Document:

exh10_1.htm

 

Exhibit 10.1

 

CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR SUCH PORTIONS.  ASTERISKS DENOTE OMISSIONS.

 

 

 

 

 

 

RESEARCH AND DEVELOPMENT AGREEMENT

 

BY AND BETWEEN

 

ZBB Energy Corporation

 

AND

 

LOTTE Chemical Corporation

 

December 16, 2013

 

 

 

 

 

  

  

  

 

 

RESEARCH AND DEVELOPMENT AGREEMENT

 

INDEX

 

	
ARTICLE 1.  DEFINITIONS

	
2

	
ARTICLE 2.  CONTRACT OF DEVELOPMENT

	
3

	
ARTICLE 3.  PROJECT TARGET AND PROJECT PLAN

	
4

	
ARTICLE 4.  REPORT ON DEVELOPMENT

	
5

	
ARTICLE 5.  TECHNICAL INSTRUCTION

	
5

	
ARTICLE 6.  PROJECT TECHNOLOGY

	
6

	
ARTICLE 7.  PAYMENTS

	
7

	
ARTICLE 8.  INFRINGEMENT

	
8

	
ARTICLE 9.  CONFIDENTIALITY

	
8

	
ARTICLE 10. TERM AND TERMINATION

	
9

	
ARTICLE 11. NOTICE

	
10

	
ARTICLE 12. ARBITRATION

	
11

	
ARTICLE 13. NON-WAIVER

	
11

	
ARTICLE 14. FORCE MAJEURE

	
11

	
ARTICLE 15. ASSIGNMENT

	
11

	
ARTICLE 16. GOVERNING LAW

	
12

	
ARTICLE 17. AMENDMENTS

	
12

	
ARTICLE 18. LANGUAGE

	
12

	
ARTICLE 19. SUPPLY AGREEMENT; CHANGE OF CONTROL

	
12

	
Appendix A. The Project Plan

	
14

	
Appendix B. Background Technology

	
18

	
Appendix C. Technical Information, including Know-How

	
21

	
Appendix D. Steering Committee Schedule

	
22

 

 

  

- 1 -

  

 

 

RESEARCH AND DEVELOPMENT AGREEMENT

 

 

THIS RESEARCH AND DEVELOPMENT AGREEMENT (“Agreement”), effective the 16th day of December, 2013 (the “Effective Date”), is by and between LOTTE CHEMICAL CORPORATION (“LOTTE”), a division of LOTTE Group, a Korean company having its place of business at The LOTTE Tower Building, 395-67 Shindaebang-Dong, Dongjak-Gu, Seoul, the Republic of Korea, and ZBB ENERGY CORPORATION (“ZBB”), a Wisconsin Corporation having its place of business at N93 W14475 Whittaker Way, Menomonee Falls, Wisconsin, USA.  ZBB are each a “Party” and together are the “Parties.”

 

 

 

WITNESSETH :

 

 

ZBB and LOTTE previously entered into a Collaboration Agreement dated April 13, 2011 for the joint development project on the V3 Zn-Br Chemical Flow Battery, which was completed December 31, 2012 (the “2011 Collaboration Agreement”).

 

LOTTE has identified energy storage as a priority business and desires continued strategic partnership in the chemical flow battery (CFB) business.

 

WHEREAS, LOTTE desires that ZBB is willing to develop and provide LOTTE with the Products, the specification for which shall be provided by LOTTE.

 

NOW, THEREFORE, in consideration of the premises and covenants contained herein, the Parties hereto agree as follows:

 

ARTICLE 1: DEFINITION

 

 

For the purpose of this Agreement:

 

1.1. The term “Product” shall mean a 500kWh Zn-Br CFB system, which consists of a 500kWh Zn-Br CFB module, including the ECM software uniquely necessary to operate the module and the full STARAIO software that may be necessary for troubleshooting.

 

1.2. The term “Development” shall mean any and all work conducted by ZBB in accordance with the Project Plan provided in Article 3 hereof.

 

1.3. The term “Results” shall mean all preparation examples, techniques, technical data, inventions or any other technical information, whether patentable or not, to be made or acquired by ZBB as the results of the Development during the life of this Agreement.

 

1.4. “CFB” means Zinc Bromide (Zn-Br) chemical flow battery.

 

1.5. “Effective Date” means the date both Parties have executed this Agreement.

 

 

  

- 2 -

  

 

1.6. “Project Start Date” means January 1st, 2013.

 

1.7. “Intellectual Property” means patents and any information, data, designs, ideas, inventions, methods, processes, apparatus and equipment, material compositions, formulas, software, trade secrets, know-how, works of authorship and copyrightable materials, whether or not any of the foregoing are registered or registerable, applications for patents on any of the foregoing and all rights to apply to register any of the foregoing.

 

1.8. “Project Technology” means the Intellectual Property arising from this Project.

 

1.9. “Background Technology” means the Intellectual Property and Patent Rights owned, developed or acquired by a Party, as further described in Appendix B hereto or in Appendix B to the 2011 Collaboration Agreement, and any other Intellectual Property owned, developed or acquired by a Party or its Affiliates prior to the 2011 Collaboration Agreement.

 

1.10. “Project” means the Development of the Product.

 

1.11. “Project Term” means the period for performing the Project, as further defined in Article 10.1.

 

1.12. “Territory” means all global territories with the exception of China and the United States.

 

1.13. The following Appendices are made a part of this Agreement:

 

Appendix A – The Project Plan

 

Appendix B – Background Technology

 

Appendix C – Technical Information, including Know-How

 

Appendix D – Steering Committee Schedule

 

 

 

ARTICLE 2 :  CONTRACT DEVELOPMENT

 

 

2.1. LOTTE hereby contracts the Development to ZBB, and ZBB accepts such contract under the terms and conditions of this Agreement.

 

2.2. ZBB hereby represents and warrants that it has developed and acquired certain basic technologies relating to the Products and that it has, to its best knowledge, a sufficient capability to undertake and complete the Development required by LOTTE and contemplated hereunder.

 

2.3. ZBB agrees that, during the Project Term, ZBB shall not conduct a research program, licensing or enter into a joint venture for the Product with any other customer, supplier or partner in the energy storage business.

 

The final Product design package is the property of LOTTE and will be shared only between LOTTE and ZBB; provided that for the avoidance of doubt, sub-systems related to the Product, including but not limited to battery stacks, converters, pumps, and software, may be used by ZBB to create, modify, manufacture and sell other customer system designs except the original software unique to the Product developed during the Project. LOTTE has the right to internally utilize the final Product design package and unique project software with no further charge and including the sale of complete systems utilizing the final Product design package and including the unique project software. Product software is and will be owned and controlled by ZBB, provided that ZBB shall grant a sole license to LOTTE for the ECM software uniquely necessary to operate the Product and the full STARAIO software that may be necessary for troubleshooting.  At the request of LOTTE and at LOTTE’s expense, ZBB shall place software source code for the Product into a third party technology escrow, solely for the purpose of enabling LOTTE to access and use the source code for the support of the Product in the event of a ZBB bankruptcy.

 

 

  

- 3 -

  

 

2.4. The Parties shall establish a committee (“Steering Committee” of “SC”) to oversee the implementation, progress and results of the Project. Each Party shall appoint two (2) persons to the Steering Committee, one of which will be a business representative, one of which will be a person who has technical knowledge. The Steering Committee shall direct the Project Plan and may modify it to the extent necessary to complete the Project.  The Steering Committee shall meet as stipulated in Appendix D.

 

2.5. With respect to certain license rights provided to ZBB by GAS Technology Institute, in a License Agreement between those entities dated April 15, 2013 (“GTI License”), ZBB agrees to provide to LOTTE a royalty-bearing sublicense to the Zn-Br field of use as may be required for LOTTE to utilize GTI Technology, as defined in the GTI License, in the Product. The royalty due from LOTTE to ZBB shall not exceed [****]% of the “Gross Profit Margin” of the battery stack price used in the most recent sale to a third party. If no third party sales have occurred, it will not be paid.  LOTTE shall report royalties and pay ZBB on a monthly basis.  ZBB represents and warrants that it has the full and unencumbered right, power and authority to grant the sublicense to the Zn-Br field of use granted by ZBB to LOTTE. ZBB shall ensure LOTTE’s sublicense rights survive any termination of the GTI License.

 

2.6           The Parties will share all patent filing, prosecution and examination costs, any patent maintenance fees, and all other costs of procuring and maintaining such patents on an equal, 50-50 basis.  If either Party ceases to pay its share of such costs, its co-ownership rights shall pass to the other Party

 

 

 

ARTICLE 3: PROJECT PLAN

 

 

3.1. ZBB shall conduct the Development in accordance with the Project Plan as stipulated in Appendix A.

 

3.2 Any changes to the Project Plan must be mutually agreed to by both Parties in prior written approval of LOTTE.

 

3.3 In the event that ZBB fails to complete the Development for each stage within the period for the stage stipulated in Appendix A by force majeure or other cause, LOTTE and ZBB may negotiate the extension of the period for such stage and the successive schedule of the Development.

 

 

  

- 4 -

  

 

ARTICLE 4 : REPORT ON DEVELOPMENT

 

 

4.1. ZBB shall submit to LOTTE on a quarterly basis, a written report on ZBB’s Development for consideration at Steering Committee meeting. Should any schedule slippage be known by ZBB to have occurred, then a written notice of such slippage and the reasons therefor shall accompany the reports for purposes of the negotiation stipulated in the paragraph 3 of Article 3.

 

4.2. ZBB must supplement the submitted report with such final Results as acquired by ZBB in answer to the request of LOTTE. Said detailed report shall include information regarding the Development, the Results acquired by ZBB, regardless of whether patentable or not patentable, and technical estimates, and ZBB shall not knowingly conceal from LOTTE with respect to any significant part of the Development for any purpose or reason.

 

4.3 Whenever reasonably requested by LOTTE in writing, ZBB shall answer, in writing if so requested, any written question by LOTTE in connection with the Development and the Results.

 

4.4. Upon completion of the Project Plan, ZBB shall submit to LOTTE a written final report detailing the work carried out within 30 days after the completion of the Development, the Project Technology obtained and the performance test of 500 kWh Zn-Br CFB system at ZBB site.

 

4.5. ZBB shall deliver to LOTTE and set-up a 500kWh Zn-Br CFB system which includes a 500kWh Zn-Br CFB module, PCS (Power Conversion System), Transformer, System Communications and Data Reporting, and software (operational program such as full STARAIO and ECM test software). ZBB shall perform a commissioning test before the end of the Project.

 

 

 

ARTICLE 5 : TECHNICAL INSTRUCTION

 

 

5.1. Upon the written request of LOTTE, within 30 days after the completion of each stage of the Development, ZBB shall give necessary technical instruction, guidance and training to the LOTTE’s staff on the Results developed by ZBB during the period of each stage of the Development, subject to the terms and conditions to be agreed upon, case by case, between LOTTE and ZBB.

 

5.2. ZBB shall perform the Development with engineers and technicians that are qualified and that shall perform the Development according to applicable professional standards and with reasonable skill, care and diligence.

  

- 5 -

  

 

ARTICLE 6 : PROJECT  TECHNOLOGY

 

 

6.1. All non-patented Project Technology (including know-how and trade secrets in those instances where the Parties decide not to pursue patent protection) shall be considered jointly owned by the Parties

 

6.2. ZBB shall inform LOTTE of any patentable invention it has made or conceived in the course of carrying out the Project.

 

6.3. ZBB and LOTTE shall have the full right, title and interest in respect of Inventions as follows:

 

(a) Both Parties have joint ownership in Project Technology. Both Parties have the right to utilize the Project Technology with no charge

 

(b) Neither Party may license the Project Technology to any third party without the prior written permission of the other Party; provided that either Party retains the right to use contract manufacturers for the benefit of that Party.  Neither Party can license the design package for the Product to any third party without the other Party’s consent.

 

(c) Each Party must take appropriate measures to maintain with no less than a reasonable degree of care and diligence, the confidentiality of all information regarding the Project Technology in any agreements with third parties.  Each Party may disclose information regarding the Project Technology only to any of the subsidiaries, directors, employees, advisors, attorneys, consultants, contractors, or other agents thereof who are informed of its confidential nature and are legally or contractually restricted from disclosing such information under the terms at least as restrictive as those stated herein.

 

 

6.4. Notwithstanding Article 6.3 (b), (i) LOTTE has a right to license the Project Technology to LOTTE’s affiliates and (ii) ZBB has the right to license to any party the subsystem components such as power conversion system, transformer, battery stacks, system communications and data reporting and other software, each without the prior written permission of the other Party.

 

6.5. ZBB shall give training to LOTTE’s staff for technology transfer of the Project Technology developed by ZBB during the Project Term as specified in the Appendix A (Figure 3).

 

6.6. ZBB shall submit the possible patentable list among Project Technology to LOTTE after 12 months and 18 months from the Effective Date.  The Steering Committee shall decide which will be applied for a patent among the possible patentable list and which Party will proceed with patent application.  All Project Technology will be jointly filed with each Party as a co-assignee. ZBB shall work with LOTTE to file all patent applications approved by the SC and shall file at least one patent application within the Project Term.

 

 

  

- 6 -

  

 

ARTICLE 7 : PAYMENTS

 

 

7.1. In consideration of the Development conducted by ZBB, LOTTE agrees to pay a total fixed amount of THREE Million US Dollars ($3,000,000) to ZBB according to the following schedule:

 

(a) $2,250,000 paid in six equal ($375,000) payments in the following installments:

 

(1) $375,000: To be paid 20 days after the Effective Date

 

(2) $375,000: Upon ZBB’s delivery to LOTTE of the first quarterly report and after the first SC meeting (expected Feb. 2014)

 

(3) $375,000: Upon ZBB’s delivery to LOTTE of the second quarterly report and after the second SC meeting (expected May 2014)

 

(4) $375,000: Upon ZBB’s delivery to LOTTE of the third quarterly report and after the third SC meeting, which will include the initial design review (expected Aug. 2014)

 

(5) $375,000: (i) Upon ZBB’s delivery to LOTTE of the fourth quarterly report and after the fourth SC meeting and (ii) [****]% DC round trip EE on Stack at 31cycle (expected Nov. 2014)

 

(6) $175,000: Upon shipment of the Product.

 

(7) $ 200,000: Upon (i) ZBB’s delivery to LOTTE of its final report and after the fifth SC meeting (ii) Product performance at ZBB >[****]% DC round trip EE on 500kWh module DC bus at 11cycles, (iii) 500kWh Zn-Br CFB system set-up and finishing commissioning at LOTTE site, (iv) Product performance at LOTTE >[****]% DC round trip EE on 500kWh module DC bus at 11cycles, and (v) filing one patent application.

 

(b) $750,000 will be paid after ZBB’s delivery to LOTTE of an invoice to enable ZBB’s purchase of materials to be used in the Product as specified in Section 4.5.

 

(c) The foregoing structure of Project payments is illustrated in Appendix A (Figure 3).

 

(d) SC meetings will take place within the quarter specified in Section 2.4 and Article 4 above.

 

7.2. The sum for installment (a) shall not be paid by LOTTE if ZBB does not accomplish the stage target of Project Plan. But, in that event, Steering Committee shall decide whether to enter into the next step or not after checking if there are reasonable and corresponding results.

 

7.3. All payments due and payable under this Agreement shall be made in US Dollars and remitted to a bank account of ZBB reasonably designated by ZBB.

 

 

  

- 7 -

  

 

ARTICLE 8 : INFRINGEMENT

 

 

8.1. ZBB shall seek to avoid infringement of any intellectual property rights belonging to the third party so that LOTTE may manufacture, use and sell the Products, applying any Results of the Development, worldwide, except for China and the United States.

 

8.2. Should any of the Products manufactured by LOTTE or ZBB partially or totally infringe on any intellectual property rights belonging to the third party which shall make a claim against LOTTE for alleged infringement of such intellectual property rights, due to such Results of the Development, ZBB shall be responsible for the handling of the claim and LOTTE shall in no respect have any responsibility for the claim from such party, except for claims arising in China or the United States.

 

8.3  Notwithstanding the foregoing, ZBB will have no defense, indemnification or hold harmless obligation under this Article 8 for any claim to the extent it arises from (i) LOTTE’s use of the Product or Project Technology in a manner not authorized by the terms of Agreement; (ii) modification of the Product or Project Technology by anyone other than ZBB; (iii) combination of Product or the Project Technology with any other products, services, hardware, software, technology or other materials; (iv) failure by LOTTE to cease using the Product or Project Technology as requested by ZBB to avoid infringement, after ZBB notifies LOTTE of the potential infringement, subject to the process set forth below in Section 8.4.

 

8.4. From receipt of the notice described in Section 8.3(iv) above and for a period of 15 days thereafter, the Parties shall discuss the potential infringement matter and a strategy for handling the same.  If, at the end of such 15-day period, ZBB continues to believe in good faith that the Product or Project Technology is infringing the intellectual property rights of a third party, ZBB will have no defense, indemnification or hold harmless obligation under this Section 8 for any claim to the extent it arises from failure by LOTTE to cease using the Product or Project Technology following the end of such 15-day period.

 

8.5. In any action to enforce the Parties’ patent rights, the Parties must agree to file any such litigation.  Once the parties agree to file litigation, both Parties shall cooperate with each other in any such litigation, share equally in the costs of any such litigation and share equally in the recovery of any damages.

 

 

 

ARTICLE 9 : CONFIDENTIALITY

 

 

9.1. Each Party agrees to maintain the confidentiality of all information relating to the Development and the Results developed by ZBB and the existence and contents of this Agreement.

 

9.2. Each Party also agrees not to communicate or disclose, directly or indirectly to any third party, except any of the subsidiaries, directors, employees, advisors, attorneys, consultants, contractors, or other agents thereof who are informed of its confidential nature and are legally or contractually restricted from disclosing such information under the terms at least as restrictive as those stated herein, without the prior written consent of the other Party, any information relating to the Development and the Results. The obligations set forth herein shall survive any termination of this Agreement.

 

9.3. Each Party further agrees not to use the Development and Results in any manner except as contemplated under the terms of this Agreement.

 

9.4. Each Party further agrees that monetary damages may be inadequate to compensate the other Party for any breach of its confidentiality obligations set forth herein. Accordingly, the breaching Party agrees and acknowledges that any such breach or threatened breach may cause irreparable injury to the non-breaching party and that, in addition to any other remedies that may be available, in law, in equity or otherwise, non-breaching party may be entitled to obtain injunctive relief against the threatened breach or the continuation of any actual breach.

 

 

  

- 8 -

  

 

ARTICLE 10 : TERM AND TERMINATION

 

 

10.1. The Project Term shall be effective as of the Project Start Date and shall continue for 24 months after the Effective Date and can renew for an additional period upon mutual written agreement, unless earlier terminated by mutual written agreement of the Parties or as otherwise provided herein.

 

Thereafter, the Steering Committee shall meet to determine if the Project should be extended, and define the scope of any such extension.  Any recommendation to further extend the Project will be presented to authorized management of the Parties and must be approved in writing before the Project may be further extended.

 

10.2 (a) LOTTE may, on 30 days’ prior written notice given to ZBB at any time during the period of this Agreement, terminate this Agreement in the event that (i) ZBB does not commence the Development of the each stage within 90 days of the beginning day decided hereunder by any causes whatsoever attributable to its negligence, and does not submit to LOTTE any reports stipulated in Article 4 or commits any breach of other provisions of this Agreement; (ii) ZBB breaches its obligations of the confidentiality hereunder, and discloses, transfers, assigns or otherwise disposes of the Results to any third parties without the prior written consent of LOTTE; or (iii) ZBB breaches its other material obligations hereunder.

 

(b) ZBB may, on 30 days’ prior written notice given to LOTTE at any time during the term of this Agreement, terminate this Agreement in the event LOTTE does not make any payments due and payable hereunder for the reasons attributable to LOTTE, breaches its obligations of the confidentiality hereunder, and discloses, transfers, assigns or otherwise disposes of the Results to any third parties without the prior written consent of ZBB; or (iii) LOTTE breaches its other material obligations hereunder.

 

For the purposes of this paragraph, the said 30 day period shall commence from the date the notice is received by LOTTE or the ZBB, as the case may be, and such notice shall contain a statement setting forth the reasons for terminating this Agreement. The Party receiving said notice may, within said 30 day period, remedy such breach or other basis for terminating this Agreement as stated in said notice, in which event such termination will not become effective.

 

(c) This Agreement shall terminate immediately and without any prior written notice if ZBB or LOTTE becomes dissolved, insolvent or bankrupt, or enters into or becomes involved in a similar proceeding. In that case, Project Technology developed before termination shall be jointly owned by ZBB and LOTTE. In case of the termination stipulated in this Section 10.2(c), the rights granted to LOTTE to the Project Technology shall be deemed licenses of “intellectual property” for purposes of the United States Code, Title 11, Section 365(n). In the event of ZBB’s bankruptcy and a subsequent rejection or disclaimer of this Agreement, or the license rights granted herein, by a bankruptcy trustee or by ZBB as a debtor in possession, whether under the law of the United States, or in the event of a similar action under applicable law, LOTTE may elect to retain its license rights, subject to and in accordance with the provisions of the United States Code, Title 11, Section 365(n) or other applicable law.

 

 

  

- 9 -

  

 

10.3 Even after the expiration of this Agreement, if so requested by LOTTE, ZBB agrees to provide assistance and service to LOTTE if problems relating to the Results occur. The detailed terms and conditions in connection with such assistance and service shall be discussed and determined separately at that time, and ZBB shall be entitled to reasonable compensation for such assistance and service.

 

10.4. Article 1, 6, 8, 9, 12, 15, 16 and 19 shall be survived after termination and expiration of this Agreement.

 

ARTICLE 11 : NOTICE

 

 

Any notice required or permitted to be given hereunder shall be in writing, and may be given by personal delivery, registered airmail, postage prepaid and return receipt requested, or by facsimile or email at the address as follows or at such other address or number as may be provided in writing by either Party.

 

If to ZBB:

 

ZBB Energy Corporation

N93 W14475 Whittaker Way

Menomonee Falls, Wisconsin 53051

Attention: Dan Nordloh

 

If to LOTTE:

 

LOTTE Chemical Corporation

24-1, Jang-Dong

Yuseong-Gu

Daejeon, 305-726 Korea

 

With a copy, for matters relating to legal issues, to:

 

LOTTE Chemical Corporation

The LOTTE Tower Building

395-67 Shindaebang-Dong

Dongjak-Gu

Seoul, 156-711 Korea

 

 

  

- 10 -

  

 

ARTICLE 12 : ARBITRATION

 

 

All disputes, controversies or differences which may arise between the Parties hereto, out of or in relation to or in connection with this Agreement, or the breach thereof, shall be finally settled by arbitration in Singapore unless otherwise agreed to in writing by the parties. The award rendered by the arbitrator(s) shall be final and binding upon both the Parties. The arbitration shall be conducted in accordance with the Commercial Arbitration Rules of The Singapore International Arbitration Centre for the time being in force, which rules are deemed to be incorporated by reference in this clause.  The arbitration shall be held and conducted in accordance with the following terms: (i) the language to be used in the arbitration shall be English (ii) the tribunal shall consist of a sole arbitrator; and (iii) the governing law shall be that of the state of Delaware, United States, as provided in Article 16.

 

The award rendered by arbitrator(s) shall be final and binding upon both Parties and judgment thereon may be entered in any court of competent jurisdiction.

 

 

 

ARTICLE 13 : NON-WAIVER

 

 

The failure of either Party to enforce at any time or for any period of time any of the provisions of this Agreement shall not be construed as a waiver of such provisions or the right of the Party thereafter to enforce each and every provision.

 

 

 

ARTICLE 14 : FORCE MAJEURE

 

 

Either Party shall not be liable to the other Party for failure or delay in performance of any of its obligations under this Agreement for the time and to the extent such failure or delay is caused by riot, civil commotions, wars, hostilities between nations, governmental laws, orders or regulations, embargoes, actions by the government or any agency thereof, acts of God, storms, fires, accidents, strikes, sabotages, explosions, or other similar or different contingencies beyond its reasonable control of the respective Parties.

 

 

 

ARTICLE 15 : ASSIGNMENT

 

 

Neither Party shall assign this Agreement including any of its rights and obligations arising from this Agreement and assign all or any of Project Technology under this Agreement without the prior written consent of the other Party.  Notwithstanding this provision, either Party (“Assignor”) may assign this Agreement, all or any of Project Technology and all or any of its rights and/or obligations to its parent company that controls that Party, to an affiliate of such parent company, or to a third party that acquires more than fifty percent (50%) of its shares or substantially all of the Party’s assets (“Permitted Assignee”), without the written consent of the other Party, provided that prior to any such assignment the Permitted Assignee agrees in writing to be bound by all of the terms, conditions and provisions contained herein.

 

 

  

- 11 -

  

 

ARTICLE 16 : GOVERNING LAW

 

 

The validity and interpretation of this Agreement and each clause and part hereof shall be governed by the laws of the State of Delaware, United States, without reference to is conflict of laws provisions.

 

 

 

ARTICLE 17 : AMENDMENTS

 

 

No amendment or supplement hereof shall be effective or binding on either Party hereto unless reduced to writing and executed by the duly authorized representatives of Parties hereto.

 

 

 

ARTICLE 18 : LANGUAGE

 

 

The language to be used in rendering reports including technical information furnished to LOTTE by ZBB under this Agreement shall be English.

 

 

 

ARTICLE 19 : SUPPLY AGREEMENT; CHANGE OF CONTROL

 

 

19.1. As soon as practicable following the execution of this Agreement, ZBB and LOTTE agree to negotiate in good faith and enter into a supply agreement, pursuant to which LOTTE will agree to be the primary manufacturer of the Product on behalf of ZBB (the “Supply Agreement”).

 

19.2. As to ZBB, “Change of Control” means a change of control of ZBB, where the acquiring company has its headquarters in the Territory.

 

19.3. In the event ZBB becomes aware of a possible Change of Control of ZBB, ZBB shall give LOTTE 30 days’ notice in writing.  Upon a Change of Control, automatically (a) ZBB shall relinquish its rights to manufacture the Product as of the date of closing of the acquisition of ZBB by the acquiring company, and (b) the acquiring company shall have no right to manufacture the Product.

 

19.4. During the 30-day notice period set forth in Section 19.3, LOTTE shall have an option to enter into a supply agreement with ZBB or the acquiring company for fulfilling any orders of ZBB currently in backlog or required by any existing agreements of ZBB at the time of ZBB’s notice to LOTTE.  If LOTTE and ZBB or the acquiring company are unable to timely enter into a supply agreement, ZBB or the acquiring company shall have the right to fulfill any and all such orders, subject to payment by ZBB to LOTTE of [****]% of the “Gross Profit Margin” of the Product price as sold to third parties.

 

 

  

- 12 -

  

 

AS WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives in duplicate original on the dates specified below and intend this Agreement to be effective as of the Effective Date set forth on the first page of this Agreement.

 

	LOTTE Chemical Corporation 	ZBB Energy Corporation
	 	 
	By: /s/ D. W. Lee                      	By: /s/ Eric C. Apfelbach                  
	Name: Dong Woo Lee	Name: Eric Apfelbach
	Title: Chief Research Director 	Title: President & CEO
	Signature Date: December 16, 2013    	Signature Date: December 16, 2013     

 

 

[Note: Effective Date is defined on the first page.]

 

- 13 -exh10_2.htm

Exhibit 10.2

 

CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR SUCH PORTIONS.  ASTERISKS DENOTE OMISSIONS.

 

AMENDED LICENSE AGREEMENT

 

This Amended License Agreement (“Amended License Agreement”) is entered into as of December 16, 2013 (“Effective Date”), by and between ZBB Energy Corporation (“ZBB”), a Wisconsin Corporation having its place of business at N93 W14475 Whittaker Way, Menomonee Falls, Wisconsin, USA and Lotte Chemical Corporation (“Lotte”), f/k/a Honam Petrochemical Corporation, a Korean company having its place of business at The LOTTE Tower building, 395-67, Shindaebang-Dong, Dongjak-Gu, Seoul, 156-711 Korea; each individually referred to as a “Party” and collectively as the “Parties.”

 

BACKGROUND

 

WHEREAS the Parties entered into Collaboration Agreement (defined in Section 1) for the joint development of ZnBr flow batteries which was completed as of January 31, 2012.

 

WHEREAS the Parties entered into a License Agreement on September 9, 2013 to grant Lotte certain licenses to use the Technology (defined in Section 1).

 

WHEREAS the Parties agreed to amend a License Agreement dated on September 9, 2013 on the basis of Letter of Intent Amendment A on September 10, 2013.

 

WHEREAS ZBB desires to grant a license to Lotte to use the Technology and Lotte desires to obtain a license to use the Technology from ZBB, in order to manufacture and sell certain Products (defined in Section 1), as specified in the license grant below and in accordance with the terms and conditions of this Amended License Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the Parties agree as follows:

 

AGREEMENT

 

1. DEFINITIONS

 

The following capitalized terms have the meanings set forth below:

 

“Background Technology” means the technology, know how and technical information and all Intellectual Property Rights in and to the technology, know how and technical information owned, developed or acquired by ZBB prior to the Collaboration Agreement, or outside the scope of the Collaboration Agreement, which has application in the zinc bromide flow battery and power control systems field, as identified in Exhibit A.

 

“Business Day” means a day on which commercial banks in the United States and Korea generally are open to conduct their regular banking business.

 

“Collaboration Agreement” means the Collaboration Agreement signed by Lotte (f/k/a Honam Petrochemical Corporation) and ZBB dated April 13, 2011 which was executed between the Parties.

 

“Research Development Agreement” means agreement signed by Lotte and ZBB dated December 16th, 2013 which was executed between the Parties.

 

“Exclusive Territory” means the territory of the Republic of Korea.

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

1

  

 

“Intellectual Property Rights” or “IPR” means all intellectual property and proprietary rights throughout the world, whether existing under statute or at common law or equity, now or hereafter in force or recognized, including: (a) trade secrets, know-how, trademarks, service marks, copyrights (including all other literary and author rights), patents, inventions, designs, logos and trade dress, moral rights, mask works, rights of personality, publicity, and privacy, rights in customer information, rights (if any) in domain names; (b) any application or right to apply for any of the rights referred to in clause (a); (c) all renewals, reissues, extensions, divisions, continuations, continuations in part, future equivalents, and restorations thereof, now or hereafter in force and effect; and (d) all rights or causes of action for infringement or misappropriation of any of the foregoing, including the right to collect and retain damages from those causes of action.

 

“Non-Exclusive Territory” means all global territories with the exception of China, the United States, and the Exclusive Territory.

 

“Product” means the ZnBr flow battery manufactured by Lotte using any of the Technology.

 

“Program Technology” means, collectively, all of the Program Technology (as defined in the Collaboration Agreement and the Research Development Agreement, respectively) arising from the Project (as defined in the Collaboration Agreement and the Research Development Agreement, respectively).

 

“Technology” means the ZnBr flow battery module, ZnBr flow battery stacks, and technical information and know how related to the foregoing described in Exhibit B (including all ZBB Background Technology included therein), and all IPR associated with the foregoing. For purposes of this Agreement, the definition “Technology” does not include any Program Technology.

 

2.            LICENSE GRANT

 

2.1           Exclusive License. Conditioned upon Lotte’s full compliance with all of the terms herein, ZBB hereby grants to Lotte an exclusive, non-assignable, non-transferable, non-sublicenseable, royalty-free limited license to use the Technology in the Exclusive Territory in order to make, have made, offer to sell, sell and install the Product in the Exclusive Territory.

 

2.2           Non-Exclusive License. Conditioned upon Lotte’s full compliance with all of the terms herein, including payment of all fees and Royalties as set forth in Section 4, ZBB hereby grants to Lotte a non-exclusive, non-assignable, non-transferable, non-sublicenseable (a) royalty-free limited license to reproduce, install, operate and use the Technology solely for Lotte Group’s internal use and only at any facility or location owned, leased or operated by or on behalf of Lotte Group in the Non-Exclusive Territory and in the United States, in order to make and have made, the Product, provided that each such facility or location shall have a primary purpose other than energy storage, except in the limited circumstances where energy stored solely to service a facility or building owned, leased or operated by the Lotte Group; and (b) royalty-bearing limited license to offer to sell and sell the Product in the Non-Exclusive Territory subject to the payment of the Royalties as set forth in Section 4 and Exhibit C (Royalty Rates). “Lotte Group” means Lotte and any Affiliate of Lotte (as defined in the Collaboration Agreement).

 

2.3           ZBB Support. Lotte can offer to sell, sell or install Products in the United States, if ZBB gives its prior written approval, in each case at ZBB’s discretion. In this case, upon Lotte’s request, ZBB and Lotte will use commercially reasonable efforts to negotiate a separate written agreement between ZBB and Lotte to support the approved Lotte sales activity (for example, a separate agreement for sales and installation support services).

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

2

  

 

2.4           No Other Rights.  Except for the rights expressly granted in Sections 2.1, 2.2 and 2.3 of this Amended License Agreement, Lotte has no other rights in the Technology, express or implied. All rights in the Technology, except for those license rights expressly granted to Lotte in Sections 2.1, 2.2 and 2.3 of this Amended License Agreement, are reserved and retained by ZBB.

 

2.5           License Limitations.

 

(a)           Lotte may decompile, modify or improve the Technology for research and manufacture of new version ZnBr flow battery for sale after collaboration, in accordance with the terms and conditions of this Amended License Agreement;

 

(b)           Subject to this Amended License Agreement, Lotte will not reverse engineer, decompile, modify or disassemble any of ZBB’s new Background Technology developed after the end date of the Collaboration Agreement Project Term (defined in the Collaboration Agreement), except and only to the extent such activity is permitted by the Collaboration Agreement or by applicable law notwithstanding this limitation;

 

 

(c)           Lotte will not remove any proprietary notices or labels on the Technology or any copy thereof. Lotte will not use ZBB’s trademarks, trade names, logos or other proprietary marks, or any contraction, abbreviation or simulation of the trademark or name of ZBB in any manner in connection with this Agreement, including advertising, publicity or otherwise, unless it is permitted under a separate written agreement between the parties;

 

(d)           Lotte will not make any representations, warranties, or other commitments on behalf of ZBB to any third party; and

 

(e)           Lotte will not exercise any license rights granted herein in violation of any applicable laws, rules, regulations and ordinances in the Exclusive or Non-Exclusive Territories or the United States.

 

3.            TERM AND TERMINATION

 

3.1           Term. This Amended License Agreement will commence as of the Effective Date and will remain in effect (the “Term”) unless otherwise terminated as set forth below. The “Royalty Term” will commence as of the Effective Date and will remain in effect until December 31, 2019.

 

3.2           Termination for Cause.  Either Party may terminate this Amended License Agreement for an uncured Cause (as defined below) upon at least thirty (30) days prior written notice to the other Party.  If the subject Cause is not cured within such thirty (30) day period, then the Party providing notice may terminate this Amended License Agreement.  “Cause” means the material breach or default of the other Party in the performance of the terms of this Amended License Agreement.

 

3.3           Termination for Bankruptcy. Either Party may terminate this Agreement by giving notice in writing with immediate effect to the other Party upon occurrence of any of the following events:

 

ZBB and Lotte Confidential Information

Amended License Agreement

3

  

 

	
(a)  

	
The other Party (i) institutes a voluntary case or undertakes actions to form an arrangement with creditors for the purpose of paying past due debts or seeking liquidation, reorganization, moratorium of payments or the suspension of payment obligations, under any bankruptcy law (or any successor statute or similar statute in any relevant jurisdiction) or otherwise, or consents to the institution of an involuntary case thereunder against it, (ii) files a petition in bankruptcy, (iii) applies for, or consents or acquiesces to the appointment of a receiver, curator (including a temporary curator), liquidator, sequestrator, trustee or other officer with similar powers, (iv) makes an assignment for the benefit of creditors or (v) admits in writing its inability to pay its debts generally as they become due.

 

	
(b)  

	
An involuntary case is commenced seeking the liquidation or reorganization of the other Party under any bankruptcy law (or any successor statute or similar statute under any relevant jurisdiction) or any similar proceeding under any other law and (i)  the petition commencing the involuntary case is not dismissed within 60 days of its filing, (ii) an interim trustee is appointed to take possession of all or a portion of the property, and/or to operate all or any part of the business of the other Party and such appointment is not vacated within 60 days, (iii) an order for relief is issued or entered therein; or (iv) a decree or order of a court having jurisdiction for the appointment of a receiver, liquidator, sequestrator, trustee or other officer having similar powers is entered.

 

3.4           Effects of Termination. In the event of the termination of this Amended License Agreement by ZBB under Section 3.2 due to Lotte’s Cause or under Section 3.3, Lotte’s license grants under Sections 2.1, 2.2 and 2.3 will terminate immediately, and Lotte will cease using the Technology and distributing the Product, but ZBB shall not refund any payment and other fee already received pursuant to this Amended License Agreement and Lotte will remain obligated to pay all amounts due and owing pursuant to this Amended License Agreement up to the date of termination. In the event of the termination of this Amended License Agreement by Lotte under Section 3.2 due to ZBB’s Cause or under Section 3.3, Lotte shall be entitled to continue practicing the rights and licenses granted under this Amended License Agreement, provided that Lotte pays the license fee in Section 4.1 and the Success Fee in Section 4.2 and continues to pay all Royalties to ZBB (or its successor in interest) until the end of the Royalty Term as they become due pursuant to the terms and conditions of this Amended License Agreement, and complies with all of the terms and conditions of this Amended License Agreement, which will survive such termination and apply to Lotte’s exercise of its license rights hereunder; if Lotte does not make such payments or does not comply with the terms and conditions of this Amended License Agreement, all of its license rights will terminate and Lotte will cease using the Technology and distributing the Product.  Unless earlier terminated by ZBB under Section 3.2 due to Cause or under Section 3.3, after the end of the Royalty Term, conditioned upon Lotte making all payments due (including the license fee in Section 4.1, the Success Fee in Section 4.2 and all Royalties) under the Amended License Agreement and being in compliance with all of the Amended License Agreement’s terms and conditions, Lotte’s license grants in Sections 2.1, 2.2 and 2.3 will survive after the end of the Royalty Term and Lotte may continue practicing the right and licenses granted under this Amended License Agreement in the Exclusive Territory and Non-Exclusive Territory without further payment of royalty, in accordance with the other terms and conditions of this Amended License Agreement. Sections 1, 3.1, 3.4, 4, 5, 6, 7, and 8 will survive after the termination or expiration of this Amended License Agreement.

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

4

  

 

4.           CONSIDERATION

 

4.1          License Fee. In partial consideration for the licenses granted under this Amended License Agreement, Lotte will pay to ZBB a license fee of $3.0 million dollars, which will be paid in 3 equal installments as follows: (a) $1.0 million will be paid 20 days after the Effective Date of this Amended License Agreement; (b) $1.0 million will be paid 45 days after the Effective Date of this Amended License Agreement; and (c) $1.0 million will be paid 75 days after the Effective Date of this Amended License Agreement. If Lotte does not pay ZBB any of the installments set forth in (a), (b) and (c) above for a total license fee of $3.0 million dollars within 75 days after the Effective Date of this Amended License Agreement, then this Amended License Agreement will be terminated and the License Agreement between the Parties effective September 9, 2013 will be reinstated and will supersede this Amended License Agreement as to the subject matter of those agreements.

 

4.2          Success Fee.  In addition to the License Fee set forth in Section 4.1 above, Lotte will pay ZBB a success fee of $1.0 million dollars (the “Success Fee”), which will be paid in 3 installments on the dates on which the following milestones are successfully achieved:

 

	
A.  

	
When a battery stack averages [***]% or more round trip DC efficiency over 100 cycles on a single stack test, Lotte will pay ZBB 50% of the Success Fee ($500,000); and

 

	
B.  

	
When test stacks (at Lotte) have completed 600 full cycles with less than or equal to [***]% degradation, Lotte will pay ZBB 25% of the Success Fee ($250,000); and

 

	
C.  

	
When a 50 kWh system demonstrates [***]% or more efficiency at the DC bus and the final design release of 500 kWh prototype system is approved by Lotte (such approval not to be unreasonably withheld), Lotte will pay ZBB 25% of the Success Fee ($250,000).

 

Both Party shall establish a “Steering Committee” and hold Steering Committee Meeting for checking whether the above milestones are achieved or not under Section 4.2. Each Party shall appoint two (2) persons to the Steering Committee, one of which will be a business representative, one of which will be a person who has technical knowledge.

 

If Lotte fails to make the payments of the Success Fee as set forth in this Section 4.2 and does not cure such failure to pay within thirty (30) days after Lotte has received notice from ZBB of such failure, then the total Success Fee will become immediately due and payable and Lotte will pay to ZBB the difference between $1.0 million and any payments already made to ZBB in accordance with Section 4.2, Sub-Sections (A), (B) and (C).

 

4.3           Royalty

 

	
(a)  

	
Royalty Payments. Lotte will pay to ZBB the royalties as set forth in Exhibit C (“Royalty” or “Royalties”).

 

	
(b)  

	
Reporting and Payment. Lotte will, within 30 days after the end of each calendar quarter, provide ZBB with a report of Royalties accrued under this Amended License Agreement and remit to ZBB the amounts corresponding to the report.

 

4.4           Taxes. All fees paid under this Amended License Agreement are exclusive of all taxes, duties, fees, and other government mandated charges, including sales, use, services, employment and value added taxes (“Taxes”). Lotte will be liable and will pay for all applicable Taxes, except for ZBB’s income taxes.  If Lotte is required to withhold Taxes from any payments made to ZBB hereunder, Lotte may withhold such Taxes and remit them to the appropriate authorities.  If Lotte withholds any Taxes, Lotte will provide ZBB with a receipt from the relevant taxing authority.

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

5

  

 

4.5           Audit Rights. Lotte will keep and maintain accurate and detailed books and records adequate to allow ZBB to ascertain the amount of Royalties payable hereunder for the duration of the Amended License Agreement and at least five (5) years from the expiration or termination of the Amended License Agreement or the Royalty Term, whichever is later.  ZBB will have the right to audit Lotte’s books, records, and facilities no more than once annually, during normal business hours and upon reasonable notice, until one (1) year after the expiration or termination of the Amended License Agreement or the Royalty Term, whichever is later, for the purpose of verifying the amounts due and payable to ZBB and to verify Lotte’s compliance with the terms of this Amended License Agreement.  Only for this purpose and to an extent reasonable for this purpose, such audit will be performed by an external auditor that is a certified public accountant selected by the ZBB. The auditor will be bound by customary confidentiality requirements for such auditing activity. ZBB will pay its costs for such audits, unless an audit discloses underpayment by Lotte of more than five percent (5%) of the total amounts due for a calendar quarter, in which case Lotte will reimburse ZBB for all costs and expenses incurred in connection with such audit (including the fees and expenses of the auditor) in addition to correcting any underpayment found to be owing by the audit. In the event that any such audit reveals an underpayment of amounts due, Lotte will promptly pay all amounts due plus 12% per annum interest thereon.

 

4.6           Currency. All amounts set forth in this Amended License Agreement are, and all payments under this Amended License Agreement will be, in United States Dollars. If Lotte calculates Royalty payments in currency other than United States dollars, such foreign currency will be converted to United States dollars at the conversion rate for foreign currency as published in the eastern edition of The Wall Street Journal published on the last Business Day in the United States (notwithstanding the definition of “Business Day” in Section 1 above) of the applicable calendar quarter.

 

5.            CONFIDENTIALITY

 

Each Party (the "Receiving Party") undertakes to retain in confidence the terms of this Amended License Agreement and all other non-public information, technology, materials and know-how of the other Party (“Disclosing Party”) disclosed or acquired by the Receiving Party pursuant to or in connection with this Amended License Agreement that is either designated as proprietary and/or confidential or, by the nature of the circumstances surrounding disclosure, ought in good faith to be treated as proprietary and/or confidential ("Confidential Information"); provided, that each Party may disclose the terms and conditions of this Amended License Agreement to its immediate legal and financial consultants in the ordinary course of its business and as required by law or the rules of any applicable securities exchange.  Neither Party may use any Confidential Information with respect to which it is the Receiving Party for any purpose other than to carry out the activities contemplated by this Amended License Agreement.  Each Party agrees to use commercially reasonable efforts to protect Confidential Information of the other Party, and in any event, to take precautions at least as great as those taken to protect its own confidential information of a similar nature.  Each Party will also notify the other promptly in writing if such Party learns of any unauthorized use or disclosure of any Confidential Information that it has received from the other Party, and will cooperate in good faith to remedy the occurrence to the extent reasonably possible.  The restrictions set forth in this Section do not apply to any information that: (a) was known by the Receiving Party without obligation of confidentiality prior to disclosure thereof by the other Party; (b) was in or entered the public domain through no fault of the Receiving Party; (c) is disclosed to the Receiving Party by a third party legally entitled to make the disclosure without violation of any obligation of confidentiality; (d) is required to be disclosed by applicable laws or regulations (but in that event, only to the extent required to be disclosed, and provided that the Disclosing Party is given the opportunity to review and redact the Amended License Agreement prior to disclosure); or (e) is independently developed by the Receiving Party without reference to any Confidential Information of the other Party.  Upon request of the Disclosing Party, the Receiving Party will return to the Disclosing Party all materials, in any medium, that contain or reveal all or any part of any Confidential Information of the Disclosing Party except that the Receiving Party may retain one copy for archival purposes.  Each Party acknowledges that breach of this provision by it would result in irreparable harm to the other Party, for which money damages would be an insufficient remedy, and therefore that the other Party will be entitled to seek injunctive relief to enforce the provisions of this Section.

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

6

  

 

6.            WARRANTIES

 

6.1           Lotte Representations and Warranties. Lotte represents, covenants and warrants to ZBB that:

 

(a)           Lotte is duly organized, validly existing, has full and adequate power to own its property and conduct its business as now conducted, is in good standing and duly licensed, and has procured all necessary licenses, registrations, approvals, consents, and any other communications in each jurisdiction as required to enable Lotte to perform its obligations under this Amended License Agreement;

(b)           Lotte will comply with all applicable laws, rules, regulations and ordinances;

(c)           Lotte will comply with all relevant export laws and regulations (collectively, “Export Controls”).  If required by law, Lotte will provide ZBB with all export classifications for the Product, a description of the technology and components contained within the Product that are subject to Export Controls, and copies of relevant export licenses obtained by Lotte or information reasonably sufficient to substantiate that no license is required.  In addition, upon ZBB’s request, Lotte will use commercially reasonable efforts to assist ZBB with obtaining any required export licenses, if necessary.

 

(d)           The execution, delivery, and performance of this Amended License Agreement by Lotte and the performance by Lotte of the transactions contemplated in this Amended License Agreement have been duly and validly authorized by all necessary action, corporate or otherwise, on its part, and this Amended License Agreement constitutes the valid, legal, and binding obligation of Lotte; and

(e)           Lotte is not and will not be subject to any agreement or other constraint that does, would, or with the passage of time would, prohibit or restrict Lotte’s right or ability to enter into or carry out its obligations hereunder.

6.2           DISCLAIMER. THE ENTIRE RISK AS TO THE RESULTS AND PERFORMANCE OF THE TECHNOLOGY AND PRODUCT IS ASSUMED BY LOTTE.  ZBB DISCLAIMS ALL WARRANTIES, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THERE IS NO WARRANTY BY ZBB OF TITLE OR OF NONINFRINGEMENT WITH RESPECT TO THE TECHNOLOGY OR PRODUCT. THIS DISCLAIMER IN THIS SECTION 6.2 WILL NOT AFFECT ANY INDEMNIFICATION PROVIDED IN FAVOR OF LOTTE IN SECTION 7.

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

7

  

 

7.             INDEMNITY

 

7.1           ZBB’s Indemnity Obligation.  ZBB will, at its sole expense, defend (upon request), indemnify and hold harmless Lotte and its directors, officers, employees, agents and independent contractors (collectively, “Lotte Indemnitees”) from and against, and pay for, any and all judgments, liabilities, bona fide settlements, penalties, losses, costs, damages, and other expenses (including reasonable fees of attorneys and other professionals) arising from any claim, action or proceeding brought by any third party (each a “Claim”) to the extent the Claim is based upon infringement, violation or misappropriation of any third party patent, copyright, trademark, service mark, mask work, or trade secret in the Exclusive Territory or the Non-Exclusive Territory by the Technology. Notwithstanding the foregoing, ZBB will have no defense, indemnification or hold harmless obligation under this Section 7.1 or otherwise under this Amended License Agreement for any Claim to the extent it arises from (i) the Product; (ii) use of the Technology in a manner not authorized by the terms of this Amended License Agreement; (iii) modification of the Technology by anyone other than ZBB; (iv) combination of the Technology with any other products, services, hardware, software, technology or other materials; or (v) failure by Lotte to cease using the Technology as requested by ZBB to avoid infringement, after ZBB notifies Lotte of the potential infringement.

 

7.2           Lotte’s Indemnity Obligation. Lotte will, at its sole expense, defend (upon request), indemnify and hold harmless ZBB and its directors, officers, employees, agents, and independent contractors (collectively, "ZBB Indemnitees") from and against, and pay for, any and all judgments, liabilities, bona fide settlements, penalties, losses, costs, damages, and other expenses (including reasonable fees of attorneys and other professionals) arising out of or related to Lotte’s breach of any representation, warranty, or other obligation in this Amended License Agreement or any use (including distribution and sale) of the Technology or Product, including any infringement, violation or misappropriation of any third party patent, copyright, trademark, service mark, mask work, or trade secret by the Technology to the extent the Claim arises under Sections 7.1(i), (ii), (iii), (iv) or (v) above, or by the Product, to the extent not due to (a) ZBB’s gross negligence or willful misconduct or (b) a Claim that is covered by ZBB’s indemnity obligations under Section 7.1 of this Amended License Agreement.

 

7.3           Right to Counsel; Payment. The indemnified party will have the right to employ separate counsel, at its sole expense, and participate in the defense of any claim. The indemnifying party will reimburse the indemnified party, upon demand, for any payments made or loss suffered by any of the indemnified party’s Indemnitees at any time, based upon the judgment of any court of competent jurisdiction or pursuant to a bona fide compromise or settlement of any claim, regarding any damages related to any claim for which the indemnifying party is required to provide indemnification under this Section. The indemnifying party will not settle any claim or action on the indemnified party’s behalf without first obtaining the indemnified party’s written consent.

 

7.4           DAMAGES LIMITATION. EXCEPT INDEMNIFICATION OBLIGATIONS ARISING UNDER SECTION 7 (INDEMNITY), DAMAGES ARISING FROM ANY BREACH OF SECTION 5 (CONFIDENTIALITY), AND GROSS NEGLIGENCE OR WILFULL MISCONDUCT, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES FOR ANY CLAIM ARISING UNDER THIS AGREEMENT, REGARDLESS OF THE CAUSE OF ACTION AND EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

8

  

 

8.            MISCELLANEOUS PROVISIONS

 

8.1           Bankruptcy Assurance. The license rights granted to Lotte herein shall be deemed licenses of “intellectual property” for purposes of the United States Code, Title 11, Section 365(n). In the event of ZBB’s bankruptcy and a subsequent rejection or disclaimer of this Amended and Restated License Agreement, or the license rights granted herein, by a bankruptcy trustee or by ZBB as a debtor in possession, whether under the law of the United States, or in the event of a similar action under applicable law, Lotte may elect to retain its license rights, subject to and in accordance with the provisions of the United States Code, Title 11, Section 365(n) or other applicable law.

 

8.2           Notices and Other Communications.  Any and all notices, requests, demands and other communications required by or otherwise contemplated to be made under this Amended License Agreement or applicable law shall be in writing and in English and shall be provided by one or more of the following means and shall be deemed to have been duly given (a) if delivered personally, when received; (b) if transmitted by facsimile, on the date of transmission with receipt of a transmittal confirmation or (c) if by international courier service, on the fourth (4th) Business Day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed in writing to the sender by such courier service. All such notices, requests, demands and other communications shall be addressed as follows:

 

If to Lotte:

Name: Jack Hwang

Lotte Chemical Corporation

The LOTTE Tower Building

395-67 Shindaebang Dong

Dongjak-Gu

Seoul, 156-711 Korea

with a copy (which copy shall not constitute notice) to:

Name: Starwood Kim

Lotte Chemical Corporation

The LOTTE Tower Building

395-67 Shindaebang Dong

Dongjak-Gu

Seoul, 156-711 Korea

If to ZBB:

Mr. Dan Nordloh

Executive Vice President – Global Business Development

ZBB Energy Corporation

N93 W14475 Whittaker Way

Menomonee Falls, Wisconsin, USA 53051

with a copy (which copy shall not constitute notice) to:

Mr. Mark Busch

K&L Gates LLP

Hearst Tower, 47th Floor

214 North Tryon Street

Charlotte, North Carolina, USA 28202

or to such other address or facsimile number as a Party may specify to the other Party from time to time in writing.

 

ZBB and Lotte Confidential Information

Amended License Agreement

9

  

 

8.3           Severability.  If any provision in this Amended License Agreement shall be found or be held to be invalid or unenforceable then the meaning of said provision shall be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Amended License Agreement which shall remain in full force and effect.  In such event, the Parties shall use their respective best efforts to negotiate in good faith a substitute, valid and enforceable provision or agreement which most nearly effects the Parties’ intent in entering into this Amended License Agreement.

 

8.4           No Waiver.  No waiver of any term or condition of this Amended License Agreement shall be valid or binding on a Party unless the same shall have been set forth in a written document, specifically referring to this Amended License Agreement and duly signed by the waiving Party.  The failure of a Party to enforce at any time any of the provisions of this Amended License Agreement, or the failure to require at anytime performance by the other Party of any of the provisions of this Amended License Agreement, shall in no way be construed to be a present or future waiver of such provisions, nor in any way affect the ability of a Party to enforce each and every such provision thereafter.

 

8.5           Entire Agreement; Amendments.  The terms and conditions contained in this Amended License Agreement (including the exhibits hereto) constitute the entire agreement between the Parties and supersede all previous agreements and understandings, whether oral or written, between the Parties with respect to the subject matter hereof, including the License Agreement between the Parties effective September 9, 2013, which is terminated as of the Effective Date of this Amended License Agreement (except as otherwise set forth in Section 4.1 of this Amended License Agreement), and the Letter of Intent (Amendment A) between the Parties dated September 10, 2013.  No agreement or understanding amending this Amended License Agreement shall be binding upon any Party unless set forth in a written document which expressly refers to this Amended License Agreement and which is signed and delivered by duly authorized representatives of each Party.

 

8.6           Assignment and COC (Change of Control).  No Party shall have the right to assign its rights or obligations under this Amended License Agreement without the written consent of the other Party, except that either Party may assign the Amended License Agreement without the other Party’s written consent to the surviving entity in a merger, consolidation or reorganization or to the purchaser in an acquisition of all or substantially all of the assets or stock of the assigning Party, provided that prior to the assignment the assignee agrees in writing to be bound by this Amended License Agreement.  Any assignment or purported assignment not made in accordance with this Section shall be void and of no force and effect.  This Amended License Agreement shall inure to the benefit of, and shall be binding upon, the Parties and their respective successors and permitted assigns.

 

8.7           No Agency.  The Parties are independent contractors.  Nothing contained herein or done in pursuit of this Amended License Agreement shall be construed as establishing a partnership, joint venture or similar relationship between the Parties for any purpose whatsoever.

 

8.8           No Third Party Beneficiaries.  This Amended License Agreement is made solely and specifically between and for the benefit of the Parties and their respective successors and assigns, and no other person, unless express provision is made herein to the contrary, shall have any rights, interests or claims hereunder or be entitled to any benefits under or on account of this Amended License Agreement as a third party beneficiary or otherwise.

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

10

  

 

8.9           Governing Law. The validity, construction and enforceability of this Amended License Agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin, USA, without regard to its conflict of law principles. Any controversy or claim (“Dispute”), whether based on contract, tort, statute or other legal or equitable theory (including but not limited to any claim of fraud, misrepresentation or fraudulent inducement or any question of validity or effect of this Agreement, including this Section 8.9) arising out of or relating to this Amended License Agreement (including any amendments, annexations or extensions) or the breach thereof shall be settled by consultation between the Parties initiated by written notice of the Dispute by one Party to the other Party. In the event such consultation does not settle the Dispute within thirty (30) days after written notice of such Dispute, then the Dispute may be submitted to and shall be settled by binding arbitration in accordance with the then current ICC Rule for Dispute Resolutions and this Section 8.9. The arbitration shall be governed by the United States Arbitration Act, 9. U.S.C. §§ 1-16 to the exclusion of any provision of state law inconsistent therewith or which would produce a different result. Judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction. The arbitration shall be held in Singapore unless otherwise agreed to in writing by the parties. There shall be one arbitrator.  Neither Party may unreasonably withhold consent of the selection of the arbitrator, and the Parties will share the costs of the arbitration equally. The arbitrator shall determine the substance of the claim(s) of the parties and render a final award in accordance with the substantive law of the State of Wisconsin, excluding the conflicts provisions of such law.  The arbitrator shall set forth the reasons for the award in writing.  The terms hereof shall not limit any obligations of a Party to defend, indemnify or hold harmless another Party against court proceedings or other claims, losses, damages or expenses.  It is expressly agreed that the arbitrator shall have no authority to award treble, exemplary or punitive damages of any type under any circumstances regardless of whether such damages may be available under the applicable law.

 

8.10           Counterparts.  This Amended License Agreement may be executed in any number of counterparts, and each counterpart shall constitute an original instrument, but all such separate counterparts shall constitute one and the same instrument.

 

 

 

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

11

  

 

IN WITNESS WHEREOF, the parties have caused this Amended License Agreement to be executed by their duly authorized representatives as of the Effective Date.

 

 

 

 

	
ZBB ENERGY CORPORATION

 

 

	  	
LOTTE CHEMICAL CORPORATION

 

 

	
/s/ Eric C. Apfelbach                                                               

By: (Sign)

	  	
/s/ Jim Koo Hwang                                                     

By: (Sign)

	
 

Name: Eric C. Apfelbach

	  	
 

Name: (Print): Jim Koo Hwang

	
 

Title: President and CEO

	  	
 

Title: Director

	
 

Date of Execution: December 16, 2013

	  	
 

Date of Execution: December 16, 2013

 

 

 

ZBB and Lotte Confidential Information

Amended License Agreement

12

  

 

EXHIBIT C

 

Royalty Rates

 

Royalty. Lotte will pay ZBB a Royalty on the Net Sales of the Product distributed or sold by Lotte only within the Non-Exclusive Territory (“Royalty Sales”). “Net Sales” means the total invoiced sale amount for Royalty Sales, after deducting for customer discounts, allowances, returns, expenses, transportation, shipping cost, packaging cost, insurance, delivery charges, payment of taxes or any other expenses or adjustments. For avoidance of doubt, for the purposes of the Royalty the Product does not include power conditioning parts.

 

Royalty Rate. The Royalty rate shall be [***]% of the Net Sales.

 

Threshold Amount. $[***].

 

[***]

 

ZBB and Lotte Confidential Information

Amended License Agreement

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00226-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00226-of-00352.parquet"}]]