Document:

exhibit_10-1.htm

Exhibit 10.1

RETIREMENT AGREEMENT

This Retirement Agreement and General Release of Claims (hereinafter “Agreement”) is entered into by and between Ivan Szeftel (hereinafter “Executive”) and ADS Alliance Data Systems, Inc., a Delaware corporation (“ADSI”), a wholly owned subsidiary of Alliance Data Systems Corporation, a Delaware corporation (“ADSC”).

WHEREAS, Executive has served as President, Retail Services since May, 1998;

WHEREAS, Executive has notified ADSI that he plans to retire effective March 1, 2012 (“Retirement Date”)

WHEREAS, following the announcement of a new President, Retail Services and through Retirement Date, the ADSC Board of Directors (“ADSC Board”) desires that Executive provide advisory services to the President, Retail Services and continue to serve as Chief Executive Officer of World Financial Network Bank (“Bank”) and Chairman of the Bank Board of Directors (“Bank Board”)
(“Executive Bank Board Service Period”);

WHEREAS, effective on the Retirement Date and at the pleasure of the Bank Board, Executive will continue to serve as an independent member and non-employee Chairman of the Bank Board (“Non-Executive Bank Board Service Period”);

WHEREAS, during and after the Non-Executive Bank Board Service Period, ADSI wishes to ensure that Executive will not utilize his institutional knowledge and unique insight into the operation of ADSI or its Affiliates to compete with, solicit employees or customers of, or otherwise interfere with the operations of ADSI or its Affiliates;

WHEREAS, ADSI believes it is in the best interests of ADSC’s stockholders to enter into this Agreement to set forth the rights and obligations of the parties; and

WHEREAS, this Agreement shall become effective following the expiration of the Revocation Period (as defined below) (the “Effective Date”).

NOW, THEREFORE, in consideration of the foregoing promises and other good and sufficient consideration contained hereinafter, the parties agree as follows:

I.   EXECUTIVE BANK BOARD SERVICE PERIOD

During the Executive Bank Board Service Period, Executive will continue as an ongoing full time employee and will be compensated as such at Executive’s current level of compensation, including remaining eligible to receive all short and long term incentive compensation payments per the terms and performance metrics established for Executive for the 2011 performance period by the Compensation Committee of the ADSC Board.

 

 

 

Separation Agreement and General Release

1

  

II.   NON-EXECUTIVE BANK BOARD SERVICE PERIOD

 

During the Non-Executive Bank Board Service Period, Executive shall be entitled to receive compensation as a non-employee director of the Bank Board, as determined from time to time by the Bank Board.  Additionally, for service as Chairman of the Bank Board, Executive shall receive an additional retainer in the amount of $20,000.00 per year, subject to approval by the Bank Board.  Nothing contained in this Agreement shall be construed as having granted Executive a right to serve as a member of the Bank Board, and such service may be terminated at any time prior to or during the Executive Bank Board Service Period or the Non-Executive Bank Board Service Period, if any, as provided in the
Bank’s Certificate of Incorporation and Bylaws, and all other applicable charter and operating agreements.  Except as set forth in the first two sentences of this Article II, none of the payments contemplated by Article III of this Agreement are contingent on Executive remaining or serving as a member of the Bank Board.

III.  RETIREMENT AND PAYMENTS

A.           General. ADSI represents and agrees that as soon as practicable after the Retirement Date, ADSI will make payment in full to Executive for all un-reimbursed business expenses incurred by Executive in compliance with ADSI policies through the Retirement Date.  ADSI and Executive further agree that as of the Retirement Date, Executive will become responsible for any business
expenses incurred by him, and will not accrue any further paid time off (“PTO”) or other benefits for which Executive was eligible or previously entitled, except for those benefits expressly provided for separately in this Agreement.  The parties further agree that the Release Payment (defined below) includes, and is more than sufficient to cover, any earned but unpaid final wages of any kind (salary, commissions, bonus, or otherwise), accrued PTO, vacation, or other benefits not otherwise expressly provided for separately in this Agreement.  Executive acknowledges and agrees that as of the Retirement Date, Executive shall no longer be eligible to participate in any employee benefit plans except as otherwise expressly
provided for separately in this Agreement, and all accrual rights thereunder will cease.  For example, and without limitation, Executive shall no longer be eligible to participate in the Alliance Data Systems 401(k) and Retirement Savings Plan (“401(k) Plan”), and therefore, the Release Payment and the Protective Covenants Payments (defined below) shall not be subject to 401(k) Plan withholdings or employer matching.

B.           Retirement Payments.  Executive shall be paid a total of seventy-eight (78) weeks (“Retirement Payment Period”) of Executive’s weekly base salary as of the Effective Date plus an additional IC payment equal to one and one half times of Executive’s target percentage of base salary as of the Effective Date
(“IC Payment”), which shall be divided into two separate payments and paid as follows:

(1) Four (4) weeks of Executives’ current base salary plus an amount equal to 4/78ths of the IC Payment (less applicable taxes and withholdings) paid to Executive in consideration of the release and wavier of claims provided for in Article V and Executive's agreement not to contest the Protective Covenants in Article VI (the “Release Payment”).  Subject to Article III.B.3 below, such payment will be payable in two (2) bi-weekly installment payments on regular payroll dates commencing on the first
payroll date after the Retirement Date; and

(2) Seventy-Four (74) weeks of Executive’s current base salary plus an amount equal to 74/78ths of the IC payment (less applicable taxes and withholdings) paid in consideration of the agreements and promises made by Executive in Article VI (the

 

 

 

Separation Agreement and General Release

2

  

“Protective Covenants Payment”).  Subject to Article III.B.3 below, such payments will be payable in bi-weekly installment payments on regular payroll dates commencing on the first payroll date after the Release Payment has been paid in full.

(3) Notwithstanding anything herein to the contrary, if the ADSC Board (or its delegate) determines in its discretion that Executive is, as of the Retirement Date, a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) and the regulations issued thereunder, then no installment of the Release Payment or the Protective Covenants Payment that is not otherwise scheduled to be paid on or before March 15, 2012 will be paid during the period beginning on the date of Executive’s “Separation from Service” (as defined in Treas. Reg. Sec.
1.409A-1(h)) from ADSI and ending on the earlier of (i) the date that is six (6) months after the date of Executive’s Separation from Service, or (ii) the date of Executive’s death.  Any portion of the Release Payment and the Protective Covenants Payment to which Executive would otherwise be entitled during such non-payment period but for the application of this paragraph will be accumulated and paid to Executive on the first regular payroll date that is not less than six (6) months following the date of Executive’s Separation from Service, or if earlier, within 30 days of Executive’s death to his surviving spouse (or to his estate if Executive’s spouse does not survive him).

C.           Equity.  ADSC also agrees that in further consideration of the agreements and promises made by Executive in Article VI herein the tranche of (1) any time-based restricted stock units (“TBRSU”) that would otherwise be scheduled to vest between March 1, 2012 and February 28, 2013 shall, subject to Executive’s continued employment with ADSI through March 1, 2012, continue to vest and be paid in February, 2013
pursuant to the schedule established by the Compensation Committee of the ADSC Board for all equity awards for that same period, consistent with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (it being understood that for purposes of Section 409A of the Code, such TBRSUs will cease being subject to a substantial risk of forfeiture as of March 1, 2012 and therefore must be paid no later than March 15, 2013); and (2) the tranche of any performance-based restricted stock units (“PBRSU”) for which performance restrictions are scheduled to lapse between March 1, 2012 and February 28, 2013, shall continue to vest and be paid in February 2013 pursuant to the schedule and performance metrics as
established by the Compensation Committee of the ADSC Board for all equity awards for that same period, without regard to any continuing employment requirements, consistent with Section 409A of the Code.  The parties agree that the Equity described in this Article III.C. shall also be considered a Protective Covenants Payment.

Additionally, as approved by the Compensation Committee of the ADSC Board, Executive’s options to acquire shares of ADSC common stock (“Options”) that are or shall become vested on or prior to the Retirement Date shall be exercisable per the original stock option agreements and the retirement provisions as specified in the Amended and Restated Alliance Data Systems Corporation and its Subsidiaries Stock Option and Restricted Stock Plan, the Alliance Data Systems Corporation 2003 Long Term Incentive Plan, the Alliance Data Systems Corporation 2005 Long-Term Incentive Plan and the 2010 Omnibus Incentive Plan, whichever is
applicable to particular Options (collectively, the “LTI Plans”), but in no event shall any Option be exercisable following the earlier of (i) twelve (12) months following the Retirement Date, or (ii) the expiration of ten (10) years from the date on which the applicable award was granted.  Any Options that are unvested as of the Retirement Date shall be forfeited.

 

 

 

Separation Agreement and General Release

3

  

D.           Continuation of Benefits.  Executive and his dependents shall be eligible for health, welfare, and executive benefits under available ADSI plans during the Retirement Payments Period at the same cost to Executive as that charged to other active executives of ADSI; provided that, that such obligation shall cease on the date Executive becomes eligible to receive health
benefits under a subsequent employer’s health insurance plans (whether or not Executive or his spouse actually elects to receive such benefits). For purposes of continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), Executive shall be eligible for such continuation coverage as of the date immediately following the end of the Retirement Payment Period.  Neither ADSI nor Executive may liquidate Executive’s right to health insurance benefits or exchange such right for any other benefit.

E.           Compliance with Code Section 409A.  Article III and this Agreement will be administered and interpreted to maximize the short-term deferral exception to Section 409A of the Code, and Executive is not permitted to designate, directly or indirectly, the taxable year of any payment made under this Agreement.  The right to a series of installment payments under this Agreement will be treated as a right to a series of separate payments.  Any installment payment under this Agreement
that is paid during the short-term deferral period (as defined in Treas. Reg. Sec. 1.409A-1(b)(4)) will be treated as a short-term deferral and not aggregated with other plans or payments.  Payment dates provided for in this Agreement are deemed to incorporate the grace periods provided by Treas. Reg. Sec. 1.409A-3(d).  To the extent the payments payable to Executive under this Agreement do not meet the short-term deferral exemption as set forth in the Treasury Regulations under Code Section 409A as set forth hereinabove, such payments shall be paid in a manner so as to comply with Code Section 409A as provided herein.

To the extent that payments to Executive are reimbursements for costs and expenses or in-kind benefits, except as otherwise permitted by Section 409A of the Code, (a) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit, (b) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year; provided that the foregoing clause (b) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code
solely because such expenses are subject to a limit related to the period the arrangement is in effect and (c) such payments shall be made on or before the last day of the taxable year following the taxable year in which you incurred the expense.

IV.           OTHER MATTERS

A.           Executive Deferred Compensation Plan.  Executive acknowledges and agrees that as of the Retirement Date, Executive shall no longer be eligible to participate in the Executive Deferred Compensation Plan (“EDCP”).  Executive and ADSI agree that Executive’s cumulative EDCP contributions shall be paid to Executive in accordance with the EDCP and shall include all interest accrued through the payment
date.  Executive acknowledges that payments under the EDCP and any other nonqualified deferred compensation plan subject to Section 409A of the Code that commence due to Executive’s Separation from Service from ADSI shall commence not earlier than six months and a day after the date of Executive’s Separation from Service.  Such payments shall be subject to all applicable taxes and withholdings.

 

 

 

Separation Agreement and General Release

4

  

B.           Stock Transactions.  Executive acknowledges and agrees that because of his position as a Section 16 officer of ADSC, he is required for a period of six (6) months after he ceases to be a Section 16 officer to file Securities and Exchange Commission (“SEC”) Forms 4 and 5 to report stock transactions related to ADSC, including, but not limited to, sales and purchases of ADSC common stock and derivative securities,
and the exercise of employee stock options (“Stock Transactions”).  Therefore, to enable timely filing of these forms with the SEC, which ADSC does on Executive’s behalf, for a period of six (6) months from the Retirement Date, Executive agrees to report any such Stock Transaction made by him to Leigh Ann A. Epperson, ADSC’s Corporate General Counsel, as soon as possible, but no later than 12:00 Noon Central Time on the day following the day such Stock Transaction is executed, or provide a legal opinion that such Stock Transaction is not a reportable event requiring the filing of a Form 4 or 5.  Executive agrees to execute and forward to ADSC the No Filing Due Statement attached hereto as Exhibit A, or to provide to ADSC all necessary details to file a Form 5, for
receipt no later than January 11, 2013.

C.           Other Agreements.  The parties agree that the Change in Control Severance Protection Agreement entered into by and between ADSI and Executive on September 25, 2003, as amended by the Joint Amendment to Agreements Providing for Compensation or Benefits upon Involuntary Severance from Employment (as amended, the “CIC Agreement”), the Indemnification Agreement entered into by and between Executive and ADSC dated as
of June 10, 2003 and the Offer Letter dated May 4, 1998 as amended (“Offer Letter”), shall terminate as of the Effective Date and be of no further force and effect.

V.   COVENANT NOT TO SUE AND RELEASE OF CLAIMS

A.           Covenant Not to Sue. Executive agrees not to file any charges, claims, suits, or complaints against ADSI with any federal, state or local governmental agency, or in any court of law, with respect to any aspect of his employment with, or separation of employment from, ADSI, with respect to any matters whatsoever, which occurred prior to or on the Effective Date, whether known or unknown to Executive at the time of execution of this Agreement, with
the exceptions of:  (a) any claims the law precludes him from waiving by agreement, including an action challenging the validity of Executive’s release of claims under the Age Discrimination in Employment Act, 29 U.S.C. §621, et seq. (“ADEA”); (b) any claim that ADSI breached its commitments under this Agreement; (c) any claims with respect to any vested right Executive may have under any employee pension or welfare benefit plan of ADSI, (d) any entitlement by Executive or his spouse or dependants to continued medical or dental coverage under COBRA; or (e) any rights Executive has to indemnification under ADSC’s bylaws or articles, as they may be amended from time to time.  Items (b), (c), (d) and (e)
immediately above shall be excepted from the release in Article V.B below.

B.           Release of Claims. Executive acquits, releases and forever discharges ADSI and its predecessors, successors, parent entities, subsidiaries, affiliates, or related companies, its and their attorneys, officers, directors, employees, former employees, agents, insurers, and assigns (collectively the “Released Parties”), jointly and/or severally, from all, and in all
manner of, actions and causes of action, suits, debts, claims and demands whatsoever, in law or in equity, which he ever had, may now have or may hereafter have with respect to any aspect of his employment with, or separation of employment from, ADSI, and with respect to any other matter whatsoever.  This release includes, but is not limited to, claims relating to or arising out of the Sarbanes-Oxley Act; any claims alleging retaliation and/or whistleblower claims; any and all

 

 

 

Separation Agreement and General Release

5

  

claims relative to agreements to sponsor for immigrant or non-immigrant positions; any claims for unpaid or withheld wages, the Offer Letter, the CIC Agreement, severance pay, benefits, incentive compensation, Options, TBRSU, PBRSU, restricted stock, special awards, commissions and/or other compensation of any kind; or any other claim, regardless of the forum in which it might be brought, if any, which Executive has, might have, or might claim to have against the Released Parties, or any of them individually, for any and all injuries, harm, damages, penalties, costs, losses, expenses, attorneys’ fees, and/or liability or other detriment, if any, whenever incurred, or suffered by Executive as a result of
any and all acts, omissions, or events by the Released Parties, collectively or individually, through the date Executive executes this Agreement.  It is expressly agreed and understood by Executive that this Agreement and General Release includes, without limitation, any and all claims, actions, demands, and causes of action, if any, arising from or in any way connected with the employment relationship between Executive and ADSI and the termination thereof, including any claim of discrimination, retaliation, harassment, failure to accommodate, wrongful termination, breach of contract, negligence, libel, slander, wrongful discharge, promissory estoppel, tortious conduct, and/or any claims that this Agreement was procured by fraud or signed under duress or coercion so as to make the Agreement not binding, including all claims that were or could have been brought by
Executive.

C.           Laws Included in Release.  Executive agrees that, subject to the exceptions set forth in Article V.A of this Agreement, his covenants and releases, as set forth in this Agreement, include a waiver of any and all rights or remedies which he ever had, may now have, or may hereafter have against ADSI, in tort or in contract, or under any present or future federal, state, local or other statute or law, including, but not limited to, statutory or common laws of the State of Ohio, the State of
Pennsylvania, or any political subdivision of the States of Ohio and Pennsylvania; the Ohio, Pennsylvania and United States Constitutions; the Ohio Civil Rights Act, the Pennsylvania Human Relations Act; the National Labor Relations Act, 29 U.S.C. §151, et seq.; Title VII of the 1964 Civil Rights Act, 42 U.S.C. §2000e, et seq.; the 1866 Civil Rights Act, 42 U.S.C. §1981; the Civil Rights Act of 1991, P.L. 102-166; the Americans With Disabilities Act, 42 U.S.C. §12101, et seq.; the Occupational Safety & Health Act of 1970, 29 U.S.C. §553, et seq.; the Fair Labor Standards Act of 1938, 29 U.S.C. §201, et seq.; the Family & Medical Leave Act of 1993, 29 U.S.C. §2601, et seq.; the ADEA and the Older Workers Benefit Protection Act, 29 U.S.C. §621, et seq., 29 U.S.C. §621, et seq.; the Equal Pay Act, 29 U.S.C. §206(d); the Employee
Retirement Income Security Act of 1974, 29 U.S.C., §1001, et seq.; Ohio and Pennsylvania Workers’ Compensation Law; the Immigration Reform Control Act; the Occupational Safety and Health Act; the Worker Adjustment and Retraining Notification Act; the Consolidated Omnibus Budget Reconciliation Act of 1986, 29 U.S.C. §1161, et seq.; any and all Ohio and Pennsylvania common law claims, including, but not limited to, any violation of Ohio and Pennsylvania public policy, invasion of privacy, breach of contract and promissory estoppel.

D.           Waiver of Unknown Claims.  Executive intends that this Agreement shall bar each and every claim, demand and cause of action hereinabove specified, whether known or unknown to him at the time of execution of this Agreement.  As a result, Executive acknowledges that he might, in the future, discover claims or facts in addition to or different from those which he now knows or believes to exist with respect to the subject matters of this Agreement and which, if known or suspected at the time
of executing this Agreement, may have materially affected the terms of this Agreement.  Nevertheless, Executive hereby waives any right, claim, or cause of action that might arise as a result of such different or additional claims or facts.

 

 

 

Separation Agreement and General Release

6

  

E.           Adequacy of Consideration.  The parties individually and collectively agree that the covenants and promises made in Article V of this Agreement are in consideration of the Release Payment and other promises made hereunder by all parties, and that, but for the execution of this Agreement, no party would be entitled to the amounts and promises provided for herein.

F.           ADEA Release.  Executive hereby acknowledges that Executive is knowingly and voluntarily entering into this Agreement with the purpose of waiving and releasing any claims under the ADEA (a law which prohibits discrimination on the basis of age), and as such, Executive acknowledges and agrees that:

(1)this Agreement is worded in an understandable way and he has read and fully understands its terms;

(2)any rights or claims arising under the ADEA are waived; 

(3)claims under the ADEA that may arise after this Agreement is executed are not waived;

(4)           the rights and claims waived in this Agreement are in exchange for additional consideration over and above anything to which Executive was already undisputedly entitled;

(5)           Executive has been advised in writing by ADSI to consult with an attorney prior to executing this Agreement;

(6)           Executive acknowledges that he has been given a twenty-one-day (21-day) period of time from the date of receipt of this Agreement to consider all of the provisions of this Agreement, and he does knowingly and voluntarily waive said given 21-day period;

(7)           Any changes made to this Agreement, whether material or immaterial, will not restart the running of this twenty-one-day (21-day) period;

(8)           Executive may revoke this waiver and release of any ADEA (age discrimination) claims covered by this Agreement within seven days from the date this Agreement is executed (such seven-day period, the “Revocation Period”)

(9)           This Agreement shall not become effective until the Revocation Period has passed and Executive shall not have revoked his waiver and release of any ADEA claim during the Revocation Period.  If Executive revokes this Agreement, Executive will be deemed not to have accepted the terms of this Agreement and ADSI will have no obligations hereunder; and

(10)          Nothing in this Agreement shall be construed as a limitation on the right of Executive to participate in any investigation by the Equal Employment Opportunity 

Commission into any charge that ADEA has been violated, including a charge filed by Executive.

 

 

 

Separation Agreement and General Release

7

  

VI.   PROTECTIVE COVENANTS

A.           Protective Covenants. Notwithstanding any other provision contained in this Agreement, Executive acknowledges and agrees that he shall continue to be bound by the post-employment restrictions in any confidentiality, non-solicitation, and/or non-competition agreements (collectively, the “Confidentiality Agreements”) signed by Executive, which the parties agree are
incorporated herein by reference, with the understanding that nothing contained in the Confidentiality Agreements shall limit the scope of this Article VI:

(1)           Non-Compete.  For a period of two (2) years following the later of the Retirement Date and the completion of the Non-Executive Bank Board Service Period (the “Protective Covenants Period”), the Executive shall not, within the United States, directly or indirectly, either alone or in conjunction with another person, in any manner, own, manage, operate, control, be employed by, perform services for, consult with, solicit business for, participate in, do business with
or otherwise be connected with the ownership, management, operation or control of any business that is materially similar to or competitive with ADSC or its Affiliates; and

(2)             Non-Solicitation.  During the Protective Covenants Period, Executive shall not, directly or indirectly, alone or in conjunction with another person in any manner:

(a)             solicit or encourage any officer or employee of ADSI or its Affiliates to leave the employment of ADSI or its Affiliates’ or to otherwise interfere with a subsisting relationship with or commitment to ADSI or its Affiliates;

(b)             hire any officer or employee who has left the employment of ADSI or its Affiliates within six (6) months of the termination of such officer's or associate's employment with ADSI or such Affiliates;

(c)             solicit or encourage any independent contractors, suppliers or referral sources performing services for ADSI or its Affiliates to cease or modify such performances or to otherwise harm their relationship with or commitment to ADSI or its Affiliates; or

(d)             solicit, induce or attempt to induce any customer, collector, sponsor or supplier of ADSI or its Affiliates to cease doing business in whole or in part with ADSI or its Affiliates or do business with any other person, firm, partnership, corporation or other entity which performs or may perform services materially similar to or competitive with those provided by ADSI or its Affiliates.

(3)           Protection of Confidential Information and Intellectual Property. Executive agrees that, during the course of Executive’s employment with ADSI, Executive has had access to certain general and specific information which is confidential and proprietary to ADSI or its Affiliates (hereinafter “Confidential Information”).

 

 

 

Separation Agreement and General Release

8

  

Executive agrees that all such Confidential Information described in this Agreement is the exclusive property of ADSI or its Affiliates.  Executive promises and agrees that Executive will not disclose any Confidential Information to any other person or entity unless required by law.  Executive further agrees not to use such Confidential Information for any personal or business purpose.

Executive further covenants and agrees that Executive will not take, following the end of Executive’s employment with ADSI or any of its Affiliates, any document, papers or materials in any form (including without limitation originals or copies, printed or in electronic form) in Executive’s possession or control containing any Confidential Information and that Executive will surrender all such material upon the Retirement Date.

B.           No Contest.  In consideration for the Protective Covenants Payments, Executive waives and releases any claim that the covenants in Article VI.A.1., VI.A.2., and VI.A.3., (the "Protective Covenants") are unenforceable as written and agrees not to sue, cause or
permit another person to sue for his benefit, or otherwise pursue a claim that the Protective Covenants are not enforceable as written.  The post-employment restrictions in the Confidentiality Agreements and the LTI Plans shall survive any revocation of this Agreement by Executive. Notwithstanding anything herein to the contrary, this Agreement shall be read so as to supplement the Confidentiality Agreements and LTI Plans and not to replace or eliminate them.

C.           Injunctive Relief. Executive agrees that a violation of the Protective Covenants would cause irreparable harm to ADSI that cannot be fully and effectively remedied through monetary damages or compensation.  Therefore, Executive agrees that in addition to, and not in lieu of, any damages which ADSI may be entitled to as a legal remedy, ADSI shall also be entitled to such injunctive relief (temporary, preliminary, permanent or otherwise) as
is needed to prevent further violations of this Agreement and to return the parties to the status quo prior to such violation where possible, and ADSI shall be entitled to specific enforcement of this Agreement.  Executive further agrees that ADSI’s recoverable remedies for a violation of Article VI of this Agreement shall include attorneys’ fees, court costs and expenses incurred by ADSI in the enforcement of this Article.

D.           Clawback.  Executive’s agreement to comply with all of the Protective Covenants and agreement to waive any contest to the enforceability of the Protective Covenants as written, and ADSI’s agreement to make Protective Covenants Payments to Executive are mutually dependent obligations.  Accordingly, in the event that any portion of the Protective Covenants deemed material by ADSI is challenged by Executive and found to be unenforceable, and if Executive has received the
Protective Covenants Payments, including, without limitation, any payment made in the form of ADSC TBRSU or PBRSU described in Article III.C whether previously paid or to be paid, such payments shall be immediately forfeited and revert to ADSI and Executive shall be required to immediately return the Protective Covenants Payments to ADSI (less any taxes paid thereon by Executive).

E.           Cessation of Payments.  In the event that Executive materially breaches one or more of the covenants set forth in Article VI, as determined by ADSI, then ADSI shall have the right to cease making the Protective Covenants Payments provided for herein and shall have no further obligations to Executive under this Agreement.  Cessation of payments pursuant to this provision shall not cause any of Executive’s obligations under this Agreement, the LTI Plans or the Confidentiality
Agreements to end.

 

 

 

 

 

Separation Agreement and General Release

9

  

The clawback pursuant to Article VI.D. and the cessation of ADSI’s obligations pursuant to Article VI.E. shall have no impact on Executive’s continuing rights and obligations under this Agreement, the LTI Plans or the Confidentiality Agreements.

VII.   MISCELLANEOUS

A.           Cooperation.  Executive agrees that from and after the date hereof he will make himself available to assist ADSI or its Affiliates as reasonably requested, regarding prior business arrangements or pending litigation or litigation which may arise in the future concerning matters about which he has or had personal knowledge or which were within the purview of his responsibilities.  Executive agrees to assist in the prosecution or defense of such claims involving ADSI, or any of its Affiliates, or
any of their officers, directors, employees, or agents, whether or not such claims involve litigation.  This assistance may include but is not limited to participation in interviews, development of factual matters and the giving of documentation and/or testimony, whether by oral testimony, affidavit, at trial or otherwise.

B.           No Assignment.  Executive hereby represents and warrants that Executive has not assigned or otherwise transferred to any other person or entity any interest in any claim, demand, action and/or cause of action Executive has, or may have, or may claim to have against any Released Party.  Executive agrees to indemnify and hold harmless all of the Released Parties from any and all injuries, harm, damages, costs, losses, expenses and/or liability, including reasonable attorneys’ fees and
court costs, incurred as a result of any claims or demands which may hereafter be asserted against any such Released Parties by, through, or by virtue of an assignment or other transfer by Executive.

C.           No Right to Re-Employment.  Executive acknowledges and agrees that by signing this Agreement, Executive is hereby releasing and forever waiving any right to re-employment or reinstatement with ADSI in any capacity; although nothing herein shall prevent ADSI from re-employing Executive should ADSI, in its own discretion, decide to re-employ Executive.

D.           D&O Coverage and Indemnification.  Notwithstanding anything in this Agreement to the contrary, Executive shall continue to be covered under any directors and officers liability policy and entitled to any indemnification for claims arising from events prior to the Retirement Date.

E.           No Admission of Liability.  This Agreement, the offer of this Agreement and compliance with this Agreement shall not constitute or be construed as an admission by the Released Parties, or any of them individually, of any wrongdoing or liability of any kind or an admission by any party (Executive or Released Parties).  This Agreement shall not be admissible in any judicial, administrative or other proceeding or cause of action as an
admission of liability or for any purpose other than to enforce the terms of this Agreement.

F.           Terms of Agreement Confidential.  Executive agrees that Executive will not disclose to any third parties, except as provided below, the fact that the parties have entered into this Agreement or the terms and conditions of this Agreement.  Unless otherwise authorized in writing by ADSI, Executive may not disclose the fact that the parties have entered into this Agreement or any of the information contained herein except with respect to
Executive’s spouse,

 

 

 

 

 

Separation Agreement and General Release

10

  

 

attorneys and tax advisors (the “Authorized Parties”), but only upon advising the Authorized Parties of the restrictions of this section and obtaining the agreement of the Authorized Parties to the terms of same.  This Agreement is not intended to prohibit or interfere with Executive’s ability to respond to or cooperate with any governmental agency request or subpoena or court order.  However, in the event Executive receives such a subpoena or order, Executive agrees to provide ADSI notice of the subpoena or order within five (5) days of Executive’s receipt of such subpoena or order to
Corporate General Counsel, Alliance Data, 7500 Dallas Parkway, Suite 700, Plano, Texas 75024.  In addition, in the twenty-four (24) month period following the later of the Retirement Date and the Non-Executive Bank Board Service Period, prior to accepting any new position of employment or agreeing to perform services for a person or entity that might foreseeably be viewed as a competitor or business engaged in any enterprise that is the same or similar to that of ADSI or its Affiliates, Executive shall provide the prospective employer with a copy of the Confidentiality Agreements and Article VI of this Agreement.

G.           Contractual Agreement; Governing Law.  The parties agree that the terms of this Agreement are contractual in nature and not merely recitals and shall be governed and construed in accordance with the laws of the State of Ohio, without regard to principles of conflicts of law.  The parties further agree that should any part of this Agreement be declared or determined by a court of competent jurisdiction to be illegal, invalid, or
unenforceable, the parties intend that the legality, validity, and enforceability of the remaining parts shall not be affected thereby, and said illegal, invalid or unenforceable part shall be deemed not to be a part of this Agreement.  The forum and venue to decide any disputes arising under this Agreement shall be a court of competent jurisdiction in Franklin County, Ohio.  Executive consents to the jurisdiction of the courts located in Franklin County, Ohio, over him and waives any and all objections to the exercise of jurisdiction over him by such courts.  ALLIANCE DATA AND EXECUTIVE HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING ARISING UNDER OR RELATING TO ANY PROVISION OF THIS AGREEMENT.

H.           Successors.  This Agreement shall be binding upon and the benefits shall inure to Executive and Executive’s heirs, and to ADSI and its successors and assigns.

I.           Waivers.  No waiver of any of the terms of this Agreement shall be valid unless in writing and signed by the party to this Agreement against whom such waiver is sought to be enforced.  The waiver by any party hereto of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party, nor shall any waiver operate or be construed as a rescission of this Agreement.

J.           Notices.  All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be deemed to have been delivered on the date personally delivered or on the date deposited in a receptacle maintained by the United States Postal Service for such purpose, postage prepaid, by certified mail, return receipt requested, and addressed as follows:

 

 

 

Separation Agreement and General Release

11

  

If to ADSC:

Alliance Data Systems Corporation

7500 Dallas Parkway, Suite 700

Plano, Texas  75024

Attn:  Corporate General Counsel

If to ADSI:

ADS Alliance Data Systems, Inc.

7500 Dallas Parkway, Suite 700

Plano, Texas  75024

Attn:  Corporate General Counsel

If to Executive:  at the address set forth below Executive’s signature on the signature page hereto, with a copy to:

	  	  	  
	  	  	  
	  	  	  

Either party hereto may designate a different address by providing written notice of such new address to the other party hereto.

K.           Entire Agreement.  Executive agrees that in executing this Agreement, Executive does not rely and has not relied on any document, representation or statement, whether written or oral, other than those specifically set forth in this Agreement.  Except where otherwise expressly provided for herein, the parties agree that this Agreement and any attachments, schedules, or exhibits hereto constitute the entire agreement between Executive
and ADSI, supersede any and all prior agreements or understandings, written or oral, pertaining to the subject matter of this Agreement, and contain all the covenants and agreements in any manner whatsoever between the parties with respect to such matters.  No oral understandings, statements, promises or inducements contrary to the terms of this Agreement exist.  This Agreement cannot be changed or terminated orally, but may be changed only through written addendum executed by both parties.

L.           Mutual Drafting.  The wording in this Agreement was reviewed and accepted by all parties after reasonable time to review with legal counsel, and no party shall be entitled to have any wording of this Agreement construed against the other party as the drafter of the Agreement in the event of any dispute in connection with this Agreement.

M.           Return of ADSI Property.  Executive represents and agrees that on or before the Retirement Date, Executive will return to ADSI all ADSI property within Executive’s possession or control, including, but not limited to, beepers, cellular telephones, keys, access cards, computers and peripheral equipment, software, automobiles, equipment, customer lists, forms, plans, documents, and other written and computer material, and copies of the
same, belonging to ADSI or its Affiliates, or any of their customers, and Executive will not at any time copy or reproduce the same. Notwithstanding anything to the contrary in this paragraph, the parties agree that Executive shall be entitled to keep and retain, as his own, the  computer and other home office equipment currently in his possession, but that before Executive shall retain such equipment that all ADSI data, whether or not confidential, and all ADSI-licensed software shall be removed from such computer.

 

 

 

Separation Agreement and General Release

12

  

N.           Understanding of Agreement.  Executive declares that the terms of this Agreement have been completely read, are fully understood, and are voluntarily accepted, after complete consideration of all facts and Executive’s legal rights, of which Executive has been fully advised by Executive’s attorneys for the purpose of making a full and final compromise, adjustment and settlement of any and all claims, disputed or otherwise, that
Executive may have against the Released Parties.

O.           Taxes.  Executive shall be responsible for the payment of any and all required federal, state, local and foreign taxes incurred, or to be incurred, in connection with any amounts payable, or benefits provided, to Executive under this Agreement.  Notwithstanding any other provision herein contained, ADSI may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld
by applicable laws and regulations with respect to any amounts payable, or benefits provided to, Executive under this Agreement and report on any applicable federal, state, local or foreign tax reporting form any income to Executive determined by ADSI as resulting from such amounts payable or benefits provided hereunder.

P.           Counterparts.  This Agreement may be executed in multiple counterparts each of which shall be deemed to be one and the same instrument.  Each party hereto confirms that any facsimile copy of such party’s executed counterpart of this Agreement shall be deemed to be an executed original thereof.

Q.           Affiliates.  For purposes of this Agreement an “affiliate” of ADSI is any entity controlling, controlled by, or under common control with ADSI.

THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

 

 

 

Separation Agreement and General Release

13

  

IN WITNESS WHEREOF, the parties have executed this Agreement this 2nd day of September, 2011, as follows:

Ivan Szeftel

/s/ Ivan Szeftel

Executive Signature

__________________________________

Address

__________________________________

City, State, Zip

Date: September 2, 2011

 

ADS Alliance Data Systems, Inc.

 

By: /s/ Leigh Ann K. Epperson

Its: SVP, General Counsel and Secretary

Alliance Data Systems Corporation

By: /s/ Leigh Ann K. Epperson

Its: SVP, General Counsel and Secretary

 

World Financial Network Bank

By: /s/ Leigh Ann K. Epperson

Its: Assistant Secretary

 

 

 

Separation Agreement and General Release

14

  

EXHIBIT A

“No Filing Due” Statement

CERTIFICATE

I am aware that, as a former executive officer of Alliance Data Systems Corporation (the “Company”) during the fiscal year ended December 31, 2012, I must file a Form 5 with the Securities and Exchange Commission within 45 days after the end of the fiscal year, unless I have previously reported all transactions and holdings otherwise reportable on Form 5.

After reviewing my records, I hereby certify to Alliance Data that I am not required to file a Form 5 for the above fiscal year.

	
Date:

	  	  	  
	  	  	  	  
	  	  	  	  
	
By:

	  	  	  
	  	  	
[Executive’s Name]

	  

 

 

 

 

 

Separation Agreement and General Release

15exh10_32.htm

 

Exhibit 10.32

 

COLLABORATION AGREEMENT

 

 

 

BY AND BETWEEN

 

 

ZBB Energy Corporation

 

 

AND

 

 

Honam Petrochemical Corporation

 

3/25/11

 

 

 

Confidential                                                                HONAM – ZBB V3 Battery Project

 

  

  

  

 

COLLABORATION AGREEMENT

Index

 

 

	Article 1 – Definitions	2 
	
 

Article 2 – The Project, Project Plan and Project Responsibility

	
 

5

	
 

Article 3 – Background Technology and Improvements

	
 

6 

	
 

Article 4 – Grant of Research License

	
 

6

	
 

Article 5 – The Program Technology

	
 

7 

	
 

Article 6 – Payments

	
 

9 

	
 

Article 7 – Confidentiality

	
 

10 

	
 

Article 8 – Termination

	
 

12 

	
 

Article 9 – Indemnities, Liability

	
 

14 

	
 

Article 10 - Insurance

	
 

15

	
 

Article 11 – U.S. Export Administration Regulation

	
 

15

	
 

Article 12 – Assignment & Change of Control

	
 

15

	
 

Article 13 – Law and Settlement of Disputes

	
 

15

	
 

Article 14 – Publication and Press Releases

	
 

16

	
 

Article 15 – Force Majeure

	
 

16

	
 

Article 16 – Pre-Existing Agreements

	
 

17

	
 

Article 17 – Address for Notices

	
 

18

	
 

Article 18 - Miscellaneous

	
 

18

 

 

 

 

 

Confidential                                                               HONAM – ZBB V3 Battery Project                         i

 

  

  

  

 

COLLABORATION AGREEMENT

 

                      THIS AGREEMENT, effective the 25th day of March, 2011 (the “Effective Date”), is by and between HONAM PETROCHEMICAL CORPORATION (“HONAM”), a division of LOTTE Petrochemical,  __________ company having its place of business at The LOTTE Tower Building, 395-67, Shindaebang-Dong, Dongjak-Gu, Seoul, 156-711 Korea, and ZBB ENERGY CORPORATION (“ZBB”), a
Wisconsin Corporation having its place of business at N93 W14475 Whittaker Way, Menomonee Falls, Wisconsin, USA.

 

RECITALS

 

	
1.  

	
ZBB possesses expertise and is active in the development of large format Zinc Bromide flow batteries and power control systems.

 

	
2.  

	
Honam possesses expertise and is active in manufacture of petrochemicals.

 

	
3.  

	
Honam Petrochemical has identified energy storage as a priority business and seeks strategic partnership in the chemical flow battery (CFB) business.

 

	
4.  

	
Honam and ZBB wish to co-operate on further technical development of the Version 3 Zinc Bromide flow battery (as defined herein below) via a cooperative project (the “Project”) and, if such development is successful, wish to commercialize the same.

 

NOW THEREFORE IT IS AGREED AS FOLLOWS:

 

ARTICLE 1 – DEFINITIONS

 

	
1.1  

	
The following expressions shall have the meanings specified:

 

	
(a)  

	
“Affiliate of HONAM” means

 

	
  

	
(1)

	
Lotte Group and any company (other than HONAM) which is from time to time directly or indirectly affiliated with Honam; and

 

	
  

	
(2)

	
any company which is managed or operated by HONAM or a company as defined in (1) and/or has an operating agreement with HONAM and/or a company as defined under (1), which operating agreement gives HONAM or such company the right to manage the operations of all or part of such first company.

 

For the purpose of this definition a particular company is (i) directly affiliated with another company or companies if that latter company beneficially owns or those latter companies together beneficially own fifty per cent or more of the voting rights attached to the ownership interest of the particular company; and (ii) is indirectly affiliated with company or companies if a series of companies can be specified, beginning with that latter company or companies and ending with the first mentioned company, so related that each company of the series (except the latter company or companies) is directly affiliated with one or more of the companies earlier in
the series.

 

  

HONAM – ZBB
Project                                 2

  

 

	
(b)  

	
“Affiliate of ZBB” means any company controlling, controlled by or under common control with ZBB, wherein, for the purposes of this definition, “control” shall mean the ownership of more than fifty percent (50%) of the outstanding voting securities of the company in question.

 

	
(c)  

	
 “Background Technology” means the Intellectual Property and Patent Rights owned, developed or acquired by a Party, as further described in Appendix B hereto, and any other Intellectual Property owned, developed or acquired by a Party or its Affiliates prior to the Project which has application in the Field. Background Technology shall be called “ZBB Background Technology” if owned or controlled by ZBB or Affiliates of ZBB and “HONAM Background Technology” if owned or controlled by HONAM or Affiliates of HONAM.

 

	
(d)  

	
“Commercialization” means that point in time when a Product developed pursuant to the Project Plan is considered commercially viable, which shall be defined as after “release to manufacturing” using ZBB Background Technology and/or ZBB Improvements.

 

	
(e)  

	
“Confidential Information” means any technical or business information disclosed by one Party to the other Party either directly or indirectly, orally, in writing, by software, by drawings, samples, by visual inspection of equipment or facilities, or in any other way and includes, but is not limited to, unpublished Background Information and Intellectual Property (including unpublished Background Information and Intellectual Property included in a Party’s Improvements), financial and business information (including revenues, expenses, profitability, taxes, business plans and contracts) and specific business and technology concepts (including
proposed business and financial structures, product plans, models and partner relationships).  Confidential Information shall be in a tangible form, or accompanied by a tangible form, marked as “Confidential,” or if disclosed visually or orally, shall be identified at the time of disclosure as Confidential Information and reduced to a writing marked “Confidential” describing the nature of the information deemed to be Confidential Information and transmitted in a tangible form to the Steering Committee within thirty (30) days of the oral disclosure.

 

	
(f)  

	
 “Designated Countries” means the list of countries for which the Parties agree that patent applications on Inventions should be filed.

 

	
(g)  

	
“Effective Date” means the date the latter Party to execute this Agreement so executes.

 

	
(h)  

	
“Project Start Date” means January 1st, 2010

 

	
(i)  

	
“Field” means the development of ZBB’s third generation Zinc Bromide flow battery module (V3).

 

	
(j)  

	
“Improvements” means any modifications, inventions and other enhancements based upon the ZBB Background Technology and/or ZBB or HONAM Improvements, conceived, developed or acquired by a Party not as part of the Project after the Project Start Date and which have application in the Field.  Improvements shall be called “HONAM Improvements” if conceived, developed or acquired by HONAM and “ZBB Improvements” if conceived, developed or acquired by ZBB.

 

  

HONAM – ZBB
Project                                 3

  

 

 

	
(k)  

	
“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.  For avoidance of doubt, Intellectual Property shall not include the trademarks and service marks of a Party or its Affiliates.

 

	
(l)  

	
“Invention(s)” means patentable subject matter embodied in the Program Technology.

 

	
(m)  

	
“Joint Product” means a product developed jointly during the Project by representatives of both ZBB and HONAM.

 

	
(n)  

	
“Party” or “Parties” means as the context requires, either or both of ZBB and HONAM.

 

	
(o)  

	
“Patent Rights” means

 

	
(i)  

	
as the term pertains to HONAM, patents and patent applications of HONAM or Affiliates of HONAM, in any country, to the extent that (i) the claims cover HONAM Improvements; and (ii) HONAM is entitled to grant licenses thereunder, subject to any condition which HONAM may be required to impose; and

 

	
(ii)  

	
as the term pertains to ZBB, patents and patent applications of ZBB or Affiliates of ZBB, in any country, to the extent that (i) the claims cover the Zinc Bromide battery, ZBB Background Technology or ZBB Improvements; and (ii) ZBB is entitled to grant licenses thereunder, subject to any condition which ZBB may be required to impose

 

	
(p)  

	
 “Program Technology” means the Intellectual Property arising from the Project, including but not limited to improvements to the Background Technology and/or Improvements which are conceived or developed by employees, contractors and consultants of either Party or its Affiliates as part of the Project.  In no event shall Background Technology or Improvements be considered Program Technology, even if incorporated or embedded in Program Technology.

 

	
(q)  

	
 “Project” means a cooperative project for the development of a commercially viable product in the Field using ZBB Background Technology, ZBB Improvements, Program Technology and/or, possibly, HONAM Improvements, as further defined in the written Project Plan.

 

	
(r)  

	
“Project Plan” means the program of work set forth in writing and attached hereto as Appendix A, which may be amended from time to time by written agreement of the Parties in accordance with Article 2.

 

  

HONAM – ZBB
Project                                 4

  

 

	
(s)  

	
“Project Term” means the period for performing the Project, as further defined in Article 8.1.

 

	
1.2  

	
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 – Commercialization License Terms

 

	
1.3  

	
The words "hereof, "herein", and "hereunder" and words of similar import, when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

	
1.4  

	
The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.

 

	
1.5  

	
Whenever the Parties have agreed that any approval or consent shall not be “unreasonably withheld,” such phrase shall also include the Parties’ agreement that the approval or consent shall not be unreasonably delayed or conditioned.

 

 

ARTICLE 2 – THE PROJECT, PROJECT PLAN AND PROJECT RESPONSIBILITY

 

	
2.1  

	
ZBB agrees that, during the Project Term,  it will not conduct a research program in the Field with another storage customer or supplier.  ZBB is free enter into an agreement with a third party to design and build flow battery modules that are larger than 500 kWh in size using the V3 Program Technology. Honam is free enter into an agreement with a third party to design and build flow battery modules that are larger than 500 kWh in size using the V3 Program Technology at the time all project payments are completed.

 

	
2.2  

	
During the Project Term, each Party shall carry out those parts of the Project assigned to it in accordance with standards no less stringent than those generally applied by that Party when carrying out development work.  In particular, the Parties shall exercise reasonable care to avoid developing technology that, if exploited, would infringe the Intellectual Property rights of any third party.  ZBB and HONAM shall each be considered as acting as an independent contractor in the conduct of the Project and the performance of all other obligations under this Agreement and the Project Plan.

 

	
2.3  

	
Each Party shall remain responsible for providing the staffing resources which it deems necessary, in its own discretion, to carry out its obligations under the Project.  Each Party shall be free, in such manner as the Party sees fit, to dispose of such portion of its entire time, energy and skill as that Party is not obligated to devote to the Project hereunder, so long as same does not create a breach of Article 2.1.

 

	
2.4  

	
Staff of a Party assigned to work on the Project shall continue to be employed by their present employer even if assigned to carry out work at the premises of the other Party.

 

	
2.5  

	
The Parties shall establish a committee (the “Steering Committee”) 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 technical person who has IP knowledge.  The technical representative from each Party shall be responsible for coordinating the tasks assigned to the Party in question and reporting of progress and Program Technology to the other Party (“Project Manager”).

 

  

HONAM – ZBB
Project                                 5

  

 

Each Party will provide the other Party with the names and contact information of its initial Steering Committee members within thirty (30) days after the Effective Date.  Either Party may change any of its Steering Committee representatives with written notice to the other Party.

 

	
2.6  

	
The Steering Committee shall direct the Project Plan and may modify it to the extent necessary to complete the Project but shall have no authority to modify the Project Plan to the extent such change would result in a change to the terms of this Agreement; e.g., a change to Field or any grant herein.

 

	
2.7  

	
Any changes to the scope or milestones of the Project Plan shall be pursuant to unanimous decision of the Steering Committee and shall require the written agreement of authorized management of each Party before they are implemented.

 

	
2.8  

	
During the Project Term, each Party shall regularly keep the other informed of progress of its work under the Project Plan and of the Program Technology it has obtained.  To that end, progress meetings will be held by the Steering Committee, and attended by such other representatives of ZBB and HONAM as are deemed appropriate, once every month or at such greater frequency as either of the Parties deems necessary.  Such meetings shall review progress made and Program Technology generated since the previous meeting and review the effect (if any) such Program Technology might have on the remainder of the Project, as well as any other factors, concerns or issues that might affect the implementation of the Project
Plan.  The Steering Committee meeting held in or around the anniversary of the Effective Date each year shall take the form of an annual review of all aspects of the Project.

 

	
2.9  

	
Promptly upon completion of the current Project Plan, the Parties, through the Steering Committee, shall jointly prepare a written report detailing the work carried out, the Program Technology obtained, whether the products were successful or, if not successful, recommendations on the next steps that might be taken (which may include a recommendation to extend the Project).  Consistent with Article 8.1, the Parties will negotiate an extension of the current Project Plan as necessary to enable HONAM to reach a next phase decision.

 

 

ARTICLE 3 – BACKGROUND TECHNOLOGY AND IMPROVEMENTS

 

	
3.1  

	
Background Technology to be made available for use in the Project is detailed in Appendix B.  If either Party decides during the Project to make any other Background Technology (including and Background Technology that was inadvertently omitted from Appendix B as of the Project Start Date) available for the Project, the nature and scope of such Background Technology  will be documented in a signed amendment to Appendix C. The Steering Committee will decide which Technology in Appendix C will become either Background Technology or Program Technology. Background Technology and the Intellectual Property therein will continue to be owned by the Party, or the Party’s Affiliate(s), that brings it to the
Project.

 

  

HONAM – ZBB
Project                                 6

  

 

	
3.2  

	
If a Party determines that disclosure of certain of its Confidential Information relative to Improvements would be useful for furtherance of the Project, such Party shall describe, in a non-confidential manner, the general nature and scope of the information to be disclosed to the other Party via the Steering Committee and the other Party shall, in its sole discretion, agree or decline to receive such Confidential Information pursuant to the terms of Article 7.  Any disclosures of Confidential Information shall be provided to the Steering Committee.

 

	
3.3  

	
ZBB may request HONAM grant ZBB a license, with the right to grant sublicenses to licensees of ZBB Background Technology and ZBB Improvements, to use HONAM’ Background Technology and any such license shall be at HONAM’ sole discretion and, if granted, shall be nonexclusive and at commercially reasonable license terms.

 

 

ARTICLE 4 – GRANT OF RESEARCH LICENSE

 

	
4.1  

	
ZBB hereby grants HONAM a worldwide, non-exclusive, non-transferable (except as provided herein below), license and right (without the right to grant sublicenses) to use ZBB’s Background Technology, together with a non-exclusive, non-transferable (except as provided herein below), license and right (without the right to grant sublicenses) under Patent Rights in ZBB Improvements developed or acquired prior to the termination date, both licenses solely for HONAM’ internal research in the Field.  This license and right is extendable to Affiliates of HONAM only.

 

	
4.2  

	
These research licenses and rights shall become fully vested upon

 

	
(i)  

	
the day HONAM makes final payment, or

 

	
(ii)  

	
the first day of the twelfth (12th) month from the Effective Date, provided the all the payments in Article 6.2 have been made.

 

	
4.3  

	
Notwithstanding any of the foregoing, the licenses and rights of this Article 4.1 shall terminate as to any Affiliate of HONAM at such time as it no longer qualifies as an Affiliate.  HONAM agrees, and shall procure the agreement of Affiliates of HONAM which do research, to inform ZBB if, during the Project Term, HONAM or such Affiliates conduct a structured research program outside the Project based upon ZBB’s Background Technology and/or Patent Rights in ZBB Improvements.  For purposes of this Article 4.3, a structured research program is defined as a research activity in which more than eighty (80) hours of labor are expended in experimental research during any contiguous three (3) month period or for
which the total cost of manpower and materials exceeds $20,000 during any contiguous three (3) month period.

 

	
4.4  

	
HONAM hereby grants, and shall cause its Affiliates to grant, to ZBB a worldwide, irrevocable, nonexclusive, royalty-free license and right under the claims of HONAM’s or its Affiliates’ (as the case may be) Patent Rights in HONAM Improvements developed or acquired prior to termination date to conduct internal research;

 

	
4.5  

	
Each Party agrees, until the termination date, to use commercially reasonable efforts to provide notice to the other Party, via the Steering Committee, when a patentable Improvement is made.

 

  

HONAM – ZBB
Project                                 7

  

 

ARTICLE 5 – THE PROGRAM TECHNOLOGY

 

	
5.1  

	
Each Party shall provide the other Party with the Program Technology developed by it or its Affiliates as part of the Project and shall inform the other Party of any patentable invention it has made or conceived in the course of carrying out the Project.

 

	
5.2  

	
All non-patented Program 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 and, except as otherwise provided in Article 5 for Inventions, each Party may use, exploit and further develop the Program Technology, jointly or solely, without accounting to the other regarding any economic benefit realized or the need to seek approval from the other Party for its disclosure or use (except to the extent such disclosure incorporates the Confidential Information of the other Party), and may authorize or license third parties to do any of the foregoing.

 

	
5.3  

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

 

	
(a)  

	
Both Parties have joint ownership in Program Technology as defined in 1.1 (o) and in the Project as defined in 1.1 (p).   Both Parties have the right to utilize the Program Technology subject to the limitations contained herein with no charge.  No  party may license the Program Technology to any third party without the prior written permission of the other party.

 

	
(b)  

	The Steering Committee will decide which party will proceed with patent application.

 

	
5.4  

	
The Party designated in Article 5.3 (the “patenting Party”) shall have the exclusive right to file patent applications in respect of such Program Technology for its own benefit as assignee and to the extent allowed by local law in its own name (or the name of its Affiliate, provided such does not change the rights or obligations of a Party under this Agreement) and at its own expense in such countries as it deems appropriate, and to assign such rights for any country to any of its Affiliates.

 

Upon request of the patenting Party, the other Party shall give all reasonable assistance to the patenting Party in prosecuting any patent applications and shall execute, and cause such Party’s employees, agents and/or subcontractors to execute, any instrument reasonably necessary to enable the patenting Party to obtain a patent on any such application, including but not limited to oaths, declarations, assignments and affidavits.

 

	
5.5  

	
Each Party will notify the other Party at least sixty (60) days prior to the filing of each first-to-be-filed patent application on an Invention and provide a copy of the proposed application.  The other Party will inform the first Party within thirty (30) days of such notice if the other Party believes that the filing must be coordinated with a filing by the other Party, and the Parties will cooperate to coordinate such filings.

 

	
5.6  

	
Each of ZBB and HONAM grants the other a perpetual, irrevocable, world-wide, non-exclusive, royalty-free license under any patents issuing from the patent applications filed pursuant to Article 5.4

 

	
(a)  

	
to conduct internal research;

 

  

HONAM – ZBB
Project                                 8

  

 

	
(b)  

	
to make and have made, use or have used, sell, offer for sale, import and export products and materials made from such production facilities; and

 

	
(c)  

	
to license to Affiliates and other third parties the right to conduct internal research; (ZBB agrees that, during the Project Term, it will not conduct a research program in the Field with another storage customer or supplier except as provided in Section 2.1, above).

 

Such licenses and rights are extendable by the Parties to their Affiliates.

 

In the event the patenting Party, or its Affiliates, no longer desires to maintain a patent or patent application resulting from Program Technology, the patenting Party will first offer to assign to the non-patenting Party all of the patenting Party’s right, title and interest in and to such patent or patent application, at no cost other than the assumption by the acquiring Party of the responsibility and cost of continuing prosecution of such patent application and/or the payment of maintenance fees on such issued patent.  Upon the request of the assignor Party, the assignee Party agrees to negotiate in good faith commercially reasonable license terms for a non-exclusive, worldwide, royalty-bearing
license under the patent rights referred to in this Article.

 

	
5.7  

	
It is the intent of the Parties to file patent applications on Program Technology in no less than the Designated Countries.  If the patenting Party does not desire to file patent applications in some of the Designated Countries, or if the other Party requests that the patenting Party file in countries in addition to the Designated Countries and the patenting Party does not agree with such request, the other Party may offer to pay for filings in such countries and, if so offered, the patenting Party will file in such countries.  The other Party shall be entitled to recover its costs for the filing, prosecution, issuance and maintenance in such other countries by receiving a commensurate adjustment in royalties
for commercial activities in such country until all such costs are recovered.

 

	
5.8  

	
Either Party may request that the other Party institute legal action against a third party for infringement of any Program Technology patent such other Party owns pursuant to this Article 5, but the Party owning such patent (the “owning Party”) shall have the sole right to determine whether or not to bring such action.  Unless otherwise agreed by the Parties, the owning Party shall bear the entire cost of such legal action, and shall be entitled to retain the entire amount of any recovery.  Either Party may request that the other Party, as the owning Party, agree to be joined to enable the requesting party to bring an infringement action at its own expense, but the owning Party shall not obligated
to agree to be so joined.

 

	
5.9  

	
In any suit or legal action to enforce and/or defend a Program Technology patent, the Party not owning such patent, at the reasonable request of the owning Party, shall cooperate in all respects and, to the extent reasonably possible, have its employees testify when request and make available relevant records, papers, information, samples, specimens, and the like.  Unless otherwise agreed by the Parties, the costs for any such cooperation shall be at the expense of the Party bringing suit.

 

 

ARTICLE 6 – PAYMENTS

 

	
6.1  

	
HONAM shall pay to to ZBB the total sum of Three Million  US Dollars ($ 3,000,000) in the four(4) installments according to the process:

 

  

HONAM – ZBB
Project                                 9

  

 

	
  

	
(i)    

	
One million US$ ($ 1,000,000) shall be due within ten (10) days after Effective Date.

 

	
(ii)  

	 Five hundred thousand US$ ($ 500,000) shall be due within ten (10) days after June 20th, 2011.

 

	
(iii)  

	
 One million two hundred thousand US$ ($ 1,200,000) shall be due within ten(10) days after September 30, 2011

 

	
(iv)  

	
Three hundred thousand US$ ($ 300,000) shall be due within ten(10) days after on the date that V3 single stack is set up at HONAM R&D Center

 

 

	
6.2  

	
HONAM will approve payment to ZBB based on progress milestones made on the Project and payments made per figure 3 in Appendix A.

 

	
6.3  

	
ZBB will invoice HONAM for each of the above payments no later than twenty (20) days before such payment is due.

 

	
6.4  

	
Except as otherwise provided in this Article 6, each Party shall be solely responsible for its internal costs.

 

 

ARTICLE 7 – CONFIDENTIALITY

 

	
7.1  

	
Each Party agrees to treat the Program Technology in the same manner as it treats its own proprietary and confidential information, but no less than a reasonable degree of care.  Except as otherwise provided in this Article 7, each Party will only disclose Program Technology to third parties under terms of confidentiality and limited use which, at a minimum, will preserve the patentability of any Inventions.

 

	
7.2  

	
ZBB and HONAM each agree, other than in respect of its own Background Technology, Improvements or Confidential Information, and except as otherwise provided in this Agreement,

 

	
(a)  

	
not to disclose to any third party any Background Technology, Improvements, Confidential Information or the terms of this Agreement subject to Article 7.4(b);

 

	
(b)  

	
not to use any Background Technology or Confidential Information for any purpose other than to carry out the Projects and/or exercise the license and rights granted to it herein; and

 

	
(c)  

	
to use all adequate means to preserve the secrecy of Background Technology, Improvements and Confidential Information.

 

	
7.3  

	
The undertakings of Article 7.1 shall not apply to any Background Technology, Improvements or Confidential Information which, at the time it is received or obtained by the receiving Party,

 

	
(a)  

	
is lawfully known by the receiving Party without binder of secrecy as demonstrated by the written record; or

 

	
(b)  

	
is publicly available

 

  

HONAM – ZBB
Project                                 10

  

 

	 	
and shall cease to apply to any Background Technology, Improvements or Confidential Information which, after it is received or obtained by the receiving Party,

 

	
(c)  

	
is received or obtained by the receiving Party without restriction on disclosure from a source free to disclose it other than the disclosing Party and/or any of its Affiliates;

 

	
(d)  

	
becomes, through no act or omission of the receiving Party, publicly available; or

 

	
(e)  

	
is independently developed by or for a Party by persons without reference to the Background Information, Improvements or Confidential Information of the other Party.

 

	 	
Information shall only be within the foregoing exceptions to the extent that the receiving Party can prove the facts.

 

	
7.4  

	
Notwithstanding the provisions of Article 7.1:

 

	
(a)  

	
each Party is authorized by the other Party to disclose to those Affiliates to whom such first Party delegates its rights or obligations pursuant to Article 12.2 such of the other Party’s Background Technology, Improvements and Confidential Information as is necessary for the conduct of the Project and/or exercise of the license and rights granted to the first Party herein, provided that before such Background Technology or Confidential Information is disclosed to them, those Affiliates have agreed to be bound by terms of secrecy and non-use no less stringent than those assumed by the first Party hereunder;

 

	
(b)  

	
each Party is authorized by the other Party to disclose to its contractors and consultants such of the other Party’s Background Technology, Improvements and Confidential Information as is necessary for the conduct of the Project, provided that before such Background Technology, Improvements or Confidential Information is disclosed to them, provided that such third parties have undertaken written obligations of confidentiality and restrictions on use with the disclosing Party commensurate with the obligations placed upon such Party herein;

 

	
(c)  

	
either Party may disclose Program Technology or the other Party’s Improvements to a third party to the extent necessary for the exercise of the license and rights granted in this Agreement; provided that such third parties have undertaken written obligations of confidentiality and restrictions on use with the disclosing Party to protect the Program Technology and Improvements as contemplated in this Agreement.

 

	
7.5  

	
Notwithstanding the provisions of Article 7.1, a Party seeking patent protection on Inventions as permitted by Section 5.3 of this Agreement may disclose the Background Technology, Improvements, Program Technology and/or Confidential Information of the other Party as required by such Party to  file a patent application, but only after first notifying the other Party of the nature and scope of the information to be disclosed and providing the other Party a reasonable opportunity to respond within sixty (60) days with any reasons such other Party may conclude that the information is not properly disclosed for these purposes.

 

  

HONAM – ZBB
Project                                 11

  

 

	
7.6  

	
If a Party receives a subpoena, order, notice, process or other legal process seeking disclosure of Confidential Information of the other Party, the first Party shall immediately notify the other Party in order to allow the other Party the opportunity to oppose the order, notice, or process, or seek a protective order.  If requested by the other Party, the first Party shall cooperate fully with the other Party in contesting such disclosure.  Except as such demand shall have been timely limited, quashed or extended,  the first Party may thereafter comply with such demand, but only to the extent required by law.  Where a protective order is obtained by the other Party, nothing in this Article
7.6 shall be construed to authorize the first Party to use in any manner or disclose Confidential Information to parties other than such governmental or judicial agency or body or beyond the scope of the protective order.

 

	
7.7  

	
Upon termination of this Agreement, the non-breaching Party, at its option, can request the other Party to destroy or return promptly to the non-breaching Party, or its nominee, all tangible records containing Confidential Information or excerpts or portions thereof, or other information derived from the tangible records which are in the possession or control of the breaching Party with the exception of one (1) legal file copy which may be retained solely for the determination of the breaching Party's legal obligations under this Agreement.  Either party may make a similar request in the event the Project is terminated pursuant to Article
8.1.

 

 

ARTICLE 8 – TERMINATION

 

	
8.1  

	
The Project Term shall be effective as of the Project Start Date and shall continue for two and half (2.5) years 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.  HONAM shall provide notice to ZBB, at least thirty (30) days before each of the payments in Article 6.2 is due, if HONAM intends to terminate the Project.

 

Following the payment pursuant to Article 6.1 but before the end of the first three month period from the Effective Date, the Steering Committee will meet to determine if the Project should be extended, and define the scope of any such extension, including a budget required for the continued research.  Any recommendation to extend the Project will be presented to authorized management of the Parties and must be approved in writing before the Project may be extended.

 

Thereafter, the Steering Committee will 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.

 

	
8.2  

	
If HONAM fails to make the payment referred to in Article 6.2 and does not cure such failure to pay within thirty (30) days after HONAM has received notice from ZBB of such failure or otherwise provides notice under Article 8.1 of its intent to terminate the Project, then ZBB shall be at liberty, by giving notice in writing to HONAM, to terminate the Project and/or this Agreement with immediate effect, subject to Article 8.6 and Honam shall have no rights to the Program Technology thereafter.

 

	
8.3  

	
Subject to Article 8.6, ZBB may terminate the Project and/or this Agreement with immediate effect by giving notice in writing to HONAM if HONAM brings a challenge to the validity of any of ZBB’s Patent Rights licensed to HONAM pursuant to this Agreement.  In the event that HONAM or any of its Affiliates brings a challenge to the validity of any of ZBB’s Patent Rights licensed to HONAM pursuant to this Agreement and ZBB does not terminate the Project and/or this Agreement, then HONAM and its Affiliates agree to continue to pay all royalties due under this Agreement during the period of such challenge, which royalties will be non-refundable by ZBB regardless of the outcome of the validity
challenge.

 

  

HONAM – ZBB
Project                                 12

  

 

	
8.4  

	
For purposes of the question of completion of a Party’s deliverables as stipulated in the Project Plan only, if either Party considers that the other Party has failed to make material progress in completion of its deliverables as stipulated in the Project Plan, and such failure is not due to the other Party’s material breach of its obligations under this Agreement or the Project Plan or force majeure pursuant to Article 15, and such other Party does not commence to cure such failure within thirty (30) days after such other Party has received notice from the first Party of such failure, the Parties shall schedule an executive mediation process in a mutually agreed neutral location, such executive mediation to commence
within sixty (60) days of the aforementioned notice.  If the dispute is not resolved within thirty (30) days from the date mediation begins, and the other Party has not cured the failure within sixty (60) days after such Party has received notice from the first Party of such failure, then

 

	
(a)  

	
if HONAM is the aggrieved Party, (i) HONAM shall be at liberty, by giving notice in writing to ZBB, to delay payments pursuant to Article 6.2 without effect until the failure of ZBB is cured and (ii) if not already irrevocable, the research license granted in Article 4.1 shall immediately become irrevocable.  If ZBB continues for an additional one hundred and twenty (120) days to fail to make material progress in completion of its deliverables as stipulated in the Project Plan, then HONAM shall be at liberty, by giving notice in writing to ZBB, to terminate the Project with immediate effect.  Upon such termination (i) HONAM may continue the Project on its
own.

 

	
(b)  

	
if ZBB is the aggrieved Party, ZBB shall be at liberty, by giving notice in writing to HONAM, to  terminate.  Except as provided in Section 2.1, above, ZBB agrees that, during the Project Term,  it will not conduct a research program in the Field with another storage customer or supplier.   If HONAM continues for an additional ninety (90) days to fail to make material progress in completion of its deliverables as stipulated in the Project Plan, then ZBB:

 

	
(i)  

	
Shall be at liberty, by giving notice in writing to HONAM, to terminate the Project and/or this Agreement with immediate effect, subject to Article 8.6.

 

	
8.5  

	
Either Party may terminate the Project by giving notice in writing with immediate effect to the other Party in the event the other Party:

 

	
-  

	
unlawfully repudiates this Agreement; or

 

	
-  

	
goes into liquidation, either compulsory or voluntary (save for the purpose of reconstruction, amalgamation and/or Chapter 11 reorganization) or a receiver, administrative receiver or administrator is appointed in respect of the whole or any part of that Party’s assets.

 

  

HONAM – ZBB
Project                                 13

  

 

	
(a)  

	
If HONAM is the terminating Party, (i) HONAM may continue the Project on its own or with third parties, provided such third party’s practice of ZBB Background Technology and ZBB Improvements shall be limited to performance of the project with HONAM; (ii) if not already irrevocable, the research license granted in Article 4.1 shall immediately become irrevocable.

 

	
(b)  

	
If ZBB is the terminating Party, ZBB shall be at liberty, by giving notice in writing to HONAM, to terminate the Project and/or this Agreement with immediate effect,

 

	
8.6  

	
Survival.

 

	
(a)  

	
The provisions of Articles 4.3, 5, 7, 8, 9, 11, 13 and 14 shall survive the termination of this Agreement.

 

 

ARTICLE 9 – INDEMNITIES, LIABILITY

 

	
9.1  

	
Each Party shall be liable for and shall hold harmless and indemnify the other Party for all claims, damages, expenses, losses or liability, arising from any claim for (1) bodily injuries, including fatal injury or disease, to the indemnifying Party’s employees and (2) damage to tangible real or personal property of the indemnifying Party and its employees arising from or in connection with the performance of the Project and this Agreement except to the extent that the cause of the injuries, loss or damage was the negligence of the indemnified Party or the its representatives, in which event there shall be no obligation of indemnity hereunder.

 

	
9.2  

	
Neither Party shall be liable to the other Party (or its Affiliates) for any loss or damage incurred by such other Party (or its Affiliates) arising out of or in relation to the use by such Party (or its Affiliates) of any Background Technology, Program Technology or Improvements.  Nothing in this Agreement shall be deemed to be a  representation or warranty by either Party on the accuracy, safety, usefulness, merchantability, fitness for particular purpose, or the non-infringement of such Party’s patent rights with respect to the Background Technology, the Program Technology, the Improvements, the Confidential Information and/or any technical information related to any of the foregoing, which shall be
provided under this Agreement “as is” and all such warranties will be expressly disclaimed.

 

	
9.3  

	
Under no circumstances shall either Party be liable to the other Party under this Agreement for any consequential, indirect, special, incidental, punitive or exemplary loss or damage, including, without limitation, business interruption, cost of capital, loss of anticipated revenues and profits, loss of goodwill or increased operating costs whether arising from contract, warranty, tort, strict liability or otherwise regardless of whether the possibility of such losses or damages have been made known to the first Party, and each Party hereby expressly waives all such rights and remedies.

 

	
9.4  

	
Any performance of any obligation on behalf of a Party under article 12.2 shall be deemed to be performance or rendering by that Party.  The other Party accordingly releases all affiliates or agents of the first Party and any director or employee of the first party or its affiliates from any liability, including liability for negligence, connected with any such performance or rendering.

 

  

HONAM – ZBB
Project                                 14

  

 

ARTICLE 10 - INSURANCE

 

	
10.1  

	
At all times and at ZBB’s sole cost, ZBB shall maintain at least the minimum types and limits of insurance in compliance with all applicable laws.

 

	
10.2  

	
If requested by HONAM, ZBB shall furnish HONAM with certificates of insurance which evidence the insurance required hereunder and provide that the insurer shall endeavor to provide thirty (30) days’ written notice to HONAM before the coverage is materially altered or canceled.

 

 

ARTICLE 11 – U.S. EXPORT ADMINISTRATION REGULATION

 

Each Party acknowledges that it is familiar with the United States Department of Commerce regulations concerning the export or re-export of United States source technical data, or the direct product thereof, to unauthorized destinations and each Party agrees to abide by all such regulations in respect of all information supplied by or on behalf of the other Party hereunder.

 

 

ARTICLE 12 – ASSIGNMENT & CHANGE OF CONTROL

 

	
12.1  

	
Neither Party shall assign any of its rights and obligations arising from this Agreement without the prior written consent of the other Party.  Notwithstanding this provision, either Party may assign this Agreement and all or any of its rights and/or obligations to an Affiliate or to a successor in interest to or an entity acquiring substantially all the business to which this Agreement pertains without receiving written consent to the other Party, provided that prior to any such assignment the assignee agrees in writing to be bound by all of the terms, conditions and provisions contained herein.

 

	
12.2  

	
Either Party shall be free to arrange for any of its obligations under the Project to be performed on behalf of such Party by one or more of its Affiliates, provided that the Affiliate agrees to terms of confidentiality and limited use commensurate with those contained herein and further providing that no such arrangement shall relieve the delegating Party of its obligations to the other Party hereunder.

 

 

ARTICLE 13 – LAW AND SETTLEMENT OF DISPUTES

 

	
13.1  

	
This Agreement shall be construed, and the rights of HONAM and ZBB shall be determined (with respect both to the interpretation of the Agreement and its performance), according to the laws of the State of Wisconsin, USA, without regard to its conflict of law principles.

 

	
13.2  

	
Except as provided in Article 8.3, 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 Article 13.2) arising out of or related to this 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 Parties.  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 provision.  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 and circumstances regardless of whether such damages may be available under the applicable law.

 

  

HONAM – ZBB
Project                                 15

  

 

ARTICLE 14 – PUBLICATION AND PRESS RELEASES

 

	
14.1  

	
Neither Party shall publish Program Technology without the consent of the other Party.  Notwithstanding the foregoing, a Party may publish Program Technology without consent to the extent necessary to exercise its rights to patent under Article 5.3, provided that such publication does not in any way prejudice the Background Technology or patent rights of the other Party.

 

	
14.2  

	
Neither party shall use any trademark, trade name, logo or any contraction, abbreviation, or simulation of the trademark or name of the other party in advertising, publicity, or otherwise, unless the parties mutually agree to a separate trademark license.

 

	
14.3  

	
Except to the extent required by law or as otherwise permitted in accordance with this Article 14, neither Party shall make any public announcements concerning the Project or this Agreement or the terms hereof without the prior written consent of the other Party and the Parties shall agree on the content and timing of any such public announcement.  However, either Party may, without the prior written approval of the other, describe the Program Technology and the activities related to and the purpose of the Project to potential licensees, acquiring entities in an offering memorandum, public filings and additional stock offerings, to its directors and shareholders, or to a governmental administrative agency in response to
a lawful requirement, subpoena, or order; provided, in each case, a suitable confidentiality obligation is put in place with the receiving party (to the extent possible in cases where the material is disclosed to a government administrative agency). The disclosing Party shall provide the other Party a right to review such disclosure prior to its submission to the potential acquiring entity or governmental administrative agency.  If the reviewing Party has reason to believe the disclosure discloses proprietary or sensitive information, such Party shall immediately notify the other Party of the same and the other Party shall edit the disclosure to delete the proprietary or sensitive information.  Either Party may require that the other Party promptly provide a copy of any disclosure made by other Party under this Article 14.3.

 

 

ARTICLE 15 – FORCE MAJEURE

 

	
15.1  

	
If the performance of a Party  is delayed, interrupted, prevented, restricted or interfered with by reason of any:

 

	
(a)  

	
fire, explosion, epidemic, storm, flood, drought or other act of God;

 

  

HONAM – ZBB
Project                                 16

  

 

	
(b)  

	
breakdown of unit, plant or facility, strike, lock-out, labor dispute, casualty or accident;

 

	
(c)  

	
inability to obtain sources of supply of labor, fuel, utilities, supplies, raw materials or transportation;

 

	
(d)  

	
riot, war, revolution, national emergency, acts of public enemies, blockade, embargo, invasion or terrorism;

 

	
(e)  

	
any law, order, proclamation, regulation, ordinance, demand or requirement of any government or of any subdivision, authority or representative of any such government; or

 

	
(f)  

	
any other cause whatsoever, whether similar or dissimilar to those above enumerated, beyond the reasonable control of the Party so affected,

 

then the Party so affected shall be excused, except for the payment of money, from performing hereunder to the extent of such delay, interruption, prevention, restriction or interference.  The Party claiming an event of force majeure shall promptly provide the other Party notice of the claim, including details regarding all facts and circumstances related to or giving rise to such an event, the expected duration of the event, and actions being taken to overcome or resolve the event.  The Party claiming an event of force majeure shall take any and all commercially reasonable measures to overcome or resolve the event.

 

 

ARTICLE 16 – PRE-EXISTING AGREEMENTS

 

	
16.1  

	
Except as provided in Section 16.2, below, each Party warrants and represents that there are no pre-existing agreements, commitments or other arrangements with any third party, including the United States government or any agency thereof, which will inhibit or restrict such Party from carrying out the terms of this Agreement including the granting of rights to the other Party under Article 3, Article 4 and Article 5 hereof.  Further, each Party agrees that it will carry out the Project and this Agreement in a manner and under such circumstances that will not provide any third party, including the United States government or any agency thereof, any claim to rights relating to the Program Technology and shall not enter
into any agreements, commitments or other arrangement with any third party, including the United States government or any agency thereof, that would inhibit or restrict the other Party from complying with the terms of this Agreement including the granting of rights to the other Party under Article 3, Article 4 and Article 5 hereof.

 

	
16.2  

	
ZBB represents and warrants as of the date of its signature of this Agreement that it has disclosed to HONAM copies of, or informed HONAM in writing of the existence of, all agreements ZBB has executed with any third party in respect of the Flow batteries and/or ZBB’s Background Technology that would (a) materially affect the obligations of ZBB hereunder; or (b) materially affect the rights granted by ZBB to HONAM hereunder; or (c) give a third party any rights to the Program Technology; or (d) give rise to an obligation of HONAM to pay a third party any royalty in respect of commercial exploitation of the Program Technology.

 

  

HONAM – ZBB
Project                                 17

  

 

ARTICLE 17 – ADDRESS FOR NOTICES

 

	
17.1  

	
Any notice provided for by this Agreement and any other notice, demand or communication which a Party may wish to send to the other Party relating to the subject matter of this Agreement shall be in writing and either delivered by recognized overnight courier delivery service (such as United Parcel Service or Federal Express), hand-delivered, or sent by certified mail, return receipt requested, postage prepaid, and addressed to the Party for which such notice, demand, or communication is intended at such Party’s addresses as set forth below:

 

If to ZBB:

 

ZBB Energy Corporation

N93 W14475 Whittaker Way

Menomonee Falls, Wisconsin 53051

Attention: Dan Nordloh

 

If to HONAM:

 

HONAM Petrochemical Corporation

24-1, Jang-Dong

Yuseong-Gu

Daejeon, 305-726 Korea

 

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

 

                HONAM Petrochemical Corporation

The LOTTE Tower Building

395-67 Shindaebang Dong

Dongjak-Gu

Seoul, 156-711 Korea

	
17.2  

	
Either Party may change its address for notice hereunder to any other address by giving written notice of such new address to the other Party in accordance with this Article 17.  Any notice, demand, or other communication shall be deemed given and effective as of the date of delivery in person or receipt set forth on the return receipt.

 

 

ARTICLE 18 - MISCELLANEOUS

 

	
18.1  

	
Relationship of the Parties.  The Parties shall perform their obligations under the Project and this Agreement as independent contractors and nothing contained in this Agreement shall be construed to make either ZBB or HONAM partners, joint venturers, principals, representatives or employees of the other.  Neither Party is eligible to participate in or receive any benefits from any of the benefit plans of the other Party , including without limitation, retirement or welfare plans as defined under the Employee
Retirement Income Security Act of 1974, as amended from time to time, or any fringe benefit plan or any other benefits extended to the employees of the other Party.  Neither Party shall have any right, power or authority, express or implied, to bind the other.  HONAM and ZBB agree that this Agreement shall not constitute a partnership for tax purposes.  In the event, however, that this Agreement were so construed, then HONAM and ZBB agree to be excluded from the provisions of Subchapter K of the United States Internal Revenue Code of 1986, as amended.

 

  

HONAM – ZBB
Project                                 18

  

 

	
18.2  

	
Entire Agreement. This Agreement constitutes the entire agreement between the parties in respect of its subject matter and supersedes any agreements, contracts, representations and understandings, oral or written made prior to or at the signing of this Agreement; provided, however, that disclosures made pursuant to the certain Secrecy Agreement by and between the Parties, shall continue to be governed by such agreement.

 

	
18.3  

	
Amendments.  The modification or amendment of any provisions of this Agreement, including its Appendices shall only be valid and effective if it is in writing, refers specifically to this Agreement and is signed by both Parties.

 

	
18.4  

	
Waivers.  The Parties agree that the waiver by either Party of a provision or of a particular breach by the other Party of any obligation, or the failure of either Party at any particular time to exercise any of its rights herein provided, shall not be deemed to constitute a waiver of any other provision or subsequent breach or to prejudice the exercise in future of any right.

 

	
18.5  

	
Severability.  Should any provision of this Agreement be, or be declared, null and void, the validity of this Agreement shall not be affected thereby. The Parties agree to replace any void provision by a valid provision to achieve the nearest possible commercial effect.

 

	
18.6  

	
 Headings.  The headings of the Articles of this Agreement are inserted for convenience only and shall not affect the meaning or operation of this Agreement.

 

           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.

 

 

	
HONAM Petrochemical Corporation

 

 

	
ZBB Energy Corporation.

 

 

	
By:  /s/ Chong, Bum Shick

 

	
By:  /s/ Eric Apfelbach

 

	
Name: Chong, Bum Shick 

 

	
Name: Eric Apfelbach 

 

	
Title: President & CEO

 

	
Title: President & CEO 

 

	Date:                                   	Date:                                  

 

Agreed Effective Date

April 8, 2011

 

 

HONAM – ZBB
Project                                 19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00194-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00194-of-00352.parquet"}]]