver to LHV a written
forecast of its needs for the LHV Products during the twelve month period
immediately following.

 

·LHV may, from time to time, advise Flux that Flux may not sell to certain
customers (the “Disapproved Customers”) for any or no reason whatsoever,
including the Disapproved Customer’s infringement of LHV’s intellectual property
rights. Flux agrees not to take orders from Disapproved Customers.

 

·LHV Products shall be shipped to Flux pursuant to the instructions issued by
Flux within a reasonable period of time after acceptance by LHV of any order

 

·LHV will use its reasonable best efforts to fill Flux’s orders promptly upon
acceptance by LHV.

 

·Flux shall not return the LHV Products without prior written authorization and
instructions from LHV, nor shall LHV accept returned LHV Products except in
accordance with such authorization and instructions.

 

Goodwill:

 

·All use of the trademarks and all goodwill and benefits arising from such use
shall inure to the sole and exclusive benefit of the Trademark Owner. Neither
party shall not do anything that, could in any way damage, injure or impair the
validity and subsistence of the other parties’ trademarks.

 

·Both parties agree to recognize that the Confidential Information constitutes
valuable trade secrets of the discloser and is the exclusive property of
discloser. Consequently, the recipient agrees to use the Confidential
Information only in connection with the purpose contemplated under this
Agreement and, during its term and extending for a period of two (2) years
thereafter, recipient specifically agrees not to use, communicate, disclose,
reverse engineer, publish or make available to any person or entity discloser’s
Confidential Information.

 

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Intellectual Property:

 

·LHV shall retain all rights title and interests to the LHV Product and any work
performed in a Statement of Work and Intellectual Property created while working
together including but not limited to perfecting the Intellectual Property and
nothing herein shall be construed as a license or an assignment of rights those
rights in any way.

 

Term & Effective Date:

 

·This Agreement shall take effect as of March 25, 2009 and expire on April 1,
2010 unless sooner terminated as provided herein (the “Initial Term”), which
will be automatically extended to an additional year, if neither party has given
a notice not less than ninety (90) days before the Initial Term (the “Further
Term”).

 

·Notwithstanding anything to the contrary in this Agreement, either party may
terminate this Agreement at any time during the Initial Term or any Further Term
without cause with ninety (90) days prior written notice. Any order accepted by
LHV prior to the date of receipt of a notice of termination shall be shipped
according to the announced shipping date.

 

Entire Agreement: This Agreement expresses fully the understanding between the
parties and all prior agreements, representations, understandings, appointments
or licenses, oral or written, are hereby expressly canceled. This Agreement may
be modified only in writing signed by both Flux and LHV. The date of the
execution by LHV shall be deemed to be the date of the Agreement and the
Agreement shall not be effective until its execution by LHV and the Flux.

IN WITNESS WHEREOF the parties have caused this Amendment to be signed by their
duly authorized representatives.

 

LHV Power Corporation   Flux Propulsion           Signature: /s/Craig Miller  
Signature: /s/Jason Touhy Name: Craig Miller   Name: Jason Tough Title: VP,
Director of Legal Affairs   Title: COO Date: June 19, 2009   Date: June 19, 2009

 

Page 5

 

 

Attachment A

Statement of Work

Battery Charger

 

SCOPE: 

This document is a Statement of Work for the design and development of the
microprocessor module portion of the 3kW battery charger system known as the
LBC-3K45P from LHV Power Corp.  The statements following “GENERAL:” below
contain the working requirements for the entire charger device of which the
microprocessor module is part; individual signals and operational modes are
described therein.  The immediately following statements reflect the physical
and operational specifics for the microprocessor module itself.

 

Microprocessor Module (MM) Design Details:

The MM contains a power regulating circuit which takes +12V from the isolated
housekeeping power supply output that is common with the DC/DC output circuits. 
This +12V will be stepped down by means of a three terminal regulator and
support components that will provide +5V for the operation of the microprocessor
and associated support circuits, including digital and analog communication
interfaces to the DC/DC controller, and to the CAN bus I/O system.

 

The microprocessor itself will be an appropriate device with appropriate
supporting hardware to handle the I/O and computational requirements of the
battery charger system’s DC/DC control board, including receiving two channels
of 3 by 8 multiplexed single ended digital signals and one channel of 3 by 8
multiplexed differential analog signals, and transmitting one singled ended
digital signal and one channel of 3 by 8 multiplexed differential analog
signals.

 

The MM will contain hardware and software systems to support, through a properly
isolated hardware interface, two simultaneously connected external CAN bus
devices, and provide proper data operation to and from devices such as the
Battery Management System (BMS), the vehicle Powertrain Control Module (PCM),
and other such external devices.

 

The MM will contain hardware and software appropriate to the task of properly
updating the internal software, so that the software enabled operational
characteristics of the battery charger can be repaired, revised, or updated from
time to time.  The physical interface to this updating system may be via the CAN
bus and/or a communication interface agreed upon by both parties.

 

The MM will contain hardware and software appropriate to receive and send
information from and to an “SAE J1772” accessory communications connector, so
that communications can be made to an off board AC or DC charging pedestal.  The
actual hardware and software requirements are TBD, pending finalization by SAE
of the exact standards to be implemented.  It is desired that at least three
digital ports be assigned and reserved on the MM board for this purpose.

 

The MM will contain hardware and software appropriate to properly control the
normal mode(s) and faulted mode(s) of operation of the battery charger system. 
It will properly communicate with other vehicular devices and provide those
external devices with normal and customary data and information as to the status
of the battery charger’s operation as described in the functional description
following this SOW.

 

Page 6

 

 

The MM will contain hardware and software appropriate to control several battery
charger systems connected in parallel; with the primary charger serving as
“master”, and additional attached battery chargers (through the CAN bus
interface) will serve as “slave(s)”, thus providing for a multiplication of
battery charging power.  Thus each battery charger produced must have an
internally assigned address number coded in software, so that the master charger
can be established by means of interrogation by each and all CAN bus connected
battery chargers, and a determination made of which charger will be declared
master, and which charger(s) will be declared slave(s).  An example might be
that all chargers connected to a common CAN bus find that three chargers exist
connected, and that the one with the lowest address number is declared the
master, and the other two are thus declared slave 1 and slave 2.  Operational
characteristics of master and slave connected chargers will be identical, so
that all parallel output (or series output) connected chargers produce similar
outputs, unless the BMS system directs otherwise. 

 

As a note, the series connection of battery chargers will be limited to two in
number by design.  The number of parallel connected battery chargers can be
twenty or more.  Combinations of parallel connected sets of two seriesed output
battery chargers are possible for higher power and higher voltage battery
systems.

 

The MM will have Real Time Clock (RTC) capabilities so that a user controlled
time of day use function for the battery charger can be implemented.

 

The MM will have hardware and software appropriate to operate an onboard
multicolor LED, which will be used to indicate charging operation and status
and/or fault modes to an observer of the charger(s) in service.  The exact
details of the multicolor LED will be on a forthcoming revision of this
document.

 

The MM will be designed to fit upon a Printed Circuit Board (PCB) of dimensions
of approximately 2” x 5”.  Details of the exact size, component height
limitations, mounting holes, connector details and locations, etc. will be
forthcoming on a subsequent revision of this document.  The layout of the MM PCB
will be done in such manner as to guarantee 1000V of isolation to the supporting
metal tray and mounting system; further details of the requirements for this
will be forthcoming on a future revision of this document (it is expected that
reinforcing insulation sheets such as Mylar sheet will be required and provided
for outside the scope of this SOW to meet this requirement).

 

LHV Power Corporation   Flux Propulsion           Signature: /s/Craig Miller  
Signature: /s/Jason Touhy Name: Craig Miller   Name: Jason Tough Title: VP,
Director of Legal Affairs   Title: COO Date: June 19, 2009   Date: June 19, 2009

 

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