Document:

exv10w16

 

Exhibit 10.16

Subject to review by O2Diesel local counsel

SUPPLY AND DISTRIBUTION AGREEMENT

     This
Supply and Distribution Agreement (the “Agreement”),
effective as of April 20, 2004 (the “Effective Date”), is made between
[an O2Diesel corporation  (“O2Diesel”), with offices at 200
Executive Drive, Newark, DE and ALOBAYA Corporation (“Distributor”)
with offices at P.O.Box 1648 Al-Khobar, Kingdom of Saudi Arabia (each
a “Party,” and collectively the “Parties”).

     WHEREAS,
O2Diesel has developed proprietary technology for
oxygenating diesel fuel, including a proprietary fuel additive,
and market development experience from its activities in the
United States and Brazil;

     WHEREAS, Distributor desires to become a distributor of
oxygenated diesel fuel and obtain a supply of O2Diesel’s proprietary
fuel additive, as well as certain market development support, to
develop a market for oxygenated diesel fuel in the Territory (as
defined in Section 1.6 herein); and

     WHEREAS, subject to receiving certain payments from
Distributor, O2Diesel desires to appoint Distributor as a
distributor and provide such additive and support;

     NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement and for other good and valuable
consideration, the adequacy and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby
agree as follows.

1. Definitions.

     1.1. “Affiliate,” with respect to a Person, means any other
Person controlling, controlled by or under common control with,
such first Person.

     1.2.
“O2Diesel Additive” means an O2Diesel proprietary compound
that allows the mixing of diesel fuel and ethanol.

     1.3. “O2Diesel Product” means oxygenated diesel fuel
comprising base diesel fuel, the O2Diesel Additive, ethanol and a
cetane improver, conforming to the specifications for such product
provided by O2Diesel.

     1.4. “Person” means a natural person, a corporation, a
partnership, a trust, a joint venture, any governmental authority
or any other entity or organization.

     1.5. “Term” shall have the meaning given in Section 13.1.

     1.6. “Territory” means Kingdom of Saudi Arabia, Egypt, and The United
Arab
Emirates.

 

 

 

 

 

 

 
 
 
 

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. OMITTED TEXT IS INDICATED BY A "*".

 

 

2. Distributions and Market Development.

     2.1. Appointment of Distributor. O2Diesel hereby appoints
Distributor as a distributor of O2Diesel Product in the Territory
subject to the terms and conditions of this Agreement. For as long as
Distributor has performed and continues to perform its obligations
under this Agreement, O2Diesel shall not enter into any agreement
authorizing a Third Party to distribute O2Diesel Product in the
Territory, or sell to any Third Party O2Diesel Additive in the
Territory, except as otherwise specifically provided in this
Agreement.

     2.2. Efforts to Commercialize. Distributor shall be responsible
for procuring, producing, marketing and selling O2Diesel Product in the
Territory in its own name, at its expense and for its own account.
Distributor shall use its best efforts to market and sell O2Diesel
Product throughout the Territory, beginning with regions offering the
greatest market potential. Without limiting the generality of the
foregoing, Distributor shall use its best efforts to take the actions
specified in Schedule A by the target dates set forth therein.

     2.3. Consequences of Failing to Meet Target Dates. Should
Distributor fail to complete any of the actions identified in Schedule
A by the specified target date for doing so, the Parties shall consult
concerning the reasons therefore and future efforts toward prompt
commercialization of O2Diesel Product in the Territory. As a result of
such consultations, the Parties may agree in writing to different
target dates and final dates than those specified in Schedule A. In the
absence of such agreement, if Distributor fails to complete any of the
actions set forth in Schedule A by the final date specified therein and
O2Diesel so notifies Distributor, then, notwithstanding Section 2.1,
O2Diesel shall have the right, at O2Diesel’s option, to (a) authorize
Third Parties to distribute O2Diesel Product in the Territory and sell
O2Diesel Additive to Third Parties in the Territory (“Permitted Third
Party Distribution”), or (b) terminate this Agreement by written notice
to Distributor.

     2.4. Exclusivity. Distributor and its Affiliates shall not
distribute any oxygenated diesel fuel other than O2Diesel Product
in the Territory during the Term.

     2.5. Government Approvals. Distributor represents and warrants
that, prior to the Effective Date, it has investigated and determined
whether any governmental approvals will be necessary for the
distribution and use of O2Diesel Product in the Territory and, if
Distributor has determined that approvals are necessary, which
approvals. A report of this information has been delivered to
O2Diesel. If Distributor has determined that governmental approvals
are necessary for the distribution and use of O2Diesel Product in the
Territory, Distributor shall, promptly after the Effective Date, apply
for such approvals. If it is permitted under the laws of the
Territory, O2Diesel may require that applications for governmental
approvals be made jointly in the name of Distributor and O2Diesel, and
if so, and to the extent that a governmental approval constitutes
property under the laws of the Territory, governmental approvals shall
be jointly owned by the Parties. In any event, Distributor shall
consult with O2Diesel concerning all material issues in obtaining and
maintaining governmental approvals and

 

 

Provide O2Diesel copies of all test results, applications,
correspondence and other documents relating to government approvals.
O2Diesel shall have the perpetual right to reproduce, use and
disclose the foregoing and authorize the same for purposes of
distributing oxygenated diesel fuel or other products (a) outside the
Territory, (b) within the Territory after the Term or (c) in the case
of a Permitted Third Party Distribution.

     2.6. Communication and Reporting. Distributor shall communicate
regularly with O2Diesel, through use of agreed methods (for example,
O2Diesel’s internet-based CPAMS system), concerning (a) Distributor’s
activities to complete the actions set forth in Schedule A, (b) other
material market conditions and developments in the Territory, and (c)
legislation affecting the distribution of O2Diesel Product in the
Territory. Senior management representatives of Distributor and
O2Diesel shall meet, on approximately a monthly basis, at times and
places mutually agreed, to discuss Distributor’s progress. The Parties
also shall arrange for effective coordination of ongoing activities at
the operational level. To the extent that O2Diesel obtains information
from Distributor under this Article 2 or otherwise concerning the
marketing of oxygenated diesel fuel, O2Diesel shall have the perpetual
right to reproduce, use and disclose it and authorize the same for
purposes of marketing oxygenated diesel fuel or other products (a)
outside the Territory, (b) within the Territory after the Term or (c)
in the case of a Permitted Third Party Distribution.

     2.7. Other Territories. Distributor and its Affiliates shall not
(a) export any O2Dicsel Additive or O2Diesel Product from the
Territory or (b) sell O2Diesel Additive or O2Diesel Product to any
Third Party with the knowledge that such Third Party is likely to
resell O2Diesel Additive unblended, resell O2Diesel Product, or export
O2Diesel Additive or O2Diesel Product from the Territory. Distributor
acknowledges that O2Diesel may distribute or authorize distribution of
O2Diesel Additive or O2Diesel Product in places that are outside, but
near the boundaries of, the Territory, and that it would he difficult
or impossible to control use of such O2Diesel Product by truck fleets
and other customers operating near the boundaries of the Territory.
Importation and use of O2Diesel Product in the Territory by a Third
Party who acquires it from O2Diesel or another authorized source outside
the Territory shall not be deemed inconsistent with Section 2.1, and
Distributor shall take no action to interfere with such activity.
Notwithstanding the foregoing, each Party shall notify the other Party
about any material such activity, the Parties shall consult in good
faith concerning whether there is any practicable action that should
be taken as a commercial matter to address the situation.

3. Supporting Information and Services

     3.1. Necessary Equipment. Promptly after the Effective Date,
O2Diesel shall provide to Distributor the specifications of certain
necessary equipment unique to the production; sale and use of
O2Diesel Product, as well as available information O2Diesel may have
concerning sources of such equipment.

     3.2. Safety Procedures. Promptly after the Effective Date,
O2Diesel shall provide to Distributor a manual describing
procedures for the use and handling of O2Diesel Additive and
O2Diesel Product, including a material safety data sheet,

 

 

procedures for blending O2Diesel Product, fuel tank preparation
procedures for the storage of O2Diesel Product and sample warning
decals (the “Manual”). O2Diesel shall have the right to add to, delete
from and otherwise modify the Manual at any time. At times and dates
agreed upon by the Parties, O2Diesel shall conduct training for
employees of Distributor in the use and handling of O2Diesel Additive
and O2Diesel Product.

     3.3. Technical Assistance. Promptly after the Effective Date,
O2Diesel shall provide to Distributor O2Diesel’s technical database
containing certain test reports and other available technical
information concerning O2Diesel Additive and O2Diesel Product. Upon
request, O2Diesel shall provide to Distributor reasonable available
technical information and assistance necessary for Distributor to
carry out its obligations under this Agreement.

     3.4. Governmental Approvals and Tax Rebate Assistance. Promptly
after the Effective Date, O2Diesel shall provide to Distributor
copies of available documentation of existing governmental approvals
for O2Diesel Product. Distributor may reproduce, use and disclose the
foregoing to the extent useful in seeking governmental approvals in
the Territory, At Distributor’s request, O2Diesel shall provide
available test results and other reasonable information and
assistance to support efforts of Distributor to obtain governmental
approvals, establish tax rebates and other incentives for the use of
O2Diesel Product in the Territory, and establish a process for the
regular submission of necessary documentation to governmental
authorities.

     3.5. Marketing. Upon request, O2Diesel shall provide to
Distributor the following information to support efforts of
Distributor to develop markets for O2Diesel Product in the Territory,
to the extent available to O2Diesel and relevant to the Territory:
market research conducted by O2Diesel, lessons learned from
distribution of O2Diesel Product by O2Diesel and other licensees and
distributors, identification of high priority potential customer
groups, economic modeling for distribution of O2Diesel Product, sample
marketing materials, and the status of development of enhanced
technologies subject to this Agreement; provided that O2Diesel shall
not be required to disclose any information that O2Diesel is not
permitted to disclose under its nondisclosure agreements with Third
Parties. All of the foregoing information is provided on an “as is”
basis in the hope it will be helpful to Distributor’s efforts to
develop markets for O2Diesel Product in the Territory. Distributor
acknowledges that there can be no assurance that O2Diesel’s marketing
experience outside the Territory will be relevant to or lead to
successful results in the Territory, and Distributor is responsible
for determining how most effectively to market O2Diesel Product in the
Territory.

4. Supply of O2Diesel
Additive.

     4.1. Minimum Purchase. Distributor commits to order and take
delivery from O2Diesel, during the first five (5) years of the Term,
the quantities of O2Diesel Additive set forth in Schedule B (“Minimum
Purchase Requirement”). In the event Distributor exceeds the Minimum
Purchase Requirement for any given year, Distributor shall be
entitled to accumulate such excess amounts and apply them toward the
Minimum

 

 

Purchase Requirement for any following year. In the event
Distributor fails to order and take delivery of the minimum required
quantity of O2Diesel Additive during any year of the Term, O2Diesel
may invoice Distributor for 75% of the then-applicable price of the
quantity by which Distributor fell short of the required minimum. If
this Agreement is renewed pursuant to Section 13.1, the Parties shall
promptly agree to minimum purchase commitments for each year of the
renewal period that are no less than the minimum purchase commitment
for the year last preceding.

     4.2.
Ordering, Delivery and Payment. Distributor shall purchase,
and O2Diesel shall sell, O2Diesel Additive against Distributor
purchase orders in accordance with the terms of this Section 4.3.
Distributor shall submit a purchase order for a requested quantity of
O2Diesel Additive at least twelve (12) weeks before the requested
delivery date. All purchase orders placed by Distributor shall be
subject to acceptance by O2Diesel, which shall not unreasonably
withhold its acceptance of a purchase order conforming to the
provisions of this Agreement. Any preprinted or standard terms
included in any purchase order shall be of no effect. In the event
that any order-specific term or instruction in a purchase order is
inconsistent with the terms of this Agreement, the terms of this
Agreement will be controlling. The price of O2Diesel Additive shall be
determined on a per-volume basis as specified on Schedule C. Delivery
of O2Diesel Additive shall be EXW (Incoterms 2000) the terminal of
O2Diesel, or at O2Diesel’s option, the terminal of its supplier. Any
receipt or other documentation signed by representatives of O2Diesel
or its supplier and Distributor or its carrier, or in the absence
thereof the meter at the relevant terminal, shall be determinative of
the quantity of O2Diesel Additive delivered.

     4.3. Forecasting. After the first commercial sale of O2Diesel
Product, on a quarterly basis within five (5) days of the beginning
of each quarter, Distributor shall provide non-binding forecasts of
its expected requirements of O2Diesel Additive for the following
twelve (12) months.

     4.4. Improvements in Additives. The Parties contemplate that the
O2Diesel Additive initially supplied hereunder will be the O2Diesel
Additive known au “O2D05.” In the event O2Diesel develops and makes
commercially available an enhanced O2Diesel Additive (a “New
Additive”), O2Diesel shall promptly notify and consult with
Distributor. If Distributor wishes to acquire a New Additive in lieu
of O2D05 or such other O2Diesel Additive as Distributor then may be
acquiring hereunder, the Parties promptly shall seek to agree
concerning any necessary adjustment in the price or other terms and
conditions for the provision of the New Additive, and if they do so,
the New Additive shall be the O2Diesel Additive provided hereunder.
Notwithstanding the foregoing, if at least one New Additive is
available, O2Diesel may discontinue the manufacture of any O2Diesel
Additive upon ninety (90) days’ notice to Distributor, and if it does
so, Distributor shall then be required to purchase an available New
Additive at a price to be mutually agreed.

     4.5. Use of O2Diesel Additive. Distributor shall: (a) use
O2Diesel Additive only to make O2Diesel Product, in accordance with
all specifications and guidance provided by O2Diesel for the
manufacture, use, handling, storage, transportation and

 

 

disposal of
O2Diesel Additive and O2Diesel Product; (b)
resell O2Diesel Additive only as blended into O2Diesel Product
or to Third Parties who agree to blend the O2Diesel additive
into O2Diesel Product, in accordance with al; specifications and
guidance provided by O2Diesel for the manufacture, use, handling
storage, transportation and disposal of O2Diesel Additive and
O2Diesel Product; and (c) not analyze or reverse engineer the
O2Diesel Additive to determine its composition or method of
manufacture.

     4.6. Sourcing of Other Supplies. Distributor acknowledges that,
apart from O2Diesel Additive, Distributor is solely responsible for
procuring sufficient equipment and supplies for its performance under
this Agreement, including supplies of base diesel fuel, ethanol and
cetane improver for the production of O2Diesel Product.

5. Payments

     5.1. Initial Payment. On the Effective Date and as a condition
precedent to the effectiveness of all the other provisions of this
Agreement, Distributor shall pay to O2Diesel Corporation, $100,000
(One Hundred Thousand Dollars) within 14 days of signing this
agreement.

     5.2. Invoices. When this Agreement provides for invoicing of
certain payments, Distributor shall pay all properly invoiced amounts
within thirty (30) days following the date of O2Diesel’s invoice.
O2Diesel reserves the right to change credit terms by written notice
at any time.

     5.3. Payments in General, All amounts payable by Distributor
hereunder shall be paid in U.S Dollars to O2Diesel by wire transfer,
or by such other method mutually agreed upon by the Parties, for
value no later than the due date thereof (with twenty-four (24))
hours advance notice of each such wire transfer) to such bank account
or accounts as O2Diesel shall designate in writing within a
reasonable period of time prior to such due date.

     5.4. Late Payments. If Distributor fails to make any payment
required under this Agreement when due, Distributor shall pay interest
on such amount at the rate of 2% per month, or the highest rate
allowed by law, whichever is less, from the date the payment was due
until the date the payment is made in full.

     5.5. Taxes. Distributor shall pay all applicable taxes and
all amounts due hereunder shall be without deduction for
withholding for any taxes or similar governmental charges.

6. Use of Trademarks.

     6.1. License Grants. Distributor shall, and O2Diesel hereby
grants to Distributor a nonexclusive, non-sub licensable
license to, use the name “O2Diesel” and

 

 

“O2Diesel” logo or such different or additional trademarks as
O2Diesel may specify (the “O2Diesel Trademarks”) in the Territory
during the Term in connection with the marketing, sale and
distribution of O2Diesel Product that conforms to O2Diesel’s
applicable specifications therefore and is produced using O2Diesel
Additive purchased from O2Diesel under Article 4. The Parties
acknowledge that such license is nonexclusive because O2Diesel or its
distributors in other territories may have occasion to advertise the
O2Diesel Product in ways that may reach the Territory, but this
Section 6.1 shall be without prejudice to the provisions of Sections
2.1 and 2.3. Distributor acknowledges the validity and O2Diesel’s
ownership of the O2Diesel Trademarks and shall not do anything
inconsistent with such validity and ownership. If O2Diesel notifies
Distributor to discontinue use of an O2Diesel Trademark, Distributor
shall do so. Distributor hereby grants to O2Diesel a nonexclusive,
worldwide license to (a) use Distributor’s name and logo (the
“Distributor Trademarks”) during the Term to identify Distributor as a
distributor of O2Diesel Product in the Territory, and (b) authorize
Third Parties to do the same.

     6.2. Limitations on Use of Marks. Distributor’s use of the O2Diesel
Trademarks and O2Diesel’s use of the Distributor Trademarks shall
(a) be consistent with the high quality image of the other Pasty so as
to enhance the marks and the goodwill relating thereto, (b) conform to
the style and usage guidelines prescribed by the other Party, (c) inure
to the benefit of the other Party, and (d) be in a manner so as not to
cause embarrassment to the other Party, tend to discredit the other
Party’s image or reputation for quality, or suggest that any actions
undertaken are actions of the other Party. On request, Distributor
promptly shall provide to O2Diesel Sample of Distributor’s use of the
O2Diesel Trademarks, and O2Diesel promptly shall provide to Disiributor
samples of O2Diesel’s use of the Distributor Trademarks. Nothing in
this Agreement shall interfere with a Party’s use of its marks anywhere
in the world, except that during the Term, so long as the condition
specified in Section 2.3 has not been met, O2Diesel shall not use or
authorize the use of the O2Diesel Trademarks in the Territory to
indicate a source of oxygenated diesel fuel in the Territory other than
Distributor.

     6.3.
Protection of Marks. All rights with respect to the O2Diesel
Trademarks and Distributor Trademarks not expressly granted in this
Agreement are reserved by O2Diesel or Distributor, as the case may be.
Distributor acknowledges the validity and O2Dieseil’s ownership of the
O2Diesel Trademarks, and O2Diesel acknowledges the validity and
Distributor’s ownership of the Distributor Trademarks. Neither Party
shall attack the validity or ownership of the other Party’s marks or
do anything inconsistent with such validity and ownership. Neither
Party shall use any unitary composite mark consisting of marks of both
Parties. Neither Party shall apply for registration of any of the
other Party’s marks as a trademark in any country or oppose
registration of the other party’s marks by the other Party. The
Parties may agree in writing that Distributor shall have the right to
enforce the O2Diesel Trademarks against any particular infringement by
a distributor of oxygenated diesel fuel in the Territory. In other
respects, each Party shall have the sole right, but not the
obligation, to register, protect and enforce its marks.

     6.4. Additional Trademarks. Absent the written consent of O2Diesel,
Distributor shall not use any trademark other than the O2Diesel
Trademarks to identify

 

 

O2Diesel Product. If Distributor believes that a trademark other
than the O2Diesel Trademarks should be used to identify O2Diesel
Product in the Territory, Distributor may propose alternatives, and the
Parties may so agree in writing. Any such agreement may also address
any questions concerning the Parties’ respective rights to use the
mark, both during the Term and after expiration or termination of this
Agreement, and which Party shall handle and pay for registration of the
mark, but absent a written agreement to the contrary, any such other
mark shall be owned by O2Diesel and treated as an O2Diesel Trademark
for all purposes of this Agreement.

7. Confidentiality.

     7.1. Definitions. In connection with its activities under this
Agreement, a Party (the “Receiving Party”) may receive or otherwise
have access to “Confidential Information” of the other Party (the
“Disclosing Party”). The term “Confidential Information” means any
material or information relating to the Disclosing Party’s technology,
research, development, product plans, trade secrets, finances or
business operations that the Disclosing Party treats as confidential,
but not any material or information that the Receiving Party can
demonstrate (a) is or becomes publicly known though no fault of the
Receiving Party; (b) is developed independently by the Receiving
Party; (c) is known by the Receiving Party when disclosed by the
Disclosing Party if the Receiving Party does not then have a duty to
maintain its confidentiality; or (d) is rightfully obtained by the
Receiving Party from a Third Party not obligated to preserve its
confidentiality who did not receive the material or information
directly or indirectly from the Disclosing Party.

     7.2. Limitations on Use and Disclosure. A Receiving Party shall
not use the Disclosing Party’s Confidential Information for any
purpose other than performance of this Agreement and shall not
disclose- Confidential Information to any Person other than its
employees and its independent contractors subject to a nondisclosure
obligation comparable in scope to this Article, which employees and
independent contractors have a need to how such Confidential
Information for the of this Agreement. Upon the expiration or
termination of this Agreement or such earlier time as particular
Confidential Information may no longer be necessary for the
performance of this Agreement, a Receiving Party shall, on request,
return or destroy all embodiments of the Disclosing Party’s
Confidential Information in its possession or control. The Parties
shall notify their employees of the confidential nature of the
Confidential Information, and the Receiving Party shall be liable to
the Disclosing Party for any unauthorized use or disclosure made by
any person receiving Confidential Information the Receiving Party.

     7.3. Exception. Notwithstanding Section 7.2, a Receiving Party
may disclose Confidential Information to the extent required by a
court or other governmental authority, provided that (a) the
Receiving Party gives the Disclosing Party reasonable notice of the
disclosure, (b) the Receiving Party uses reasonable efforts to
resist disclosing the Confidential Information and minimize the
amount of Confidential Information disclosed, and (c) the Receiving
Party cooperates with the Disclosing Party on request to seek a
protective order or otherwise limit the effects of the disclosure.

 

 

7.4. Acknowledgement. The Parties acknowledge that either
Party’s breach of this Article 7 would cause the other Party
irreparable injury for which it would not have an adequate remedy at
law. In the event of a breach, the non-breaching Party shall be
entitled to injunctive relief in addition to any other remedies it
may have at law or in equity.

8. Other Intellectual Property Matters.

     8.1. In General. Subject to all of Distributor’s obligations
under this Agreement, O2Diesel hereby acknowledges that Distributor
may practice O2Diesel’s patents and trade secrets in the Territory
during the Term to the extent necessary to blend O2Diesel Product
using O2Diesel Additive purchased from O2Diesel under Article 4. As
between the Parties, O2Diesel shall retain all right, title and
interest in and to its patents, trade secrets and other intellectual
property (“O2Diesel Intellectual Property”). All rights with respect
to O2Diesel Intellectual Property not expressly granted to Distributor
in this Agreement are reserved by O2Diesel, and O2Diesel grants no
licenses by implication or estoppel. Distributor shall take no action
inconsistent with such O2Diesel Intellectual Property rights. For the
avoidance of doubt, and without limiting the generality of the
foregoing, (a) Distributor is not authorized to manufacture, offer for
sale or sell O2Diesel Additive as such; (b) Distributor shall not
grant sublicenses under the O2Diesel Intellectual Property to any
Third Party without the written consent of O2Diesel; and (c)
Distributor shall not challenge the validity or enforceability of the
O2Diesel Intellectual Property.

     8.2. Third Party Infringement. Distributor shall inform O2Diesel
of any infringement by any Third Party of any of the O2Diesel
Intellectual Property in the Territory of which it becomes aware.
O2Diesel may, but shall not be required to, take legal action to
enforce the O2Diesel Intellectual Property against infringement by
Third Parties and defend the O2Diesel Intellectual Property against
challenges by Third Parties. Distributor shall cooperate fully with
O2Diesel in any such enforcement or defense and supply all assistance
reasonably requested by O2Diesel in carrying on such action, at
O2Diesel’s expense, including by using commercially reasonable efforts
to have its employees testify when requested and to make available
relevant records, information, specimens and the like.

     8.3. Joint Improvements. To the extent that employees of
O2Diesel or its Affiliates together with employees of Distributor or
its Affiliates jointly invent or discover any improvements to the
O2Diesel Additive, O2Diesel Product or to any other invention,
discovery, know-how or technology, the Parties shall jointly own the
same, and each Party shall be free to exploit or authorize the
exploitation of the same without the consent of or accounting to the
other Party, subject to any other relevant intellectual property
rights of the other Party. If a Party becomes aware of any such joint
invention, discovery, know-how or technology, it shall verify that
the other Party is aware of the same and the parties shall consult
and cooperate with respect to the protection of the same.

     8.4. Distributor Improvements. Before commencing any research or testing

 

 

efforts with respect to the oxygenation of diesel fuel,
Distributor shall disclose the same to O2Diesel. Subject to Section
8.3, to the extent that Distributor or its Affiliates may during the
Term invent or discover or otherwise acquire rights to any
improvements to the O2Diesel Additive, O2Diesel Product or any related
know-how or technology for the oxygenation of diesel fuel, Distributor
promptly shall disclose the same to O2Diesel, and Distributor hereby
grants to O2Diesel a perpetual, royalty-free, paid-up, nonexclusive
license to practice and authorize the practice of such improvements
and other know-how and technology (a) outside the Territory, (b)
within the Territory after the Term or (c) upon authorization of Third
Party distributors or termination of this Agreement as specified in
Section 2.3. For the avoidance of doubt, Distributor’s right to
practice such improvements or other know-how or technology is subject
to any relevant O2Diesel Intellectual Property.

     8.5. Patent Marking. Distributor shall, if applicable, comply
with any laws and regulations in the Territory concerning the marking
or other identification of O2Diesel Product as being patented.

9. Representations and
Warranties.

     9.1. Representations and Warranties of Both Parties. Each Party
represents and warrants that:

          (a) it is a company duly organized, validly existing and in good
standing under the laws of, in the case of O2Diesel, [Insert O2Diesel
jurisdiction], and in the case of Distributor, [Insert Distributor
Jurisdiction];

          (b) the execution of this Agreement on its behalf has been
properly authorized by all necessary corporate action;

          (c) this Agreement is valid and binding on it and enforceable
against it in accordance with the terms hereof, subject to applicable
bankruptcy and similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of
equity;

          (d) neither the execution nor the performance of this Agreement
will constitute a breach or violation of the terms of its charter or
organizational documents or any contract, agreement or other
commitment to which it is a party or by which it or any of its
properties are bound;

          (e) there are no bankruptcy, insolvency, receivership or similar
proceedings involving it or any of its Affiliates either pending or
being contemplated, or any other pending or threatened actions,
suits, arbitrations or other proceedings by or against it;

          (f) its business is being conducted in compliance in all
material respects with all applicable laws and regulations; and

          (g) it is not in default with respect to any governmental or court
order,

 

 

and there are no unsatisfied judgments against it.

     9.2. Representations and Warranties of Distributor. Distributor
represents and warrants that: (a) Distributor is experienced in fuel
distribution and has operations extending to the provision of diverse
products and services other than O2Diesel Product; (b) Distributor bas
had a reasonable opportunity to, and has in fact, investigated
independently its business prospects under this Agreement before
entering into this Agreement; (c) Distributor is not relying upon any
information, representation or warranty provided by O2Diesel except as
expressly set forth in this Agreement; (d) Distributor is not relying
upon O2Diesel’s providing significant assistance with or control over
Distributor’s method of operation under this Agreement; and (e) all
information concerning the ownership, financial condition, governmental
approvals, experience, personnel, supplier and customer relationships,
facilities and distribution network and infrastructure of Distributor
that Distributor has provided to O2Diesel in connection with the
negotiation of this Agreement is accurate in all material respects and
not materially misleading.

     9.3. Warranty for O2Diesel Additive. O2Diesel warrants that the
O2Diesel Additive delivered to Distributor hereunder complies with
O2Diesel’s specifications for such product, provided that Distributor
notifies O2Diesel of any defects therein within thirty (30) days after
taking delivery thereof. Distributor’s exclusive remedy for a breach of
this Section 9.3 shall be, at O2Diesel’s option, a refund of any
amounts already paid for the non conforming O2Diesel Additive or
prompt redelivery of the same quantity of conforming O2Diesel
Additive.

     9.4. EXCEPT AS PROVIDED EXPLICITLY HEREIN, NO PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND AND SPECIFICALLY DISCLAIMS
ALL OTHER WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. O2DIESEL. HEREBY DISCLAIMS ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE VALIDITY OR ENFORCEABILITY
OF THE O2DIESEL INTELLECTUAL PROPERTY AND AS TO WHETHER DISTRIBUTOR
WILL BE FREE FROM ANY INFRINGEMENT OF THE PATENT OR OTHER INTELLECTUAL
PROPERTY RIGHTS OF ANY THIRD PARTY.

10. Indemnification.

     In General. Each Party (the “Indemnifying Party”) shall defend,
indemnify and hold harmless the other Party (the “Indemnified Party”),
its Affiliates, and its and their employees, officers, directors,
agents, distributors and licensees against any loss, damage, expense,
or cost, including reasonable attorneys fees, arising out of any
claim, demand, action, suit, investigation, arbitration or other
proceeding by a Third Party (an “Action”) based on (a) the
Indemnifying Party’s breach of this Agreement; (b) negligence, willful
misconduct or violation of any law or regulation by the Indemnifying
Party, its Affiliates, or its or their employees, officers, directors,
or agents; or (c) the Indemnifying Party’s manufacture, use, sale,
handling, storage, transportation or disposal of O2Diesel

 

 

Additive, O2Diesel Product or other products.

     Procedure If an Indemnified Party becomes aware of any Action it
believes is indemnifiable under Section 10.1, (a) the Indemnified
Party shall give the Indemnifying Party prompt written notice of such
Action; (b) the Indemnifying Party shall assume, at its expense, the
sole defense of such claim or cause of action through counsel selected
by it and reasonably acceptable to the Indentified Party, except that
in the case of a conflict of interest between the Parties, the
Indemnifying Party shall, at the Indemnifying Party’s expense, provide
separate counsel for the Indemnified Party selected by the Indemnified
Party; (c) the Indemnifying Party shall maintain control of such
defense, including any decision as to settlement, except that any
settlement of an Action shall require the written consent of both
Parties, which consent shall not to be withheld or delayed
unreasonably; (d) the Indemnified Party may, at its option and
expense, participate in such defense, and in any event, the Parties
shall cooperate with one another in such defense; and (e) the
Indemnifying Party shall bear the total costs of any court award or
settlement in such Action.

11. Insurance

     Distributor shall during the Term maintain comprehensive
general liability insurance covering at least claims arising out of
the manufacture, use, sale, handling, storage, transportation and
disposal of O2Diesel Product by Distributor and liability assumed
under Article 10 with a coverage limit of not less than $5M per
occurrence. Such
insurance must provide primary coverage without right of contribution
from any O2Diesel insurance. O2Desel shall be named as an additional
insured under such insurance. Such insurance shall not be terminated or cancelled
unless O2Diesel is given thirty (30) days prior written notice. Upon
the execution of this Agreement, and thereafter upon the reasonable
request of O2Diesel, Distributor shall provide certificates
evidencing such insurance issued by Distributor’s insurance carrier.

12. Limitation of Liability.

     NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES
ARISING OUT OF OR RELATED TO THIS AGREEMENT, EVEN IF THE PARTY HAS
BEEN ADVISED OF THE POSSIBILITY THEREOF. O2DIESEL’S LIABILITY TO
DISTRIBUTOR FOR OTHER DAMAGES, IF ANY, SHALL IN NO EVENT EXCEED THE
TOTAL AMOUNT DISTRIBUTOR HAS PAID TO O2DIESEL FOR ANY PRODUCT OR
SERVICE GIVING RISE TO A CLAIM OF LIABILITY.

13. Terms and Termination.

     Term. This Agreement shall commence as of the Effective Date
and, unless terminated as provided in Section 13.2 or 13.3, continue
in full force and effect for an initial term of five (5) years (the
“Term”). Distributor may renew this Agreement for up to 2 (two)
successive three (3) year renewal periods by providing written notice
to

 

 

O2Diesel at least one hundred and eighty
(180) days and no more
than two hundred (200) days prior to the end of the then current Term,
if the quantity of O2Diesel Additive ordered and delivered during the
last two (2) years prior to such notice is at least 50m liters per
year, and provided that Distributor has fully paid any amounts then due
under this Agreement and is not otherwise in material breach of this
Agreement. Upon renewal, each such renewal period shall become part of
the Term.

     13.2. Termination for Default. If either Party materially
breaches this Agreement and fails to cure the breach within thirty
(30) days after receiving written notice thereof from the other Party,
the other Party may terminate this Agreement upon further written
notice to the breaching Party at any time that the breach remains
uncured. Either Party may terminate this Agreement if it has
reasonable grounds for insecurity concerning the other Party’s future
performance and does not receive reasonably adequate assurance of
performance within ten (10) days after giving written notice demanding
the same.

     13.3. Termination for Convenience. This Agreement may be
terminated by either Party upon six (6) months’ written notice to
the other Party effective at any time more than three (3) years
after the Effective Date.

     13.4. Rights and Obligations of Parties won Expiration and Termination.

          (a) Termination of this Agreement by either Party for any reason
shall not affect and shall be without prejudice to the rights and
obligations of the Parties accrued prior to the effective date of
termination.

          (b) To the extent that Distributor has outstanding orders for
O2Diesel Additive at the expiration or termination of this Agreement,
such orders shall be deemed cancelled unless O2Diesel notifies
Distributor within thirty (30) days after expiration or termination
that it will deliver the ordered quantity of O2Diesel Additive. If
O2Diesel so honors such orders, Distributor shall take and pay for the
O2Diesel Additive in accordance with the provisions of this Agreement.

          (c) Within thirty (30) days after the expiration or termination
of this Agreement, Distributor shall notify O2Diesel of the quantity
of O2Diesel Additive that Distributor then has on hand. Distributor
shall have the nonexclusive right to use such O2Diesel Additive and
any further O2Diesel Additive provided pursuant to Section 13.4(b) to
make and sell O2Diesel Product subject to the applicable terms of
this Agreement, but in no event shall such right continue for longer
than six (6) months after the date of expiration or termination.
After the expiration or termination of the Agreement and any further
period of distribution permitted under this Section 13.4(c),
Distributor shall take no action that would infringe O2Diesel
Intellectual Property or use O2Diesel Confidential Information.

         
 (d) After the expiration or termination of this Agreement and
any further period of distribution permitted under Section 13.4(c),
Distributor shall, within thirty (30) days after O2Diesel’s request,
return to O2Diesel or destroy any materials

 

 

provided by O2Diesel under Article 3 and any excess marketing
materials for O2Diesel Product.

       
   (e) The provisions of Sections 2.5, 4.6, 6.3 and 13.4 and
Articles 7 through 10, 12, and 14 through 16 of this Agreement shall
survive the expiration or termination of this Agreement.

14. Dispute Resolution

     14.1. Discussions. The Parties shall use reasonable efforts to
amicably resolve any disputes arising out of or relating to this
Agreement by direct discussions between them.

     14.2. Arbitration of Disputes. Any dispute not resolved as set
forth in Section 14.1 within fifteen (15) days after one Party
notifies the other Party that it wishes to discuss the matter
(“Dispute”), except matters relating to O2Diesel’s patents, trademarks
or other intellectual property, shall be resolved by arbitration in
Newark, Delaware under the Commercial Arbitration Rules (“Commercial
Rules”) of the American Arbitration Association (“AAA”), including the
AAA Supplementary Procedures for Large Complex Commercial Disputes
(“Complex Procedures”), as such rules shall be in effect on the date of
delivery of a demand for arbitration (“Demand”), except to the extent
that such rules are inconsistent with the provisions set forth herein.
Notwithstanding the foregoing, the Parties may agree that the Complex
Procedures shall not apply in order to promote the efficient
arbitration of Disputes where the nature of the Dispute, including the
amount in controversy, does not justify the application of such
procedures.

     14.3. Arbitration Procedures. The arbitration shall be conducted
in the English language before one (1) impartial arbitrator selected
by mutual agreement of the Parties. If the Parties are unable to
mutually agree on an impartial arbitrator within ten (10) days, a
neutral arbitrator shall be appointed by the AAA from the panel of
commercial arbitrators of any of the AAA Large and Complex Resolution
Programs. The arbitrator’s award shall be a final and binding
determination of the dispute. If awarded by the arbitrator, the
prevailing Party shall be entitled to recover its reasonably
attorneys’ fees and expenses, including arbitration administration
fees incurred in connection with such proceeding.

     14.4. Judicial Action. Notwithstanding the above, either Party
may seek from any court having jurisdiction hereof any interim,
provisional or injunctive relief or specific performance that may be
necessary to protect the rights or property of any Party or to
maintain the status quo before, during or after the pendency of the
arbitration proceeding. The institution and maintenance of any
judicial action or proceeding for any such interim, provisional or
injunctive relief shall not constitute a waiver of the right or
obligation of either Party to submit the dispute to arbitration,
including any claim’s or disputes arising from the exercise of any such
interim, provisional or injunctive relief.

15. Notices.

     15.1. Delivery of Notices. All notices sent under this Agreement shall be
in

 

 

writing and (a) hand delivered;
(b) transmitted by legible
facsimile with a copy sent concurrently by certified mail, return
receipt requested; or (c) delivered by prepaid priority delivery
service.

     15.2. Addresses for Notices. Notices shall be sent to the Parties
at the following addresses or such other addresses as the parties
subsequently may provide:

	 	 	 
	If to O2Diesel:

	 	100 Commerce Drive

Suite 301

Newark, Delaware 19713
	 
	 	 
	Attention:

Telephone:

     Fax:

	 	Alan Rae

(3O2) 266-6000

(3O2) 266-7076
	 
	 If
to Distributor:

	 	ALOBAYYA Corporation

	Attention:

	 	H.R.H.Prince Turki Bin

AbdullahBin Abdulaziz AL-SAUD

	Telephone:

	 	966-3-899 6666

	     Fax:

	 	966-3-899 5270

16. Miscellaneous

     16.1. No Authority to Bind O2Diesel. Distributor shall have no
authority, and shall not purport, to enter into any contracts or make
any representations or warranties on behalf of O2Diesel or otherwise
to bind or obligate O2Diesel in any manner whatsoever.

     16.2. Relationship Between
Parties. O2Diesel and Distributor are
separate business entities, and shall not be considered as joint
ventures, partners, agents, servants, employee, or fiduciaries of each
other. Neither this Agreement nor the relationship between the Parties
shall be considered in any way to deem Distributor a franchisee of
O2Diesel for any purpose whatsoever. The Parties specifically agree
that any obligation to act in good faith and to deal fairly with each
other which may be implied in law shall be deemed satisfied by the
Parties’ compliance with the express terms of this Agreement.

     16.3. Compliance with Laws. In obtaining necessary government
approvals and in other aspects of Distributor’s business relating to
O2Diesel Product, Distributor shall: (a) in compliance with the US.
Foreign Corrupt Practices Act, Title 15 United States Code § 78dd, not
directly or indirectly pay, give, offer or promise any money, gift or
anything else of value to (i) any officer or employee of any
government or any department, agency, or instrumentality thereof, (ii)
any person acting in an official capacity for or on behalf of any
foreign government or any department, agency, or instrumentality
thereof, (iii) any political party, or (iv) any candidate for
political office (collectively “Governmental Official”), or to any
family member of any Governmental Official, to influence any act or
decision of such Governmental Official, induce such

 

 

Governmental Official to do or omit to do any act in violation
of the lawful duty of such Governmental Official, or secure any
advantage in obtaining, retaining or directing business for or with
any Person; (b) not export or reexport any information, products or
other items in violation of U.S. export control laws and regulations;
and (c) comply with the conditions of any applicable governmental
approvals and all other applicable laws and regulations.

     16.4. Governing Law: Jurisdiction. This Agreement shall be
governed by and construed in accordance with the law of the State of
Delaware, without regard to its conflict of laws principles.

     16.5. Recordkeeping and Inspection. During the Term and for
three (3) years thereafter, or such longer period as may be required
by law, Distributor shall keep and maintain reasonable records of
all agreements, approvals and other activities relating to this
Agreement. O2Diesel may, at its expense, during regular business
hours and with reasonable prior notice, examine, review, and inspect
all facilities in which O2Diesel Additive or O2Diesel Product is
stored, blended or distributed by or on behalf of Distributor, and
review, audit and analyze Distributor’s records relating to this
Agreement and representative samples of O2Diesel Additive and
O2Diesel Product in Distributor’s custody or control.

     16.6.
Force Majeure. O2Diesel shall not be liable to Distributor
for the consequences of any failure to perform, or default in
performing, any of its obligations under this Agreement, if that
failure or default is caused without the fault or negligence of
O2Diesel by any act of “Force Majeure.” For the purposes of this
Agreement, “Force Majored” shall mean war (whether declared or not);
act of God; revolution; acts or omissions of Distributor or third
parties beyond the control of O2Diesel; faulty or impassable roads;
invasion; insurrection; riot; civil commotion; sabotage; military or
usurped power; lightning; explosion; fire; storm; drought; flood;
earthquake; epidemic; quarantine; strikes; acts or restraints of
governmental authorities; inability to secure materials, machinery,
equipment or labor; and laws and regulations of any governmental
authority.

     16.7. Severability. The provisions of this Agreement are
severable, and the unenforceability of any provision of this
Agreement shall not affect the enforceability of the remainder of
this Agreement. The Parties acknowledge that it is their intention
that if any provision of this Agreement is determined by a court to
be unenforceable as drafted, that provision should be construed in a
manner designed to effectuate the purpose of that provision to the
greatest extent possible under applicable law.

     16.8. Construction of Agreement. The Parties acknowledge that
they thoroughly have reviewed this Agreement and bargained over its
terms. Accordingly, this Agreement shall be construed without
regard to the Party or Parties responsible for its preparation and
shall be deemed to have been prepared jointly by the Parties.

 

 

     16.9. Cumulative Rights and Remedies. The rights and remedies
provided in this Agreement and all other rights and remedies available
to either Party at law or in equity are, to the extent permitted by
law, cumulative and not exclusive of any other right or remedy now or
hereafter available at law or in equity. Neither asserting a right nor
employing a remedy shall preclude the concurrent assertion of any other
right or employment of any other remedy, nor shall the failure to
assert any right or remedy constitute a waiver of that right or remedy.

     16.10.
Assignment. Distributor shall not transfer or assign any of
its rights under this Agreement to any Third Party without the prior
written consent of O2Diesel. O2Diesel may transfer or assign this
Agreement for financing purposes or to any Affiliate or successor
entity. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the Parties and their respective
successors, permitted assigns and legal representatives.

     16.11. Headings. All headings in this Agreement are included
solely for convenient reference, are not intended to be full and
accurate descriptions of the contents of this Agreement, shall not be
deemed a part of this Agreement, and shall not affect the meaning or
interpretation of this Agreement.

     16.12. Relationship of the Parties. The Parties are independent
contractors, and nothing in this Agreement shall be construed as
creating a partnership, joint venture, employment, franchise or agency
relationship among the Parties, or between a Party and any employee of
another Party.

     16.13. Amendments. This Agreement may be modified or amended
only by written agreement of the Parties.

     16.14. English Language. The Parties shall use the English
language in all communications relating to this Agreement, and the
English language version of this Agreement signed by the Parties
shall control over any and all translations.

     16.15. Entire Agreement. This Agreement constitutes the entire
agreement between the Parties concerning the subject matter of this
Agreement and supersedes all prior agreements between the Parties
concerning the subject matter hereof.

     16.16. Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute this
Agreement.

 

 

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized officers as of the
Effective Date.

	 	 	 
	O2DIESEL
CORPORATION

	By:

	 	/s/ Karim Jobanputra

	Name: Karim Jobanputra
	Title: Director
	 
	 	 
	[DISTRIBUTOR]
	 
	 	 
	By:

	 	/s/ Turki Bin Abdullah Bin Abdulaziz AL-SAUD

	Name: H.R.H.Prince Turki Bin Abdullah Bin Abdulaziz AL-SAUD
	Title: Director/Owner

 

 

Schedule A

Milestones

[TO BE DISCUSSED AND ADAPTED TO LOCAL CONDITIONS]

	 	 	 	 	 	 	 
	Task
	 	Target Date
	 	Final Date

	Distributor assigns at least one full time business
development staff person to development of markets for O2Diesel Product
	 	 
	 
	 	 
	Distributor completes and provides O2Diesel with the results
of a detailed study of the market for O2Diesel Product in the
Territory
	 	 
	 
	 	 
	Distributor provides O2Diesel with report regarding the
necessity of governmental approvals before Distributor can
begin sales of the O2Diesel Product
	 	 
	 
	 	 
	Distributor commences any
confirmatory field trials or other
activities necessary to obtain any necessary governmental
approvals
	 	 
	 
	 	 
	Distributor enters into agreements to secure logistics and
necessary blenders/distributors/jobbers to ensure distribution
of O2Diesel Product in first priority regions of the Territory
	 	 
	 
	 	 
	Distributer enters into agreements to secure supplies of base
diesel fuel, ethanol and cetane improver for the production of
O2Diesel Product
	 	 
	 
	 	 
	Marketing to first priority customers begins
	 	 
	 
	 	 
	Distributor signs an agreement for provision of O2Diesel
Product to its first large customer fleet
	 	 
	 
	 	 
	Distributor has storage, handling and distribution facilities
ready for the production and distribution of O2Diesel Product
	 	 
	 
	 	 
	Distributor’s first
commercial sale of O2Diesel Product
	 	 
	 
	 	 
	Distributor has all assigned trucks in its first large customer
	 	 

 

 

	 	 	 	 	 	 	 
	Task
	 	Target Date
	 	Final Date

	fleet running on O2Diesel Product
	 	 
	 
	 	 
	Distributor has signed agreements for provision of O2Diesel Product to a total
of at least                                      large customer fleets
	 	 
	 
	 	 
	Distributor has all assigned trucks in its least                                      large

customer fleets running on O2Diesel Product
	 	 

Schedule B

Minimum Purchase Quantities of O2Diesel Additive

	 	 	 
	1st YEAR

	 	20,000 M/T excluding Egypt or ROI Market.
	 
	 	 
	2nd Year

	 	20,000 M/T
	 
	 	 
	3rd Year

	 	To be Discussed and evaluated.

Schedule C

Pricing of O2Diesel Additive

(*)exv10w18

 

Exhibit
10.18

Novell, Inc.

Amendment 2005-1

to Severance Agreement

     THIS AMENDMENT 2005-1 (the “Amendment”) to the Severance Agreement (the “Agreement”) entered
into on May 29, 2003 between Novell, Inc. (the “Company”) and Ronald W. Hovsepian (the “Executive”)
is dated as of October 31, 2005.

     WHEREAS, the parties entered into the Agreement in order to provide the Executive with
appropriate severance payment rights in the event of his termination from the service of the
Company;

     WHEREAS, the parties have now agreed that the Agreement shall be amended in relevant part to
provide certain additional separation benefits to the Executive;

     WHEREAS, in connection with, and contingent upon, the execution of this Amendment, the
Company has granted to the Executive (i) 300,000 non-qualified stock options with respect to the
Company’s common stock (half of which are to vest with reference to the Executive’s continued
service with the Company (“Service Vesting”), and the other half to vest with reference to the
attainment of certain performance goals (“Performance Vesting”)), and (ii) 300,000 shares of
restricted common stock of the Company (half of which restricted common stock shares are to vest
subject to Service Vesting, and the other half to vest subject to Performance Vesting), with all
such grants subject to the terms and conditions as set forth in the grant documents.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
hereinafter set forth and intending to be legally bound, the Company and the Executive agree as
follows:

     1. Except as otherwise specifically provided herein, all provisions of the Agreement are
ratified and confirmed, and shall continue to apply in accordance with their terms.

     2. A new Section 2(c) is added to the Agreement as follows:

     (c) Termination in the Event of Separation from Service of Current CEO. In the event
of a Qualifying Termination (as described in Section 2(c)(i) below), the Executive shall be
provided the Separation Benefits (as described in Section 2(c)(ii)).

          (i) Qualifying Termination: A Qualifying Termination shall be deemed to have occurred if (A)
the individual occupying the position of Chief Executive Officer of the Company as of the date of
this Amendment is no longer the Chief Executive Officer of the Company; (B) the Executive is not
named Chief Executive Officer of the Company following the occurrence described in Section
2(c)(i)(A); and (C) the Executive resigns

1

 

his position voluntarily within one year of the date of the occurrence described in Section
2(c)(i)(A) following his provision of written notice to the Company of the asserted occurrence of a
Qualifying Termination at least 120 days prior to his date of resignation.

          (ii) Separation Benefits: The Separation Benefits shall consist of:

          (1) 150% of Executive’s Base Pay, payable as follows: (x) 50% of such aggregate amount shall
be payable to him in a lump sum in the seventh month following his Termination Date; and (y) the
remaining 50% shall be payable in equal monthly installments following the month in which the lump
sum payment is made, consistent with the Company’s past payroll practices.

          (2) Executive’s pro rated Incentive Pay for the year in which his Termination of Employment
occurs. The pro rated Incentive Pay shall be based on the Executive’s Incentive Pay for the year
in which Executive’s Termination Date occurs, multiplied by a fraction, the numerator of which is
the number of days during which Executive was employed by the Company in the year of his
termination and the denominator of which is 365. Such pro rated Incentive Pay shall be aggregated
with the amount payable pursuant to subsection (1) above and paid in the same form and over the
same period as described in that subsection.

          (3) For a period of twelve (12) months following Executive’s his Termination Date, Executive
shall continue to receive the medical and dental coverage in effect on his Termination Date (or
generally comparable coverage) for himself and, where applicable, his spouse and dependents, as the
same may be changed from time to time for employees generally, as if Executive had continued in
employment during such period; or, as an alternative, the Company may elect to pay Executive cash
in lieu of such coverage in an amount equal to Executive’s after-tax cost of continuing comparable
coverage, where such coverage may not be continued by the Company (or where such continuation would
adversely affect the tax status of the plan pursuant to which the coverage is provided). If the
Executive does not receive the cash payment described in the preceding sentence, the Company shall
take all commercially reasonable efforts to provide that the COBRA health care continuation
coverage period under section 4980B of the Code, shall commence immediately after the foregoing
twelve (12) month benefit period, with such continuation coverage continuing until the earlier of
(i) the end of the applicable COBRA health care continuation coverage period or (ii) the date on
which Executive is covered by the medical and dental coverage of his successor employer, if any.

          (4) With respect to any Company unvested stock options held by the Executive as of the date of
such Qualifying Termination which options, by their terms, are subject to Service Vesting, and
which were granted on or before the date hereof, the Company shall fully accelerate the vesting
of such stock options. Such options, plus any other options that previously became exercisable
and have not expired or been exercised, shall remain exercisable, notwithstanding anything in any
other agreement governing such options, until the latest of (A) December 31 of the calendar year in
which his Termination Date occurs; (B) the 15th day of the third month following his

2

 

Termination Date; or (C) the date of termination of the options originally set forth in the
relevant grant agreement. Executive’s options that are subject to Performance Vesting shall
continue in effect subject to the terms and conditions set forth in the relevant grant agreement.

          (5) With respect to any shares of Company common stock held by the Executive that are, at the
time of Qualifying Termination, subject to the Company’s repurchase right upon termination of the
Executive’s employment (“Restricted Stock”) and subject to Service Vesting, and which were granted
on or before the date hereof, the Company shall waive such repurchase right as to all such shares
and the shares shall be fully vested and nonforfeitable. Any Restricted Stock held by the
Executive that is subject to Performance Vesting shall continue in effect subject to the terms and
conditions set forth in the relevant grant agreement.

          (6) Executive shall receive any amounts earned, accrued or owing but not yet paid to Executive
as of his Termination Date, payable in a lump sum, and any benefits accrued or earned in accordance
with the terms of any applicable benefit plans and programs of the Company.

          (iii) Effect of Election. In the event that the Executive experiences a Qualifying
Termination and elects to receive the Separation Benefits, he shall be deemed to have waived any
right to severance benefits under any other provisions of this Agreement. All other provisions of
the Agreement, including, but not limited to Section 10 of the Agreement, shall continue to apply.
With respect to Section 11, subsection 11(a) shall not apply in the event the Executive experiences
a Qualifying Termination and elects to receive the Separation Benefits under this Section 2(c).

[SIGNATURE PAGE FOLLOWS]

3

 

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of
the date first written above.

	 	 	 	 	 
	NOVELL, INC.

	 	 	 	 
	 
	 	 	 	 
	By:
/s/ Jack L. Messman
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Name: Jack L. Messman
	 	 	 	 
	 
	 	 	 	 
	Title: Chairman and Chief Executive Officer
	 	 	 	 
	 
	 	 	 	 
	EXECUTIVE
	 	 	 	 
	/s/
Ronald W. Hovsepian
	 	 	 	 
	 

Ronald W. Hovsepian

	 	 	 	 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]