Joint Development Agreement

EXHIBIT 10.2
 
 
[Formof]
Byand Between
MILLENNIUMCELL INC.
and
THEDOW CHEMICAL COMPANY

 
TABLEOF CONTENTS
 
1.
Definitions
2
     
2.
Milestones.
2
2.1.
Purpose
2
2.2.
Milestones 1, 2, 3 and 4
2
2.3.
Steering Committee
2
2.4.
No Restrictions
3
3.
Intellectual Property.
3
3.1.
MCEL-Contributed IP
3
3.2.
Cross Licensing Agreement
3
4.
Development Obligations of MCEL.
4
4.1.
MCEL Obligations Generally
4
4.2.
MCEL Obligations Per Milestone
4
5.
Development Obligations of Dow.
7
5.1.
Dow Obligations Generally.
7
5.2.
Dow Obligations Per Milestone
8
6.
Compensation to Dow Upon Achievement of Milestones
9
6.1.
Compensation Per Milestone
9
6.2.
Limitations on Compensation.
10
7.
Representations and Warranties By MCEL
11
7.1.
General Representations and Warranties.
11
7.2.
MCEL’s Commitment
12
7.3.
MCEL-Contributed Intellectual Property
12
7.4.
Disclaimer.
13
7.5.
JDA Intellectual Property
13
7.6.
Disclaimer.
15
8.
Representations and Warranties By Dow
15
8.1.
General Representations and Warranties.
15
8.2.
Disclaimer
16
9.
Other Agreements Relating to the Joint Development Activities.
16
9.1.
Confidential Information
16
9.2.
License and Supplier Arrangements with Third Parties.
18
9.3.
Non-Solicitation of Employees
19
9.4.
Costs and Expenses Related to Joint Development
19
9.5.
Determination of Milestone and Objectives under the Milestone Table.
19
9.6.
Publicity/Press Releases
20
9.7.
Records
20
9.8.
Insurance
20
10.
Indemnification.
21
10.1.
Survival
21
10.2.
Indemnification by MCEL
21
10.3.
Indemnification by Dow
22
10.4.
Limitation
22
10.5.
Procedures.
22
10.6.
Additional Obligations with respect to Intellectual Property
24
10.7.
Exclusivity of Remedies
24

 
11.
Term and Termination.
24
11.1.
Term
24
11.2.
Termination by Either Party
25
11.3.
Termination By Dow
25
11.4.
Termination by MCEL
25
11.5.
Effect of Termination.
26
11.6.
Survival of Certain Provisions
26
12.
Disputes.
26
12.1.
Alternative Dispute Resolution
26
13.
General Provisions.
27
13.1.
Relationship of the Parties
27
13.2.
Transfer; Successors and Assigns
27
13.3.
Governing Law
27
13.4.
Counterparts
27
13.5.
Construction of Certain Terms
27
13.6.
Notices
28
13.7.
Amendments and Waivers
29
13.8.
Severability
29
13.9.
Delays or Omissions
29
13.10.
Entire Agreement
29
ExhibitA Definitions
ExhibitB Milestones
 
Schedule1  MCEL-ContributedIntellectual Property
Schedule2   ExcludedIntellectual Property

 
 
THIS (this“Agreement”) ismade and entered into on this __ day of __________, 2005 (the “EffectiveDate”) by andbetween THE DOW CHEMICAL COMPANY, a Delaware corporation (“Dow”) andMILLENNIUM CELL INC., a Delaware corporation (“MCEL”). Dowand MCEL also may be referred to herein individually as a “Party” orcollectively as the “Parties.”
 
Recitals
 
WHEREAS,the Parties entered into that certain Stock Purchase Agreement, dated as ofFebruary 27, 2005 (the “StockPurchase Agreement”),pursuant to which, among other things, at the First Closing (as defined in theStock Purchase Agreement), the Parties are to enter into thisAgreement;
 
WHEREAS,the First Closing has occurred and, simultaneously therewith, the Parties areentering into this Agreement pursuant of the Stock PurchaseAgreement;
 
WHEREAS,simultaneously with the entering into of this Agreement, Dow and MCEL have alsoentered into that certain Cross Licensing and Intellectual Property Agreement,dated as of the Effective Date (the “CrossLicensing Agreement”);
 
WHEREAS,MCEL is engaged in the business of developing fuel systems for the safe storage,transportation and generation of hydrogen for use as an energy source and, inconnection therewith, has developed and patented the proprietary system calledHydrogenon Demand®,whereby the energy potential of hydrogen is carried in the chemical bonds ofsodium borohydride, which in the presence of a catalyst, releaseshydrogen;
 
WHEREAS,among other things, Dow is engaged directly and indirectly in developingtechnologies addressing the increasing need for energy for portable electronicsdevices;
 
WHEREAS,the Parties wish to jointly develop portable energy solutions through theproduction of hydrogen gas for use by fuel cells within the Field of Use (asdefined below) and within the Application (as defined below), using certainprocesses currently being developed by MCEL, as further described in thisAgreement;
 
WHEREAS,in connection with the joint development arrangement described above, andpursuant to the terms and conditions of the Stock Purchase Agreement and thisAgreement, MCEL and Dow have agreed that MCEL will (i) upon the executionof this Agreement, issue certain shares of Series A Preferred Stock (as definedbelow) and (ii) upon the achievement of Milestones 1, 2, 3 and 4 (each asdefined below), issue certain shares of Series A Preferred Stock inconsideration for Dow providing its commercial and technical services pursuantto this Agreement, as further described in this Agreement and the Stock PurchaseAgreement; and
 
WHEREAS,pursuant to the terms and conditions of the Stock Purchase Agreement, MCEL andDow have agreed that, upon the achievement of Milestones 1, 2, 3 and 4, MCELwill offer to sell, and Dow may purchase, certain shares of Series B PreferredStock in consideration for Dow’s equity investments into MCEL, as furtherdescribed in this Agreement and the Stock Purchase Agreement.
 
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NOW,THEREFORE, in consideration of the foregoing and the mutual covenants andagreements contained herein, the Parties agree as follows:
 
1.    Definitions.Capitalized terms used in this Agreement shall have the meanings set forth inExhibitA(Definitions). Capitalized terms that do not appear in ExhibitA shallhave the meanings given such terms as provided for in thisAgreement.
 
2.    Milestones.
 
2.1.  Purpose. The Parties have entered into this Agreement for the purpose of jointlydeveloping portable energy solutions through the production of hydrogen gas foruse by fuel cells using certain processes currently being developed by MCEL. Inconnection therewith, MCEL shall use reasonable best efforts to, among otherthings, perform the MCEL Military Tasks and the MCEL Consumer Tasks and Dowshall use commercially reasonable efforts when requested by MCEL to perform theDow Military Tasks and the Dow Consumer Tasks in accordance with this Agreement.By performing these obligations, MCEL will seek to cause the occurrence of theMilitary Objectives and the Consumer Objectives (if any) contained in the four(4) milestones described in this Article2 (each, a“Milestone” and,collectively, the “Milestones”) and,as a result of the occurrence of all the Military Objectives or the ConsumerObjectives in any such Milestone, will achieve such Milestone as set forth inthe Milestone Table. Upon the achievement of each Milestone, Dow will beentitled to receive Series A Preferred Stock and to purchase Series B PreferredStock and receive Warrants, subject to the terms and conditions of thisAgreement and the other Transaction Agreements.
 
2.2.  Milestones1, 2, 3 and 4. Each of the four (4) Milestones (“Milestone1,”“Milestone2”,“Milestone3” and“Milestone4”,respectively) shall be achieved upon the occurrence of either (i) all of theMilitary Objectives or (ii) all of the Consumer Objectives, in either case,corresponding to such Milestone in the Milestone Table set forth on ExhibitB of thisAgreement (the “MilestoneTable”).Notwithstanding anything to the contrary set forth in the Milestone Table, (i)if Milestone 2 is achieved prior to the achievement of Milestone 1, thenMilestone 1 will be deemed to have been achieved upon the achievement ofMilestone 2, (ii) if Milestone 3 is achieved prior to the achievement ofMilestone 1 and/or Milestone 2, then any prior Milestone that has not beenachieved at such time (Milestone 1 and/or Milestone 2, as the case may be) willbe deemed to have been achieved upon the achievement of Milestone 3, (iii) ifMilestone 4 is achieved prior to the achievement of Milestone 1, Milestone 2and/or Milestone 3, then any prior Milestone that has not been achieved at suchtime (Milestone 1, Milestone 2 and/or Milestone 3, as the case may be) will bedeemed to have been achieved upon the achievement of Milestone 4. In any suchevent, all of the Closings (as defined in the Stock Purchase Agreement)preceding the applicable Milestone shall occur simultaneously.
 
2.3.  SteeringCommittee. The Parties shall establish and maintain a steering committee (the “SteeringCommittee”) thatwill oversee the development activities under, and all other aspects of therelationship contemplated by, this Agreement and facilitate the relationshipbetween Dow and MCEL as explicitly set forth this Agreement. The SteeringCommittee shall consist of four (4) individuals (each, a “CommitteeMember”), two(2) of which shall be appointed by Dow at its sole discretion and two (2) ofwhich shall be appointed by MCEL at its sole discretion. The initial CommitteeMembers shall be as follows (a) two MCEL-appointed Committee Members shall be:(i) Adam Briggs and (ii) John Battaglini and the two-Dow appointed CommitteeMembers shall be: (i) Director Emerging Energy Platform and (ii) anotherrepresentative to be appointed in the future; provided,however, eitherParty may replace such Party’s Committee Members at any time by providingwritten notice to the other Party. During the Term, the Steering Committee willmeet from time to time and in the manner as the Committee Members shall agree.Any action made by the Steering Committee under this Agreement shall only beenforceable if at least seventy-five percent (75%) of the Committee Membersagree to such action in writing. Notwithstanding anything to the contrary setforth herein, in no event shall the Steering Committee have the right to modify,amend, supplement, change or waive any provision or term of thisAgreement.
 
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2.4.  NoRestrictions. In no event shall the obligations of the Parties contained in this Agreement,the Stock Purchase Agreement, the other Transaction Agreements or transactionscontemplated hereby or thereby prevent or in any way prohibit or restrain theeither Party from engaging in any activities (including without limitation,development activities, joint development activities, investment activities orotherwise) which may be deemed to be directly or indirectly competitive with theother Party, the current operations of the other Party or the future businessplans of the other Party, it being understood that each Party may by itself orin combination with other third parties, develop, manufacture, produce or sellhydrogen fuel cell products; provided,however, eachParty’s rights under this Section2.4 shall besubject to all agreements and restrictions of the Parties with respect to (i)Dow Intellectual Property, MCEL-Contributed Intellectual Property (as definedbelow) and Joint Development Intellectual Property under this Agreement, theCross Licensing Agreement and all other Transaction Agreements, (ii) thespecific representations, warranties, covenants and agreements contained in theTransaction Agreements and (iii) confidentiality and non-solicitationobligations of the Parties under this Agreement.
 
3. Intellectual Property.
 
3.1.  MCEL-ContributedIP. MCEL hereby acknowledges and agrees that all patents, copyrights, trade secrets,technical data, designs, concepts, processes, formulae, know-how and informationof MCEL as of the date of this Agreement to be used by MCEL in furtherance ofthe purpose of this Agreement, including without limitation the patents,copyrights and other intellectual property set forth on Schedule1, and allknow-how and trade secrets embodied therein shall collectively be, “MCEL-ContributedIntellectual Property”;provided,however, neither(i) the intellectual property set forth on Schedule2 of thisAgreement nor (ii) the JDA Intellectual Property shall be deemedMCEL-Contributed Intellectual Property. MCEL shall use the MCEL-ContributedIntellectual Property to the extent necessary to meet its obligations under thisAgreement.
 
3.2.  CrossLicensing Agreement. Simultaneously herewith, the Parties acknowledge and agree that the Parties haveentered into the Cross Licensing Agreement with respect to the intellectualproperty matters related to the transactions contemplated by thisAgreement.
 
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4. Development Obligations of MCEL. 
 
4.1.  MCELObligations Generally. During the Term, MCEL shall use its reasonable best efforts to achieve each ofthe Military Objectives and each of the Consumer Objectives as expeditiously aspossible; provided,however, that inthe event the Board of Directors of MCEL determines in good faith that it is inthe best interests of MCEL to primarily pursue only the Military Objectives orthe Consumer Objectives in respect of MCEL’s efforts to achieve the unachievedMilestones (such determination being a “One-TrackDetermination”), thenMCEL shall (i) promptly inform Dow that MCEL has made such One-TrackDetermination and (ii) for the remainder of the Term MCEL shall use itsreasonable best efforts to achieve only the Military Objectives or the ConsumerObjectives, as the case may be, applicable to such unachievedMilestones.
 
4.2.  MCELObligations Per Milestone. Without limiting the generality of Section4.1, MCELshall perform, at a minimum, each of the incomplete MCEL Military Tasks and theincomplete MCEL Consumer Tasks on the terms set forth in this Section4.2regardless of the Milestone that has been achieved for purposes of the MilestoneTable; provided,however, if aMilestone has been achieved under the Milestone Table due to the occurrence ofall Military Objectives, on the one hand, or Consumer Objectives, on the otherhand, contained in such Milestone, then for the purposes of this Section4.2, theMilitary Objectives or the Consumer Objectives, as applicable, contained in allpreceding Milestones shall be deemed to have occurred; provided,further, if MCELhas made a One-Track Determination, then MCEL will only be required to performsuch incomplete MCEL Consumer Tasks or such incomplete MCEL Military Tasks, asapplicable.
 
(a)  MCELMilitary Tasks – Throughout Ter Forthe time period commencing on the date hereof and ending upon the earlier of theachievement of the Military Objectives contained in Milestone 4 or theexpiration of the Term, MCEL shall (i) identify potential opportunities withmilitary and/or government entities to become Military Customers party to aMilitary Contract, Production-Ready Military Contract and/or Military P.O. andexercise reasonable best efforts through marketing and business developmentactivities to enhance such potential opportunities; (ii) exercise best effortsto comply with any then-effective Military Contract, Production-Ready MilitaryContract or Military P.O.; and (iii) prepare the filings for allgovernment/regulatory approvals necessary and appropriate for the use ofNaBH4 for themilitary applications contemplated by the Military Objectives, make such filingsif and when applicable, and follow up with specific government/regulatory bodiesand exercise reasonable best efforts to respond to further application issues asappropriate (the obligations described in this clause (iii) being the“MilitaryNaBH4Approval Process”).
 
(b)  MCELMilitary Tasks – Milestone 1. From the date hereof until the achievement of the Military Objectives containedin Milestone 1, MCEL shall (i) develop proposed Military Prototypespecifications to meet military needs for a fuel cell power source and developproposed terms for a future Military Contract; (ii) develop and test theproposed Military Prototype and exercise reasonable best efforts to make theappropriate improvements thereto prior to the execution of the MilitaryContract; (iii) exercise reasonable best efforts to negotiate and execute a bonafide proposed Military Contract; and (iv) exercise reasonable best efforts totest, develop, manufacture and deliver a Military Prototype meeting thespecifications of the executed Military Contract.
 
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(c)  MCELMilitary Tasks – Milestone 2. From the date of achievement of the Military Objectives contained in Milestone 1until the achievement of the Military Objectives contained in Milestone 2, MCELshall (i) perform an evaluation of the Military Prototype and MCEL’s performanceunder the Military Contract to identify areas of improvement; (ii) develop andtest the proposed production-ready Military Prototype and exercise reasonablebest efforts to make the appropriate improvements thereto prior to execution ofthe Production-Ready Military Contract; (iii) exercise reasonable best effortsto negotiate and execute a proposed Production-Ready Military Contract; (iv)seek to become the preferred provider or the exclusive provider of theproduction-ready Military Prototype to the Military Customer under theProduction-Ready Military Contract; and (v) exercise reasonable best efforts totest, develop, manufacture and deliver the Military Prototypes meeting thespecifications of the executed Production-Ready Military Contract.
 
(d)  MCELMilitary Tasks – Milestone 3. Fromthe date of achievement of the Military Objectives contained in Milestone 2until the achievement of the Military Objectives contained in Milestone 3, MCELshall (i) perform an evaluation of the production-ready Military Prototype andMCEL’s performance under the Production-Ready Military Contract to identifyareas of improvement; (ii) develop a manufacturing plan for a Military Product;(iii) if applicable, identify and exercise reasonable best efforts to engage indiscussions with potential licensees and suppliers of intellectual property, rawmaterials and products necessary or helpful for the manufacture of theproduction-ready Military Product and seek access thereto in anticipation of theMilitary P.O.; (iv) if applicable, exercise reasonable best efforts to negotiateand enter into appropriate license agreements and supplier agreements inanticipation of the Military P.O.; (v) if applicable, exercise reasonable bestefforts to acquire required technology (by merger, acquisition, purchase orotherwise) to perform a proposed Military P.O.; (vi) develop and test theproposed Military Product and exercise reasonable best efforts to make theappropriate improvements thereto prior to the execution of the Military P.O.;and (vii) exercise reasonable best efforts to negotiate and execute a proposedMilitary P.O.; provided, thatclauses (iii) and (iv) of this Section4.2(d) shall besubject to Section9.2.
 
(e)  MCELMilitary Tasks – Milestone 4. Fromthe date of achievement of the Military Objectives contained in Milestone 3until the achievement of the Military Objectives contained in Milestone 4, MCELshall exercise reasonable best efforts to test, develop, manufacture and deliverthe Military Products meeting the specifications of the executed MilitaryP.O.
 
(f)  MCELConsumer Tasks – Throughout Term. For thetime period commencing on the date hereof and ending upon the earlier of theachievement of the Consumer Objectives contained in Milestone 4 and theexpiration of the Term, MCEL shall (i) identify potential opportunities withOEMs to be party to a Consumer Contract and/or Consumer P.O. and exercisereasonable best efforts through marketing and business development activities toenhance such potential opportunities; (ii) exercise best efforts to comply withany then-effective Consumer Contract or Consumer P.O.; and (iii) prepare thefilings for all government/regulatory approvals necessary and appropriate forthe use of NaBH4 for theconsumer applications contemplated by the Consumer Objectives, make such filingsif and when applicable, and follow up with specific government/regulatory bodiesand exercise reasonable best efforts to respond to further application issues asappropriate (the obligations described in this clause (iii) being the“ConsumerNaBH4Approval Process”).
 
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(g)  MCELConsumer Tasks – Milestone 1. Fromthe date hereof until the achievement of the Consumer Objectives contained inMilestone 1, MCEL shall (i) develop proposed Consumer Prototype specificationsto meet consumer needs for a fuel cell power source and develop proposed termsfor any future Consumer Contract; (ii) develop and test the proposed ConsumerPrototype and exercise reasonable best efforts to make the appropriateimprovements thereto; (iii) exercise reasonable best efforts to solicit lettersof support from potential OEMS with respect to the Consumer Prototype; and (iv)exercise reasonable best efforts to attempt to negotiate and execute a bona fideproposed Consumer Contract.
 
(h)  MCELConsumer Tasks – Milestone 2. Fromthe date of achievement of the Consumer Objectives contained in Milestone 1until the achievement of the Consumer Objectives contained in Milestone 2, MCELshall exercise reasonable best efforts to test, develop, manufacture and deliverthe Consumer Prototypes meeting the specifications of the executed ConsumerContract.
 
(i)  MCELConsumer Tasks – Milestone 3. Thereare no MCEL Consumer Tasks to be performed in connection with Milestone3.
 
(j)  MCELConsumer Tasks – Milestone 4. Fromthe date of achievement of the Consumer Objectives contained in Milestone 2until the achievement of the Consumer Objectives contained in Milestone 4, MCELshall (i) perform an evaluation of the Consumer Prototype and MCEL’s performanceunder the Consumer Contract to identify areas of improvement; (ii) develop amanufacturing plan for a Consumer Product; (iii) if applicable, identify andexercise reasonable best efforts to engage in discussions with potentiallicensees and suppliers of intellectual property, raw materials and productsnecessary or helpful for the manufacture of the Consumer Product and seek accessthereto in anticipation of the Consumer P.O.; (iv) if applicable, exercisereasonable best efforts to negotiate and enter into appropriate licenseagreements and supplier agreements in anticipation of Consumer P.O.; (v) ifapplicable, exercise reasonable best efforts to acquire required technology (bymerger, acquisition, purchase or otherwise) to perform a proposed Consumer P.O.;(vii) develop and test the proposed Consumer Product and exercise reasonablebest efforts to make the appropriate improvements thereto prior to execution ofthe Consumer P.O.; (viii) exercise reasonable best efforts to negotiate andexecute a proposed Consumer P.O.; and (ix) exercise reasonable best efforts tocomply with all terms of the executed Consumer P.O.; provided, thatclauses (iii) and (iv) of this Section4.2(j) shall besubject to Section9.2.
 
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5. Development Obligations of Dow. 
 
5.1.  DowObligations Generally.
 
(a)  DowFTEs Per Milestone. Dowshall, at the request of MCEL, use commercially reasonable efforts to makeavailable to MCEL at a maximum such number of FTEs as follows:
 
(i)  from thedate hereof until the achievement of Milestone 1, Dow shall, at the requestof MCEL, make available at a maximum one (1) FTE to use commercially reasonableefforts to (i) perform each of the incomplete Dow Military Tasks set forth inSection5.2(a) and (b) and/orincomplete Dow Consumer Tasks set forth in Section 5.2(f)and (g),respectively, and (ii) provide commercial and technical services from Dow’scurrent resources related to the characterization of chemicals, chemicalprocesses, plastics, and plastic parts with respect to the then-applicablecommercially reasonable efforts of Dow under Section5.2;
 
(ii)  from thedate of achievement of Milestone 1 until the achievement of Milestone 2, Dowshall, at the request of MCEL, make available at a maximum three (3) FTEs to usecommercially reasonable efforts to (i) perform each of the incomplete DowMilitary Tasks set forth in Section5.2(a) and (c) and/orincomplete Dow Consumer Tasks set forth in Section5.2(f) and (h),respectively, and (ii) provide commercial and technical services from Dow’scurrent resources related to the characterization of chemicals, chemicalprocesses, plastics, and plastic parts with respect to the then-applicablecommercially reasonable efforts of Dow under Section5.2; and
 
(iii)  from thedate of achievement of Milestone 2 until the achievement of Milestone 4, Dowshall, at the request of MCEL, make available at a maximum six (6) FTEs to usecommercially reasonable efforts to (i) perform each of the incomplete DowMilitary Tasks set forth in Section5.2(a), (d) and (e) and/orincomplete Dow Consumer Tasks set forth in Section5.2(f), (i) and (j),respectively, and (ii) provide commercial and technical services from Dow’scurrent resources related to the characterization of chemicals, chemicalprocesses, plastics, and plastic parts with respect to the then-applicablecommercially reasonable efforts of Dow under Section5.2;
 
provided,however, upon therequest of either Party upon the achievement of any Milestone, the SteeringCommittee shall review whether to change the number of FTEs that Dow shall makeavailable under this Section5.1(a);provided,further, thatthere shall be no modification of this Section5.1(a) or theterm “FTE” without the written agreement of the Parties. 
 
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Notwithstandingthe foregoing, Dow shall only use such commercially reasonable efforts thatrelate to a Dow Military Task for a Military Objective or a Dow Consumer Taskfor a Consumer Objective for which MCEL is using its reasonable best efforts tocause to occur; provided,further, if MCELhas made a One-Track Determination, Dow shall only be required to usecommercially reasonable efforts to perform the incomplete Dow Military Tasks orDow Consumer Tasks, as applicable, that MCEL is continuing to pursue andotherwise on the terms of this Article 5.
 
5.2.  DowObligations Per Milestone.
 
(a)  DowMilitary Tasks – Throughout Term. To theextent required by Section5.1 above,throughout the Term, Dow Military Tasks shall include (i) assisting MCEL in theidentification of potential opportunities with military and/or governmententities to become a Military Customer party to a Military Contract,Production-Ready Military Contract and/or Military P.O and (ii) assisting MCELin the Military NaBH4 ApprovalProcess. 
 
(b)  DowMilitary Tasks – Milestone 1. To theextent required by Section5.1 above,from the date hereof until the achievement of the Military Objectives containedin Milestone 1, Dow Military Tasks shall include assisting MCEL in its effortsto secure funding under and enter into the Military Contract.
 
(c)  DowMilitary Tasks – Milestone 2. To theextent required by Section5.1 above,from the date of achievement of the Military Objectives contained in Milestone 1until the achievement of the Military Objectives contained in Milestone 2, DowMilitary Tasks shall include (i) assisting MCEL to develop the MilitaryPrototype and (ii) assisting MCEL in its optimization of chemical systems withinthe Field of Use and Application for the production of hydrogen.
 
(d)  DowMilitary Tasks – Milestone 3. To theextent required by Section5.1 above,from the date of achievement of the Military Objectives contained in Milestone 2until the achievement of the Military Objectives contained in Milestone 3, DowMilitary Tasks shall include (i) assisting MCEL in development of manufacturingplan for Military Product; (ii) assisting MCEL in its identification anddiscussions with potential licensees and suppliers of intellectual property, rawmaterials and products necessary or helpful for the manufacture of theproduction-ready Military Product and seek access thereto in anticipation of theMilitary P.O.; and (iii) assisting MCEL in its negotiating and entering intoappropriate license agreements and supplier agreements with MCEL onmutually-satisfactory terms and/or assisting MCEL in its negotiation ofappropriate license agreements and supplier agreements with third parties, ifappropriate, in anticipation of Military P.O.; provided, thatclauses (iii) of this Section5.2(d) shall besubject to Section9.2.
 
(e)  DowMilitary Tasks – Milestone 4. To theextent required by Section5.1 above,from the date of achievement of the Military Objectives contained in Milestone 3until the achievement of the Military Objectives contained in Milestone 4, DowMilitary Tasks shall include assisting MCEL in its establishing and utilizingmanufacturing capabilities and distribution chain forMilitary Products.
 
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(f)  DowConsumer Tasks – Throughout Term. To theextent required by Section5.1 above,throughout the Term, Dow Consumer Tasks shall include (i) attempting to usecorporate contacts within potential OEMs to assist MCEL in its promotion of theConsumer Prototype and or the Consumer Product and (ii) assisting MCEL in theConsumer NaBH4 ApprovalProcess.
 
(g)  DowConsumer Tasks – Milestone 1. To theextent required by Section5.1 above,from the date hereof until the achievement of the Consumer Objectives containedin Milestone 1, Dow Consumer Tasks shall include (i) providing market researchdeveloped by Dow with respect to proposed technologies for Consumer Prototype,if any; and (ii) assisting MCEL in its meetings with OEMs to promote Dow’s plansand capabilities, if any, with respect to the Consumer Prototype.
 
(h)  DowConsumer Tasks – Milestone 2. To theextent required by Section5.1 above,from the date of achievement of the Consumer Objectives contained in Milestone 1until the achievement of the Consumer Objectives contained in Milestone 2, DowConsumer Tasks shall include (i) providing Consumer Prototype technologyevaluation capabilities to assist with technical due diligence thereof; and (ii)assisting MCEL in its identification of manufacturing and quality controlassessment for the Consumer Prototype.
 
(i)  DowConsumer Tasks – Milestone 3. Thereare no Dow Consumer Tasks to be performed in connection with Milestone3.
 
(j)  DowConsumer Tasks – Milestone 4. To theextent required by Section5.1 above,from the date of achievement of the Consumer Objectives contained in Milestone 3until the achievement of the Consumer Objectives contained in Milestone 4, DowConsumer Tasks shall include (i) assisting MCEL to develop the Consumer Product;(ii) assisting MCEL in development of manufacturing plan for Consumer Product;(iii) assisting MCEL in its identification and discussions with potentiallicensees and suppliers of intellectual property, raw materials and productsnecessary or helpful for the manufacture of the Consumer Product and seek accessthereto in anticipation of the Consumer P.O.; and (iv) assisting MCEL in itsnegotiating and entering into appropriate license agreements and supplieragreements with MCEL on mutually-satisfactory terms and/or assist MCEL in itsnegotiation of appropriate license agreements and supplier agreements with thirdparties, if appropriate, in anticipation of Consumer P.O.; provided, thatclauses (iii) and (iv) of this Section5.2(j) shall besubject to Section9.2.
 
6. Compensation to Dow Upon Achievement of Milestones.
 
6.1.  CompensationPer Milestone. Subjectto the Stock Purchase Agreement and this Agreement:
 
(a)  FirstClosing. Inexchange for entering into this Agreement, the Parties acknowledge and agreethat MCEL has issued to Dow, and Dow has accepted, such number of shares ofSeries A-0 Preferred (as defined in the Stock Purchase Agreement) equal to a 3%Ownership Interest as part of the First Closing (as defined in the StockPurchase Agreement);
 
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(b)  UponAchievement of Milestone 1. Uponthe achievement of Milestone 1 and in the event Dow elects to pay to MCEL atleast the Minimum Series B Investment at the Second Closing (as defined in theStock Purchase Agreement), MCEL shall issue to Dow, and Dow shall accept(subject to the terms of the Stock Purchase Agreement), such number of shares ofSeries A-1 Preferred (as defined in the Stock Purchase Agreement) that equal,when combined with such number of the Series B-1 Preferred (as defined in theStock Purchase Agreement) and Warrants, if any, purchased by Dow at the SecondClosing with the Minimum Series B Investment, a 4% Ownership Interest.
 
(d)  UponAchievement of Milestone 2. Uponthe achievement of Milestone 2 and in the event Dow elects to pay to MCEL atleast the Minimum Series B Investment at the Third Closing (as defined in theStock Purchase Agreement), MCEL shall issue to Dow, and Dow shall accept(subject to the terms of the Stock Purchase Agreement), such number of shares ofSeries A-2 Preferred (as defined in the Stock Purchase Agreement) that equal,when combined with such number of the Series B-2 Preferred (as defined in theStock Purchase Agreement) and Warrants, if any, purchased by Dow at the ThirdClosing with the Minimum Series B Investment, a 3% Ownership Interest.
 
(f)  UponAchievement of Milestone 3. Uponthe achievement of Milestone 3 and in the event Dow elects to pay to MCEL atleast the Minimum Series B Investment at the Fourth Closing (as defined in theStock Purchase Agreement), MCEL shall issue to Dow, and Dow shall accept(subject to the terms of the Stock Purchase Agreement), such number of shares ofSeries A-3 Preferred (as defined in the Stock Purchase Agreement) that equal,when combined with such number of the Series B-3 Preferred (as defined in theStock Purchase Agreement) and Warrants, if any, purchased by Dow at the FourthClosing with the Minimum Series B Investment, a 5% OwnershipInterest.
 
(g)  UponAchievement of Milestone 4. Uponthe achievement of Milestone 4 and in the event Dow elects to pay to MCEL atleast the Minimum Series B Investment at the Fifth Closing (as defined in theStock Purchase Agreement), MCEL shall MCEL shall issue to Dow, and Dow shallaccept (subject to the terms of the Stock Purchase Agreement), such number ofshares of Series A-4 Preferred (as defined in the Stock Purchase Agreement) thatequal, when combined with such number of the Series B-4 Preferred (as defined inthe Stock Purchase Agreement) and Warrants, if any, purchased by Dow at theFifth Closing with the Minimum Series B Investment, a 4.9% OwnershipInterest.
 
6.2. Limitations on Compensation.
 
(a)  Failureto Pay the Minimum Series B Investment. In theevent Dow does not pay to MCEL at least the Minimum Series B Investment inconnection with the achievement of any Milestone at the applicable Closing (asdefined in the Stock Purchase Agreement) pursuant to the Stock PurchaseAgreement, the shares of Series A Preferred Stock that MCEL is required to issueto Dow shall be subject to reduction pursuant to the terms of the Stock PurchaseAgreement and Section11.4(ii) of thisAgreement shall apply.
 
(b)  DeferredShares. Subjectto the terms of the Stock Purchase Agreement, in the event that, in connectionwith the achievement of any Milestone, Dow elects (in its sole discretion) notto accept, in whole or in part, any Series A Preferred Stock that Dow isentitled to receive upon such Milestone (the “DeferredSecurities”), MCELshall hold such Deferred Securities in reserve for a period of up to twelve (12)months from the date of non-acceptance by Dow (the “DeferralPeriod”). Dowshall have the right, at any time and from time to time, during the DeferralPeriod to receive all or a portion of the Deferred Securities upon the sameterms and conditions that Dow would have received the Deferred Securities at thetime of original issuance.
 
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(c)  ExcessShares. Subjectto the terms of the Stock Purchase Agreement, if, at any time, an issuance ofSeries A Preferred Stock or Series B Preferred Stock (or shares of Common Stockissuable upon conversion thereof or upon the exercise of Warrants) would resultin Dow holding greater than a 19.9% Ownership Interest in respect of Series APreferred Stock, Series B Preferred Stock and Warrants acquired pursuant to theterms of the Stock Purchase Agreement, then the amount of Series A PreferredStock or Series B Preferred Stock in excess of Dow’s 19.9% Ownership Interest(the “ExcessShares”) shallbe held in reserve by MCEL. Dow shall have the right, at any time and from timeto time, when Dow’s Ownership Interest is less than 19.9%, to receive orpurchase such Excess Shares, in whole or in part, upon the same terms andconditions that Dow would have received or purchased such Excess Shares at thetime of the initial offering of such Excess Shares.
 
(d)  NoAdditional Compensation. In theevent that Dow makes available more FTEs than specified in Section5.1 orprovides services in addition to those described in Section5.2, Dowshall not be entitled to receive compensation pursuant to this Agreement that isin addition to the compensation described in Section6.1.
 
7.    Representationsand Warranties By MCEL. MCELmakes the representations and warranties set forth below in this Article7.
 
7.1.  GeneralRepresentations and Warranties.
 
(a)  CorporatePower and Authorization.MCEL hasall requisite legal and corporate power and authority to enter into thisAgreement and perform its obligations in accordance with the terms of thisAgreement. The execution and delivery of this Agreement by MCEL and theconsummation by it of the transactions contemplated hereby have been dulyauthorized by all necessary action on the part of MCEL and no further action isrequired by MCEL. This Agreement has been duly executed and delivered by MCELand constitutes the valid and binding obligation of MCEL enforceable againstMCEL in accordance with its respective terms except (a) as limited by applicablebankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, orother laws of general application relating to or affecting the enforcement ofcreditors’ rights generally and (b) as limited by laws relating to theavailability of specific performance, injunctive relief, or other equitableremedies.
 
(b)  Filings,Consents and Approvals.MCEL isnot required to obtain any consent, waiver, authorization or order of, give anynotice to, or make any filing or registration with, any court or other federal,state, local or other governmental authority or other Person in connection withthe execution, delivery and performance by MCEL of this Agreement in accordancewith its terms.
 
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7.2.  MCEL’sCommitment. ThisAgreement is made with MCEL in reliance upon MCEL’s representation to Dow thatMCEL is fully committed on the date of this Agreement to focusing primarily uponthe development activities within the Field of Use and within the Applicationand the other obligations of MCEL contemplated by this Agreement. MCELacknowledges that Dow is presently engaged in other business activities and mayin the future be engaged in other business activities.
 
7.3.  MCEL-ContributedIntellectual PropertyExcept asstated on Schedule7.3:
 
(a)  NoMCEL-Contributed Intellectual Property or product or service of MCEL related toMCEL-Contributed Intellectual Property is subject to any proceeding oroutstanding decree, order, judgment, agreement, contract or stipulationrestricting in any manner the use, transfer or licensing thereof by MCEL, orwhich may affect the validity, use or enforceability of such MCEL-ContributedIntellectual Property. Each item of registered MCEL-Contributed IntellectualProperty is presumed valid and subsisting. All necessary registration,maintenance and renewal fees currently due in connection with registeredMCEL-Contributed Intellectual Property have been made and all necessarydocuments, recordations and certifications in connection with such registeredMCEL-Contributed Intellectual Property have been filed with the relevant patent,copyright, trademark or other Government Authority for the purpose ofmaintaining such registered MCEL-Contributed Intellectual Property.
 
(b)  MCEL ownsand has exclusive title to, or has licenses (sufficient for the conduct of thebusiness of MCEL as currently conducted and as proposed to be conducted) to,each item of MCEL-Contributed Intellectual Property used in connection with theconduct of the business of MCEL as currently conducted and as proposed to beconducted free and clear of any lien, and MCEL is the exclusive owner orexclusive licensee of all trademarks and service marks, trade names and domainnames used in connection with the operation or conduct of the business of MCEL,free and clear of all liens.
 
(c)  MCEL ownsexclusively all copyrighted works that are MCEL products or which MCEL otherwiseexpressly purports to own, free and clear of all liens.
 
(d)  To theextent that any MCEL-Contributed Intellectual Property has been developed orcreated by a third party for MCEL, MCEL has a written agreement with such thirdparty with respect thereto and MCEL thereby either (i) has obtained ownership ofand is the exclusive owner of, or (ii) has obtained a license (sufficient forthe conduct of the business of MCEL as currently conducted and as proposed to beconducted, including MCEL’s development activities contemplated hereby) to allof such third party’s MCEL-Contributed Intellectual Property in such work,material or invention by operation of law or by valid assignment.
 
(e)  Allcontracts relating to the MCEL-Contributed Intellectual Property are in fullforce and effect. The consummation of the transactions contemplated by thisAgreement will neither violate nor result in a breach, modification,cancellation, termination or suspension of any of such contracts. MCEL is incompliance in all material respects with all such contracts and has not breachedany material term of any such contract. To the knowledge of MCEL, all otherparties to such contracts are in compliance in all respects with all suchcontracts and have not breached any term of any such contract.
 
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(f)  To MCEL’sknowledge, the operation of the business of MCEL as it is currently conductedand as proposed to be conducted, including MCEL’s development activitiescontemplated hereby, has not, does not and will not infringe or misappropriatein any manner the intellectual property of any third party or constitute unfaircompetition or trade practices under the applicable laws of anyjurisdiction.
 
(g)  To MCEL’sknowledge, MCEL has not received written notice from any third party or anyother overt threats from any third party, that the operation of the business ofMCEL as it is currently conducted and as proposed to be conducted, or any act,product or service of MCEL, infringes or misappropriates the intellectualproperty of any third party or constitutes unfair competition or trade practicesunder the applicable laws of any jurisdiction.
 
(h)  To theknowledge of MCEL, no Person has or is infringing or misappropriating anyMCEL-Contributed Intellectual Property.
 
(i)  MCEL hastaken steps which it believes to be reasonable to protect the rights of MCEL inthe Proprietary Information of MCEL or any trade secrets or confidentialinformation of third parties used, and, without limiting the foregoing, MCEL hasenforced a policy requiring each employee, consultant and independent contractorto execute a proprietary information/confidentiality agreement in substantiallythe form provided to Dow, and except under confidentiality obligations, or inconnection with pursuing patent rights by filing applications for patents in theU.S. or foreign patent and trademark offices, there has not been any disclosureby MCEL of any such trade secrets or confidential information.
 
7.4.  Disclaimer. EXCEPTFOR THE REPRESENTATIONS AND WARRANTIES PROVIDED IN THIS AGREEMENT, THE STOCKPURCHASE AGREEMENT, THE CROSS-LICENSING AGREEMENT AND THE PATENT ASSIGNMENTAGREEMENT (AS DEFINED IN THE STOCK PURCHASE AGREEMENT), MCEL MAKES NO OTHERREPRESENTATIONS WITH RESPECT TO MCEL-CONTRIBUTED INTELLECTUAL PROPERTY ANDEXPLICITLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUTLIMITATION, ANYIMPLIED WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OROTHERWISE ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE WITH RESPECT TOMCEL-CONTRIBUTED INTELLECTUAL PROPERTY OR REPRESENTATIONS AND WARRANTIES OFNON-INFRINGEMENT.
 
7.5.  JDAIntellectual PropertyExcept asstated on Schedule7.5:
 
(a)  To MCEL’sknowledge, no JDA Intellectual Property or JDA Product or service of MCELrelated to JDA Intellectual Property is subject to any proceeding or outstandingdecree, order, judgment, agreement, contract or stipulation restricting in anymanner the use, transfer or licensing thereof by MCEL, or which may affect thevalidity, use or enforceability of such JDA Intellectual Property. Each item ofregistered JDA Intellectual Property is presumed valid and subsisting. Allnecessary registration, maintenance and renewal fees currently due in connectionwith registered JDA Intellectual Property have been made and all necessarydocuments, recordations and certifications in connection with such registeredJDA Intellectual Property have been filed with the relevant patent, copyright,trademark or other Government Authority for the purpose of maintaining suchregistered JDA Intellectual Property.
 
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(b)  MCEL ownsand has exclusive title to, or has licenses (sufficient for the conduct of thebusiness of MCEL as currently conducted and as proposed to be conducted) to,each item of JDA Intellectual Property used in connection with the conduct ofthe business of MCEL as currently conducted and as proposed to be conducted freeand clear of any lien, and MCEL is the exclusive owner or exclusive licensee ofall trademarks and service marks, trade names and domain names used inconnection with the operation or conduct of the business of MCEL, free and clearof all liens.
 
(c)  MCEL ownsexclusively all copyrighted works that are MCEL products or which MCEL otherwiseexpressly purports to own, free and clear of all liens.
 
(d)  To theextent that any JDA Intellectual Property has been developed or created by athird party for MCEL, MCEL has a written agreement with such third party withrespect thereto and MCEL thereby either (i) has obtained ownership of and is theexclusive owner of, or (ii) has obtained a license (sufficient for the conductof the business of MCEL as currently conducted and as proposed to be conducted)to all of such third party’s JDA Intellectual Property in such work, material orinvention by operation of law or by valid assignment.
 
(e)  Allcontracts relating to the JDA Intellectual Property are in full force andeffect. The consummation of the transactions contemplated by this Agreement willneither violate nor result in a breach, modification, cancellation, terminationor suspension of any of such contracts. MCEL is in compliance in all materialsrespects with all such contracts and has not breached any material term of anysuch contract. To the knowledge of MCEL, all other parties to such contracts arein compliance in all respects with all such contracts and have not breached anyterm of any such contract.
 
(f)  To MCEL’sknowledge, the operation of the business of MCEL as it is currently conductedand as proposed to be conducted, including MCEL’s development activitiescontemplated hereby, has not, does not and will not infringe or misappropriatein any manner the intellectual property of any third party or, to the knowledgeof MCEL, constitute unfair competition or trade practices under the applicablelaws of any jurisdiction.
 
(g)  To MCEL’sknowledge, MCEL has not received written notice from any third party or anyother overt threats from any third party, that the operation of the business ofMCEL as it is currently conducted and as proposed to be conducted, or any act,product or service of MCEL, infringes or misappropriates the intellectualproperty of any third party or constitutes unfair competition or trade practicesunder the applicable laws of any jurisdiction.
 
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(h)  To theknowledge of MCEL, no Person has or is infringing or misappropriating any JDAIntellectual Property.
 
(i)  MCEL hastaken steps which it believes to be reasonable to protect the rights of MCEL inthe Proprietary Information of MCEL or any trade secrets or confidentialinformation of third parties used, and, without limiting the foregoing, MCEL hasenforced a policy requiring each employee, consultant and independent contractorto execute a proprietary information/confidentiality agreement in substantiallythe form provided to Dow, and except under confidentiality obligations, or inconnection with pursuing patent rights by filing applications for patents in theU.S. or foreign patent and trademark offices, there hasnot been any disclosure by MCEL of any such ProprietaryInformation.
 
7.6.  Disclaimer. EXCEPTFOR THE REPRESENTATIONS AND WARRANTIES PROVIDED IN THIS AGREEMENT, THE STOCKPURCHASE AGREEMENT, THE CROSS-LICENSING AGREEMENT AND THE PATENT ASSIGNMENTAGREEMENT (AS DEFINED IN THE STOCK PURCHASE AGREEMENT), MCEL MAKES NO OTHERREPRESENTATIONS WITH RESPECT TO JDA INTELLECTUAL PROPERTY AND EXPLICITLYDISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUTLIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR APARTICULAR PURPOSE OR OTHERWISE ARISING FROM A COURSE OF DEALING OR USAGE OFTRADE WITH RESPECT TO JDA INTELLECTUAL PROPERTY OR REPRESENTATIONS ANDWARRANTIES OF NON-INFRINGEMENT.
 
8.    Representationsand Warranties By Dow. Dowmakes the representations and warranties set forth below in this Article8.
 
8.1.  GeneralRepresentations and Warranties.
 
(a)  CorporateAuthority.Dow hasall requisite legal and corporate power and authority to enter into thisAgreement. The execution and delivery of this Agreement and the consummation byit of the transactions contemplated hereby have been duly authorized by allnecessary action on the part of Dow. This Agreement has been duly executed anddelivered by Dow and constitutes the valid and binding obligation of Dowenforceable against it in accordance with its terms except (a) as limitedby applicable bankruptcy, insolvency, reorganization, moratorium, fraudulentconveyance, or other laws of general application relating to or affecting theenforcement of creditors’ rights generally and (b) as limited by laws relatingto the availability of specific performance, injunctive relief, or otherequitable remedies
 
(b)  BindingObligations.Dow isnot required to obtain any consent, waiver, authorization or order of, give anynotice to, or make any filing or registration with, any court or other federal,state, local or other governmental authority or other Person in connection withthe execution, delivery and performance by Dow of this Agreement in accordancewith its terms.
 
(c)  Dowacknowledges that MCEL is presently engaged in other business activities and mayin the future be engaged in other business activities.
 
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8.2.  Disclaimer.DOW MAKESNO OTHER REPRESENTATIONS, INCLUDING WITHOUT LIMITATION, WITH RESPECT TODOW-LICENSED INTELLECTUAL PROPERTY AND EXPLICITLY DISCLAIMS ALL OTHERWARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OFMERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE ARISING FROM ACOURSE OF DEALING OR USAGE OF TRADE WITH RESPECT TO DOW-LICENSED INTELLECTUALPROPERTY OR REPRESENTATIONS AND WARRANTIES OF NON-INFRINGEMENT.
 
9. Other Agreements Relating to the Joint Development Activities.
 
9.1.  ConfidentialInformation.
 
(a)  Confidentiality. EachParty (in either case, the “ReceivingParty”) shall,and shall cause its directors, officers, employees, agents or advisors(collectively, “Representatives”) to,hold in confidence, and not disclose to any Person without the prior writtenconsent of the other Party (which in the case of MCEL shall be signed by thepresident or a senior vice president in either case, the “DisclosingParty”), oruse in any manner except as contemplated by this Agreement, all ProprietaryInformation of the Disclosing Party obtained by it in connection with thisAgreement, during the Term and for ten (10) years thereafter exceptthat such Proprietary Information may be disclosed (i) where necessary to anyregulatory authorities or governmental agencies, (ii) if required by court orderor decree or applicable law or by the rules of any securities exchange on whichsuch Party is listed, (iii) if it is available from public or publishedinformation, (iv) if it is received from a third party not known to such Partyto be under an obligation to keep such information confidential, (v) if it is orbecomes known to the public other than through disclosure by such Party or itsRepresentatives, (vi) if such Party can demonstrate it was in its possessionprior to disclosure thereof in connection with this Agreement, or (vii) if suchParty can demonstrate it was independently developed by it.
 
(b)  ProprietaryInformation. The term“ProprietaryInformation” means,with respect to either Party, all information concerning such Party’s businessactivities, business relationships and financial affairs which has become, ormay become, known to the Receiving Party in connection with this Agreement,including, without limitation, the intellectual property of such Party(including any intellectual property covered by this Agreement or theCross Licensing Agreement), business plans or processes, trade secrets,technical information, know-how, research and development activities, productand marketing plans, business relationships, financing plans, financing sourcesand financing proposals, customer and supplier information and informationdisclosed to the Receiving Party by third parties of a proprietary orconfidential nature or under an obligation of confidence. ProprietaryInformation is contained in various media, including, without limitation, patentapplications, computer programs in object and/or source code, flow charts,storyboards and other program documentation, manuals, plans, drawings, designs,technical specifications, laboratory notebooks, supplier and customer lists,internal financial data and other documents and records of such Party, as wellas all notes, analyses, compilations, studies, interpretations or otherdocuments prepared by the Receiving Party or its Representatives which contain,reflect or are based upon, in whole or in part, the Proprietary Information.
 
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(c)  Protectionof Proprietary Information. TheReceiving Party shall limit access to such other Party’s Proprietary Informationto its Representatives requiring access to achieve the purposes contemplated bythis Agreement. The Receiving Party shall exercise all reasonable precautions toprotect the integrity and confidentiality of the other Party’s ProprietaryInformation that is in its possession, including advising its employees andRepresentatives that are actively engaged in activities under this Agreement ofits obligations under this Section9. Uponthe termination of this Agreement, each Party shall promptly return to the otherParty any and all materials containing any the other Party’s ProprietaryInformation in such Party’s possession or under such Party’s control and shallpromptly destroy any Proprietary Information prepared by it or itsRepresentatives; provided,further, eachParty, upon request of the other Party, shall certify in a letter to such Partythat is has performed the foregoing return and/or destruction in full compliancewith this Section 9.1(c).
 
(d)  RequiredDisclosure. If theReceiving Party or its Representatives are requested or required (by oralquestions, interrogatories, requests for information or documents in legalproceedings, subpoena, civil investigative demand or other similar process) todisclose any of the such other Party’s Proprietary Information, the ReceivingParty shall provide the other Party with prompt written notice of any suchrequest or requirement so that the other Party may seek a protective order orother appropriate remedy and/or waive compliance with the provisions of thisagreement. If, in the absence of a protective order or other remedy or thereceipt of a waiver by the other Party, the Receiving Party concludes, afterconsultation with legal counsel, that it nonetheless legally compelled todisclose such other Party’s Proprietary Information, the Receiving Party or itsRepresentative may, without liability hereunder, disclose only that portion ofsuch other Party’s Proprietary Information which is legally required to bedisclosed, provided that the Receiving Party exercise its reasonable bestefforts to preserve the confidentiality of such other Party’s ProprietaryInformation, including, without limitation, by reasonably cooperating with suchother Party’s efforts to obtain an appropriate protective order or otherreliable assurance that confidential treatment will be accorded the ProprietaryInformation.
 
(e)  Ownershipof Proprietary Information; Liability. EachParty acknowledges that all Proprietary Information of the other Party is andshall remain the exclusive property of such other Party. Except as otherwiseprovided in this Agreement, each Party understands and acknowledges that theother Party does not make any representation or warranty, express or implied, asto the accuracy or completeness of such other Party’s Proprietary Informationand that neither Party nor any of its Representatives shall have any liabilityrelating to or resulting from the use of such other Party’s ProprietaryInformation or any errors or omission therefrom.
 
(f)  EquitableRemedies. EachParty acknowledges that the restrictions contained in this Section 9.1 arenecessary for the protection of the business and goodwill of the other Party.Each Party agrees that any breach or threatened breach of this Section 9.1 by suchParty may cause irreparable damage to the other Party and, in the event of suchbreach or threatened breach, such other Party shall be entitled, in addition tomonetary damages and to any other remedies available to such other Party underthis Agreement or at law, to equitable relief, including injunctive relief, andto the payment of all costs incurred by such other Party in enforcing theprovisions of this Agreement, including reasonable attorneys’ fees.
 
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9.2.  Licenseand Supplier Arrangements with Third Parties.
 
(a)  Intentof Parties. Withrespect to all potential licensees and suppliers of intellectual property, rawmaterials, and products necessary for or helpful to the manufacture of (i) theproduction-ready Military Products in anticipation of the Military P.O. withrespect to Milestone 3 and/or (ii) the Consumer Products in anticipation of theConsumer P.O. with respect to Milestone 4 (each, a “MaterialMCEL Agreement”), ineach case in accordance with Section 4.2 andSection 5.2, it isthe intent of the Parties that Dow may provide all licensee and supplierresources under all such Material MCEL Agreements with MCEL on termsmutually-satisfactory to the Parties.
 
(b)  Rightof First Refusal.Notwithstanding the foregoing, during the Term, in the event MCEL proposes toenter into a Material MCEL Agreement with a third party, Dow shall have a rightof first refusal to enter into such proposed Material MCEL Agreement with MCELon substantially similar terms and conditions as those contained in the proposedMaterial MCEL Agreement with such third party, subject to the procedurecontained in Sections9.2(c), (d) and(e).
 
(c)  Noticeof Proposed Transfer. Afterthe achievement of Milestone 1, before effecting any proposed Material MCELAgreement with a third party, MCEL shall give written notice (i) to Dowdescribing the scope of activities under the proposed Material MCEL Agreement,the identity of the proposed third party and the material terms of such proposedMaterial MCEL Agreement (the “AgreementNotice”). MCELshall also certify to Dow that the proposed Material MCEL Agreement is a bonafide transaction and that the third party is ready, willing and able(financially and otherwise) to enter into the proposed Material MCEL Agreement.
 
(d)  Exerciseof Right of First Refusal. At anytime within the ten (10)-Business Day period immediately following the receiptof the Agreement Notice, Dow may elect to exercise the right of first refusalset forth in Section 9.2(b). Theentering into of any Material MCEL Agreement pursuant to the exercise of anysuch right of first refusal shall in no event be held more than thirty (30)-daysafter exercise of such right of first refusal.
 
(e)  MaterialMCEL Agreement with a Third Party. If (i)Dow fails to exercise the right of first refusal under Section 9.2(b) withinthe ten (10)-Business Day period following receipt of the Agreement Notice onsubstantially similar terms and conditions as the those contained in theAgreement Notice or (ii) Dow fails to enter into the Material MCEL Agreementwithin the thirty (30)-day period specified therefor in Section 9.2(d), thenMCEL may, not later than thirty (30) days following the later of clause (i) and(ii) of this Section9.2(e), enterinto the Material MCEL Agreement on the terms and conditions described in suchAgreement Notice. Any proposed Material MCEL Agreement on terms and conditionsmaterially different from those described in the Agreement Notice, as well asentering into the proposed Material MCEL Agreement with a third party after theexpiration of such thirty (30)-day period, shall again be subject to the rightof first refusal set forth in Section 9.2(b) andshall require compliance by MCEL with the procedure described in Sections 9.2(c),(d)and(e).
 
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9.3.  Non-Solicitationof Employees. EachParty agrees that during the Term and for a period of twelve (12) monthsfollowing expiration or termination of this Agreement, neither such Party will,without the other Party’s written consent (which in the case of MCEL shall besigned by the president or a senior vice president), solicit for employment, asan employee or as a contractor, any person employed then or within the preceding180 days by the other Party if that person was involved in the performance ofthis Agreement. Neither a response to an employment inquiry first initiated by aprospective employee, nor the publishing of employment advertisements in publicor industry media, nor contacts initiated by search firms who have not beenrequested to contact the specific persons, will be a violation of thisSection 9.3.
 
9.4.  Costsand Expenses Related to Joint Development. Exceptas set forth in Section 9.5(b), eachParty shall bear all costs and expenses that it incurs in performing itsobligations under this Agreement (including such Party’s costs and expensesrelated to its Committee Members performing his or her duties as CommitteeMembers).
 
9.5.  Determinationof Milestone and Objectives under the Milestone Table. 
 
(a)  BetweenParties. At suchtime as either Party believes in good faith that Milestone 1, Milestone 2,Milestone 3 or Milestone 4 has been achieved (or a Military Objective or aConsumer Objective contained in any such Milestone has occurred) under theMilestone, such Party (the “NotifyingParty”) shallnotify the other Party (the “RecipientParty”) inwriting that the Notifying Party has determined that such Milestone has beenachieved or such Military Objective or Consumer Objective has occurred. Withinfive (5) Business Days of such notification, the Recipient Party shall either(i) notify the Notifying Party in writing that it agrees that such Milestone hasbeen achieved or such Military Objective or Consumer Objective has occurred, atwhich time such Milestone shall be conclusively deemed to have been achieved orsuch Military Objective or Consumer Objective shall be conclusively deemed tohave occurred, or (ii) notify the Notifying Party in writing (the “DisagreementNotice”) thatit disagrees with the determination made by the Notifying Party (and set forthin reasonable detail the reasons why the Recipient Party disagrees that theapplicable Milestone has been achieved or the applicable Military Objective orConsumer Objective has not occurred), at which time the Parties will be deemedto have disagreed as to such determination. The Parties shall reasonablycooperate to provide the Recipient Party with all information and access as isnecessary or appropriate for Recipient Party to agree or disagree with theNotifying Party’s determination under this Section 9.5(a).
 
(b)  IndependentExpert Referee. If theRecipient Party delivers a Disagreement Notice pursuant to Section 9.5(a), theSteering Committee will meet in person on at least one occasion and negotiate ingood faith (at reasonably agreeable times) during the ten (10) Business Daysperiod immediately following the delivery of the Disagreement Notice todetermine whether such Milestone has been achieved or such Military Objective orConsumer Objective has occurred. If the Steering Committee cannot reachagreement during such 10-Business Day period, within the ten (10) Business Daysimmediately following such initial 10-Business Day period, Dow shall appoint anIndependent Expert (the “DowExpert”) andMCEL shall appoint an Independent Expert (the “MCELExpert”). Uponthe appointment of such Independent Experts, Dow shall instruct the Dow Expertand MCEL shall instruct the MCEL Expert to cooperate with each other to appointa third Independent Expert (the “Referee”).Within 30 days of the appointment of the Referee, the Dow Expert shall presentthe position of Dow to the Referee and the MCEL Expert shall present theposition of MCEL to the Referee. Dow and MCEL shall then instruct the Referee torender a decision as to whether such Milestone has been achieved or suchMilitary Objective or Consumer Objective has occurred, which decision shall befinal and binding on Dow and MCEL. Dow shall bear all costs and expenses of theDow Expert, and MCEL shall bear all costs and expenses of the MCEL Expert. Thecosts and expenses of the Referee shall be borne by the Party against which theReferee renders the unfavorable decision. 
 
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9.6.  Publicity/PressReleases.NeitherParty will make or issue any press release, announcement or any other publicdisclosure regarding this Agreement or the transactions or activitiescontemplated hereby without the prior written consent of the other Party, whichconsent shall not be unreasonably withheld or delayed; provided,however, thateither Party may make such disclosure (A) if it is advised by counsel that suchdisclosure is legally required under applicable law or the rules of anysecurities exchange on which such Party is listed and (B) such Party provides asmuch advance notice as possible to the other Party of such disclosure and, inany event, an opportunity to review and comment on such proposed disclosureprior to disclosure thereof.
 
9.7.  Records. EachParty shall maintain all books and records related to its obligations hereunderfor at least three (3) years after the termination or expiration of thisAgreement.
 
9.8.  Insurance. At alltimes during the Term, MCEL will procure and maintain, at its own expense andfor its own benefit, Comprehensive/Commercial General Liability Insurance andUmbrella Insurance (including contractual liability, products liability, andcompleted operations coverage) with a bodily injury, death, and property damagecombined single limit of $5,000,000 per occurrence. The scope of this coverageis to be equivalent to standard ISO forms (e.g., 1996 Commercial GeneralLiability ISO form # CG 00 01 01 96, etc. or CG 00 02 01 96). If the insuranceto be provided is in the form of ISO Form CG 00 02 01 96 (claims made), thepolicy shall contain an extended reporting period of at least five (5) years;any “Retroactive Date” under said policy shall be no later than the EffectiveDate. MCEL shall furnish Dow a certificate(s) from the insurance carrier (havinga minimum AM Best rating of A-) showing evidence of the foregoing insurance. Thecertificate(s) will include the following statement: “The insurance certifiedhereunder is applicable to all contracts between The Dow Chemical Company andthe Insured. This insurance may be canceled or altered only after thirty (30)days written notice to DOW.” The insurance, and the certificate(s), will (a)name Dow (including Dow’s officers, directors, employees, affiliates, agents,subsidiaries, successors, and assigns) as additional insureds with respect tomatters arising from this Agreement, (b) provide that such insurance is primaryand non contributing to any liability insurance carried by Dow, and (c) providethat underwriters and insurance companies of MCEL may not have any right ofsubrogation against Dow (including Dow’s officers, directors, employees,Affiliates, agents, subsidiaries, successors, and assigns). The insurance willcontain no more than an ordinary deductible. MCEL agrees to waive any right ofrecovery against Dow (including Dow’s officers, directors, employees,Affiliates, agents, successors, and assigns) for any loss or damage of the typecovered by the insurance to be procured and maintained under this Section9.8,regardless of whether or not such insurance is so maintained.
 
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10.    Indemnification.
 
10.1.  Survival. Therepresentations and warranties of the Parties contained or made pursuant to inthis Agreement shall survive the execution and delivery of this Agreement andshall continue in full force and effect until the second (2nd)anniversary of expiration of the Term, except that, thosecovenants and agreements set forth in this Agreement that, by their terms, areto have effect after the Closings shall survive for the period contemplated bysuch covenants and agreements, or, if no period is expressly set forth, for theapplicable statute of limitations.
 
10.2.  Indemnificationby MCEL. MCELhereby indemnifies Dow and its Affiliates, directors, officers, employees andagents against, and agrees to hold each of them harmless from, any and allclaims, demands, costs, expenses, obligations, liabilities, damages, recoveriesand deficiencies, including, without limitation, interest, penalties, courtcosts, costs and expenses (including the reasonable fees of external counsel)(the “Damages”)incurred or suffered by any of them:
 
(i)  arisingout of or related in any way to any misrepresentation or breach of anyrepresentation or warranty made by MCEL in this Agreement;
 
(ii)  arisingout of or related in any way to any breach of any covenant or agreement to beperformed by MCEL pursuant to this Agreement;
 
(iii)  arisingout of or related in any way to the infringement by MCEL or its licensees(including without limitation through use of the MCEL-Contributed IntellectualProperty or the JDA Intellectual Property) of the intellectual property rightsof a third party;
 
(iv)   arisingout of or related in any way to any product liability or similar claims relatedto any products developed by MCEL under this Agreement, including the JDAProducts;
 
(v)  arisingout of or related in any way to the gross negligence or willful misconduct ofMCEL, its employees or its agents, while performing under thisAgreement;
 
(vi)   arisingout of violations by MCEL of applicable law;
 
(vii)  arisingout of any death or personal injury of whatever nature or kind relating to theperformance by MCEL of MCEL’s obligations under this Agreement; or
 
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(viii)  arisingout of or related to any failure by MCEL to comply or be consistent with(through acts or omissions from action by MCEL) any and all applicable past,present or future laws (1) for the protection of the environment or humanhealth and safety or (2) regulating the management, release, remediation orexposure of Persons to any hazardous materials, or otherwise with respect tohazardous materials, including, without limitations, with respect to thedevelopment activities of MCEL hereunder and the JDA Products.
 
10.3.  Indemnificationby Dow. Dowhereby indemnifies MCEL and its Affiliates, directors, officers, employees andagents against, and agrees to hold each of them harmless from, any and allDamages incurred or suffered by any of them:
 
(i)  arisingout of or related in any way to any misrepresentation or breach of anyrepresentation or warranty made by Dow in this Agreement;
 
(ii)  arisingout of or related in any way to any breach of any covenant or agreement to beperformed by Dow pursuant to this Agreement; or
 
(iii)arising out of the gross negligence or willful misconduct of Dow, its employeesor its agents, while performing under this Agreement.
 
10.4.  Limitation. DOW SHALLNOT UNDER ANY CIRCUMSTANCES BE LIABLE TO MCEL FOR ANY INDIRECT, INCIDENTAL,SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS, REVENUE, ORBUSINESS) RESULTING FROM OR IN ANY WAY RELATED TO THIS AGREEMENT, OR THETERMINATION OF THIS AGREEMENT, OR ARISING OUT OF OR ALLEGED TO HAVE ARISEN OUTOF A BREACH OF THIS AGREEMENT. THIS LIMITATION APPLIES REGARDLESS OF WHETHERSUCH DAMAGES ARE SOUGHT BASED ON THEORIES OF CONTRACT OR TORT OR ANY OTHER LEGALTHEORY. THE LIMITATIONS IN THIS SECTION10.4 SHALLAPPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT TO THE CONTRARY, DOW’SAGGREGATE LIABILITY TO MCEL AND ANY THIRD PERSONS FOR ALL DAMAGES AND LOSSES,DIRECT OR INDIRECT, ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT AND THECROSS LICENSING AGREEMENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OROTHERWISE SHALL BE LIMITED TO TWO HUNDRED FIFTY THOUSAND U.S. DOLLARS($250,000).
 
10.5.  Procedures. 
 
(a)    If any ofDow or any of their directors, officers, employees and agents, seekindemnification pursuant to Section10.2, or MCELor any of their Affiliates or any of their directors, officers, employees andagents, seek indemnification pursuant to Section10.3, thePerson seeking indemnification (the “IndemnifiedParty”) shallgive written notice to the party from whom such indemnification is sought (the“IndemnifyingParty”)promptly (and in any event within 30 days) after the Indemnified Party becomesaware of the facts giving rise to such claim for indemnification (an“IndemnifiedClaim”)specifying in reasonable detail the factual basis of the Indemnified Claim,stating the amount of the Damages, if known, the method of computation thereof,containing a reference to the provision of this Agreement in respect of whichsuch Indemnified Claim arises and demanding indemnification therefor. Thefailure of an Indemnified Party to provide notice in accordance with thisSection10.5 shallnot constitute a waiver of that party’s claims to indemnification pursuant toSection10.2 orSection10.3, asapplicable, except to the extent that any such failure or delay in giving noticecauses the amounts paid by the Indemnifying Party to be greater than theyotherwise would have been or otherwise results in prejudice to the IndemnifyingParty. If the Indemnified Claim arises from the assertion of any claim, or thecommencement of any suit, action or proceeding brought by a Person that is not aparty hereto (a “ThirdParty Claim”), anysuch notice to the Indemnifying Party shall be accompanied by a copy of anypapers theretofore served on or delivered to the Indemnified Party in connectionwith such Third Party Claim.
 
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(b)    Uponreceipt of notice of a Third Party Claim from an Indemnified Party pursuant toSection 10.5(a), theIndemnifying Party will be entitled to assume the defense and control of suchThird Party Claim subject to the provisions of this Section 10.5. Afterwritten notice by the Indemnifying Party to the Indemnified Party of itselection to assume the defense and control of a Third Party Claim, theIndemnifying Party shall not be liable to such Indemnified Party for any legalfees or expenses subsequently incurred by such Indemnified Party in connectiontherewith. Notwithstanding anything in this Section 10.5 to thecontrary, if the Indemnifying Party does not assume defense and control of aThird Party Claim as provided in this Section 10.5, theIndemnified Party shall have the right to defend such Third Party Claim, subjectto the limitations set forth in this Section 10.5, in suchmanner as it may deem appropriate. Whether the Indemnifying Party or theIndemnified Party is defending and controlling any such Third Party Claim, theyshall select counsel, contractors, experts and consultants of recognizedstanding and competence, shall take all steps necessary in the investigation,defense or settlement thereof, and shall at all times diligently and promptlypursue the resolution thereof. The party conducting the defense thereof shall atall times act as if all Damages relating to the Third Party Claim were for itsown account and shall act in good faith and with reasonable prudence to minimizeDamages therefrom. The Indemnified Party shall, and shall cause each of itsAffiliates, directors, officers, employees, and agents to, cooperate fully withthe Indemnifying Party in connection with any Third Party Claim.
 
(c)    TheIndemnifying Party shall be authorized to consent to a settlement of, or theentry of any judgment arising from, any Third Party Claims, and the IndemnifiedParty shall consent to a settlement of, or the entry of any judgment arisingfrom, such Third Party Claims; provided, that the Indemnifying Party shall (1)pay or cause to be paid all amounts arising out of such settlement or judgmentconcurrently with the effectiveness thereof; (2) shall not encumber any of theassets of any Indemnified Party or agree to any restriction or condition thatwould apply to such Indemnified Party or to the conduct of that party’sbusiness; and (3) shall obtain, as a condition of any settlement or otherresolution, a complete and irrevocable release of each Indemnified Party andsuch settlement or judgment (x) shall not require any admission of liability,fault or wrongdoing by any Indemnified Party or impose any non-monetaryobligation on an Indemnified Party (such as, by way of example, and not inlimitation, injunctive relief) and (y) shall not require any admission orstatement that could reasonably be expected to materially impair, disparage orotherwise adversely affect, the business reputation of the Indemnified Party.Except to the extent of the foregoing, no settlement or entry of judgment inrespect of any Third Party Claim shall be consented to by any Indemnifying Partyor Indemnified Party without the express written consent of the other party,which consent shall not be unreasonably withheld or delayed.
 
(d)    If anIndemnifying Party makes any payment on an Indemnified Claim, the IndemnifyingParty shall be subrogated, to the extent of such payment, to all rights andremedies of the Indemnified Party to any insurance benefits or other claims orbenefits of the Indemnified Party with respect to such claim.
 
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10.6.  AdditionalObligations with respect to IntellectualProperty. In theevent that the use of the MCEL-Contributed Intellectual Property or the JDAIntellectual Property becomes, or is likely to become the subject of any claim,suit or proceeding or if the manufacture, use or sale of the JDA Products byMCEL may be,or is, enjoined, MCEL shall use its reasonable best efforts to do one or more ofthe following:
 
(i)  obtainthe right to continued use of the MCEL-Contributed Intellectual Property, theJDA Intellectual Property and/or the JDA Products; or
 
(ii)  modify orreplace the affected MCEL-Contributed Intellectual Property, the JDAIntellectual Property and/or the JDA Products with an acceptable non-infringingor non-conflicting alternative so long as the alternative is in compliance withthe requirements of this Agreement in all material respects;
 
provided,however, if suchactual or potential claim, suit, proceeding or injunction is applicable only toa market that is not material to MCEL or Dow, then MCEL may alternatively ceasesuch use of MCEL-Contributed Intellectual Property or the JDA IntellectualProperty or manufacture, use of sale of JDA Products, as applicable, within suchnonmaterial market.
 
10.7.  Exclusivityof Remedies. Exceptfor such remedies as may be provide for in the other Transaction Agreements andexcept for Article11, theindemnity and other provisions under this Article10 shall bethe sole and exclusive remedy of Dow or MCEL, as the case may be, and theirrespective Affiliates for breach or default of this Agreement; provided, thatnothing herein shall limit in any way limit either Party’s remedies in respectof fraud by another Party or any equitable remedy arising in connection withthis Agreement.
11.    Termand Termination.
 
11.1.  Term. ThisAgreement shall be in full force and effect during the time period commencing onthe date hereof and ending on the third (3rd) yearanniversary of the date hereof (the “Term”)(except in the event of early termination of the Term in accordance withSections13.2,13.3 or13.4);provided, thatthe Term may be mutually extended by the Parties but only in a writteninstrument executed by the Parties.
 
11.2.  Terminationby Either Party. ThisAgreement shall automatically and immediately terminate upon the occurrence of aBankruptcy Event of the other Party.
 
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11.3.  TerminationBy Dow. ThisAgreement may be terminated by Dow as follows:
 
(i)  immediatelyand at any time upon written notice from Dow to MCEL if any infringement by MCELoccurs with respect to the intellectual property rights of Dow or a third party;
 
(ii)  except asprovided in clause (i) above, at any time without Cause prior to the achievementof Milestone 1 upon 30 days’ written notice from Dow to MCEL;
 
(iii)  except asprovided in clause (i) above, at any time without Cause on or after theachievement of Milestone 1 upon 90 days’ written notice from Dow to MCEL;or
 
(iv)  at anytime for Cause immediately upon written notice from Dow to MCEL.
 
Forpurposes of this Section11.3,“Cause” means(a) a breach of MCEL’s representations and warranties under this Agreement orthe Cross Licensing Agreement, which breach is not remedied within fifteen (15)days after MCEL receives written notice thereof, (b) a breach or default by MCELin the performance of any covenant or agreement under this Agreement or theCross Licensing Agreement, which breach is not remedied within fifteen (15) daysafter MCEL receives written notice thereof, or (c) any failure whatsoever tocomply with Section 9.8.
 
11.4.  Terminationby MCEL. ThisAgreement may be terminated by MCEL as follows:
 
(i)  at anytime upon a material breach or default by Dow in the performance of any covenantor agreement under this Agreement upon written notice from MCEL to Dow;provided,that, if MCELprovides such notice to Dow under this subsection (i), Dow shall have 30 daysafter such notice in which to cure such breach or default;
 
(ii)  if Dowdoes not make a Minimum Series B Investment with respect to any SubsequentClosing (as defined in the Stock Purchase Agreement) pursuant to the StockPurchase Agreement (after taking into account any payment made by Dow in excessof a Minimum Series B Investment applicable to a prior Minimum Series BInvestment, as provided for in the Stock Purchase Agreement), upon writtennotice from MCEL to Dow, but only within the 30 day period immediately followingDow’s non-payment of such Minimum Series B Investment with respect to suchSubsequent Closing;provided however, if MCELdoes not deliver such written notice to Dow during such 30-day period, then thisAgreement, the Stock Purchase Agreement and the other Transaction Agreementswill continue with respect to each subsequent Milestone as if Dow had made suchMinimum Series B Investment for such Milestone.
 
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11.5.  Effectof Termination. (a)  DowOwnership Generally.Termination of this Agreement for any reason whatsoever shall not affect anyownership interest that Dow has acquired in MCEL by virtue of this Agreement,the Stock Purchase Agreement or any other Transaction Agreement prior to suchtermination; provided,however, if Dowterminates this Agreement without Cause prior to July 1, 2005, Dow shall forfeitall such ownership interests.
 
(b)  AdditionalMilestone Participation. If Dowterminates this Agreement at any time for Cause, in addition to any ownershipinterest that Dow has retained in MCEL under Section11.5(a), Dowwill be entitled, at the time of such termination to additionally(i) purchase the Series B Preferred Stock and receive the Warrants and(ii) receive the Series A Preferred Stock that Dow would have had theright to acquire upon achievement of the next Milestone (as if such nextMilestone had occurred upon the termination of this Agreement and otherwisepursuant to the terms of this Agreement, the Stock Purchase Agreement and theother Transaction Agreements).
 
(c)  NoRelease of MCEL’s Obligations.Termination of this Agreement for any reason whatsoever (whether at expirationof the Term or otherwise) shall not release MCEL from any obligations it mayhave under any Military Contract, Military P.O., Consumer Contract, or ConsumerP.O. Any and all of such agreements shall remain in full force and effect andMCEL shall perform its obligations under such agreements in accordance withtheir terms.
 
11.6.  Survivalof Certain Provisions. Unlessotherwise expressly agreed in writing by the Parties, Section2.4,9.1,9.3,9.4 and10.4, andArticles12 and13 and allother provisions expressly relating to obligations following termination orexpiration, shall survive the Term.
 
12.    Disputes.
 
12.1.  AlternativeDispute Resolution. Anyunresolved controversy or claim arising out of or relating to this Agreement,except as (a) otherwise provided in this Agreement, or (b) any suchcontroversies or claims arising out of either party’s intellectual propertyrights for which a provisional remedy or equitable relief is sought, shall besubmitted to arbitration by one arbitrator mutually agreed upon by the Parties,and if no agreement can be reached within 30 days after names of potentialarbitrators have been proposed by the American Arbitration Association (the“AAA”), thenby one arbitrator having reasonable experience in corporate finance transactionsof the type provided for in this Agreement and who is chosen by the AAA. Thearbitration shall take place in the District of Columbia, in accordance with theAAA rules then in effect, and judgment upon any award rendered in sucharbitration will be binding and may be entered in any court having jurisdictionthereof. There shall be limited discovery prior to the arbitration hearing asfollows: (a) exchange of witness lists and copies of documentary evidence anddocuments relating to or arising out of the issues to be arbitrated,(b) depositions of all party witnesses and (c) such other depositions asmay be allowed by the arbitrators upon a showing of good cause. Depositionsshall be conducted in accordance with the Federal Rules of Civil Procedure, thearbitrator shall be required to provide in writing to the Parties the basis forthe award or order of such arbitrator, and a court reporter shall record allhearings, with such record constituting the official transcript of suchproceedings. The arbitrator shall award reasonable attorney’s fees, costs, andnecessary disbursements in addition to any other relief to which the arbitratordetermines a party to be entitled. Each of the Parties to this Agreementconsents to personal jurisdiction for any equitable action sought in the U.S.District Court for the District of Columbia or any court of the District ofColumbia having subject matter jurisdiction.
 
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13.    GeneralProvisions.
 
13.1.  Relationshipof the Parties. It isexpressly understood that Dow and MCEL intend by this Agreement to establish therelationship of independent contractors, and do not intend to undertake therelationship of principal and agent or to create a joint venture or partnershipbetween them or their respective successors in interests. Neither Dow nor MCELshall have any authority to create or assume, in the name or on behalf of theother Party, any obligation, expressed or implied, nor to act or purport to actas the agent or the legally empowered representative of the other Party heretofor any purpose whatsoever.
 
13.2.  Transfer;Successors and Assigns. NoParty shall assign any rights or obligations under this Agreement without theprior written consent of the other Party, provided, however, that Dow may assignany and all rights and obligations under this Agreement to any of itsAffiliates. The terms and conditions of this Agreement shall inure to thebenefit of and be binding upon the respective successors and assigns of theparties. Nothing in this Agreement, express or implied, is intended to conferupon any Party other than the parties hereto or their respective successors andassigns any rights, remedies, obligations, or liabilities under or by reason ofthis Agreement, except as expressly provided in this Agreement.
 
13.3.  GoverningLaw. ThisAgreement shall be governed by and construed in accordance with the laws of theState of Delaware without regard to its principles of conflicts oflaws.
 
13.4.  Counterparts. ThisAgreement may be executed in two (2) or more counterparts, each of which shallbe deemed an original, but all of which together shall constitute one and thesame instrument. This Agreement may also be executed and delivered by facsimilesignature and in two or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the sameinstrument.
 
13.5.  Constructionof Certain Terms. Thetitles of the articles, sections, and subsections of this Agreement are forconvenience of reference only and are not to be considered in construing thisAgreement. Wherever the words “including,” “include” or “includes” are used inthis Agreement, they shall be deemed followed by the words “without limitation.”References to any gender shall be deemed to mean any gender. The parties heretohave participated jointly in the negotiation and drafting of this Agreement. Inthe event an ambiguity or question of intent or interpretation arises, thisAgreement shall be construed as if drafted jointly by the parties hereto, and nopresumption or burden of proof shall arise favoring or disfavoring any Party byvirtue of the authorship of any provisions of this Agreement.
 
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13.6.  Notices. Allnotices and other communications given or made pursuant to this Agreement shallbe in writing and shall be deemed effectively given: (i) upon personal deliveryto the Party to be notified, (ii) when sent by confirmed electronic mail orfacsimile if sent during normal business hours of the recipient, and if not soconfirmed, then on the next Business Day, (iii) five (5) days after having beensent by registered or certified mail, return receipt requested, postage prepaid,or (iv) one (1) day after deposit with a nationally recognized overnightcourier, specifying next day delivery, with written verification of receipt. Allcommunications shall be sent to the address or facsimile number set forth belowor to such other address or facsimile number as delivered by notice to the otherin accordance with this Section12.6:
 
If toMCEL:
 
MillenniumCell Inc.
1Industrial Way West
Eatontown,New Jersey 07724
Attention:President
Facsimile:732.542.4010
 
With acopy to:
 
Dickstein,Shapiro, Morin & Oshinsky LLP
2101 LStreet, N.W.
Washington,D.C. 20031-1526
Attention:Neil Lefkowitz
Facsimile:202.887.0689
 
If toDow:
The DowChemical Company
2030 DowCenter
Midland,Michigan 48674
Attention:Director, Natural Resources Platform, Dow Ventures
Facsimile:989.638.7133
With acopy to:
The DowChemical Company
2030 DowCenter
Midland,Michigan 48674
Attention:Business Counsel, Dow Ventures
Facsimile:989.636.7594
King& Spalding LLP
1700Pennsylvania Avenue, N.W.
Washington,D.C. 20006
Attention:David Gibbons
Facsimile:202.626.3737
 
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13.7.  Amendmentsand Waivers. Neitherthis Agreement nor any term of this Agreement may be amended, terminated orwaived without the written consent of MCEL and the holders of at least amajority of the then-outstanding Shares. Any amendment or waiver effected inaccordance with this Section 13.7 shall bebinding upon Dow and each transferee of the Preferred Shares or Warrants (or theCommon Stock issuable upon conversion thereof), each future holder of all suchsecurities, and MCEL.
 
13.8.  Severability. Theinvalidity of unenforceability of any provision hereof shall in no way affectthe validity or enforceability of any other provision.
 
13.9.  Delaysor Omissions. Nodelay or omission to exercise any right, power or remedy accruing to any Partyunder this Agreement, upon any breach by or default of the other Party underthis Agreement, shall impair any such right, power or remedy of suchnon-breaching or non-defaulting Party nor shall it be construed to be a waiverof any such breach or default, or an acquiescence therein, or of or in anysimilar breach or default thereafter occurring; nor shall any waiver of anysingle breach or default be deemed a waiver of any other breach or defaulttheretofore or thereafter occurring. Any waiver, permit, consent or approval ofany kind or character on the part of any Party of any breach or default underthis Agreement, or any waiver on the part of any Party of any provisions orconditions of this Agreement, must be in writing and shall be effective only tothe extent specifically set forth in such writing. All remedies, either underthis Agreement or by law or otherwise afforded to any Party, shall be cumulativeand not alternative.
 
13.10.  EntireAgreement. ThisAgreement (including the Schedules and Exhibits hereto) and the otherTransaction Agreements constitute the full and entire understanding andagreement between the parties with respect to the subject matter hereof, and anyother written or oral agreement relating to the subject matter hereof existingbetween the parties are expressly canceled.
 
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INWITNESS WHEREOF, theParties hereto have caused this Agreement to be executed as of the EffectiveDate.
 
     
  MILLENNIUM CELL INC.
 
 
 
 
 
 
By:  
 
  Title 

     
  THE DOW CHEMICAL COMPANY
 
 
 
 
 
 
By:  
 
  Title 

 
 
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EXHIBITA
 
DEFINITIONS
 
Affiliate” means,with respect to any person or entity (a “Person”), anyPerson which, directly or indirectly, controls, is controlled by, or is undercommon control with such Person, including, without limitation, any partner,officer, director, or member of such Person; provided,however, thatDow is not an Affiliate of MCEL.
Application” means(A) production of hydrogen gas for use by fuel cells by storing and chemicallyconverting sodium borohydride or other boron hydride-fuel formulations intohydrogen by (1) controlling the contact of an alkaline aqueous boron hydridesolution with a contained solid catalyst comprised of a transition metal adheredto a substrate which promotes the chemical reaction between the boron hydrideand water to release hydrogen gas; and/or (2) [***] and (B) interconnections andrelated control strategies for the integration of a fuel cell and hydrogengenerator systems for delivery of hydrogen gas produced by one of these meansfor conversion to power by a fuel cell.
 
BankruptcyEvent” means,with respect to any Person, any (i) assignment by such Person for thebenefit of creditors, (ii) application by such Person for the appointmentof a trustee, liquidator, receiver or custodian of any substantial part of suchPerson’s assets, (iii) filing of a petition or commencement of a proceedingby such Person relating to itself under any bankruptcy, reorganization,arrangement or similar law, (iv) filing of a petition or commencement of aproceeding under any bankruptcy, reorganization, arrangement or similar lawagainst such Person where either (a) such Person has effectively given itsconsent or (b) such proceeding has continued undischarged and unstayed for aperiod of 60 days.
 
BusinessDay” meansany day except Saturday, Sunday or any day on which banks are generally not openfor business in New York City, New York.
 
CommonStock” has themeaning given such term in the Stock Purchase Agreement.
 
ConsumerContract” meansan agreement with an OEM.
 
ConsumerObjective” meanseach item listed under the “Consumer Objective” heading in the Milestone Tablewith respect to any Milestone.
 
ConsumerP.O.” means apurchase order with an OEM for the manufacture and production of one or moreConsumer Products.
 
ConsumerProduct” means afinished cartridge and fuel cell system for consumer use.
 
ConsumerPrototype” aconsumer proof-of-concept prototype for a fuel cell power source to anOEM.
 
Informationmarkedby [***] has been omitted pursuant to a request for confidential treatment. Theomitted portion has been separately filed with the Securities and ExchangeCommission.
 
A-1

 
DowConsumer Task” meanseach item that Dow is required to perform pursuant to Sections5.2(f),5.2(g),5.2(h),5.2(i) and5.2(j).
 
DowMilitary Tasks” meanseach item that Dow is required to perform pursuant to Sections5.2(a),5.2(b),5.2(c),5.2(d) and5.2(e).
 
Fieldof Use” meansfuel cells for energy generation.
 
FTE” meansthe equivalent of 40 person hours per week or its equivalent.
 
IndependentExpert” means aPerson that is nationally recognized as being in the Field of Use and/orApplication and that has not been employed, retained, affiliated with or theowner of any equity securities of either Party in the preceding three (3) years;provided, however, such Person will not be deemed to own any equity securitiesin Dow solely by virtue of such Person owning less than 3% of all issued andoutstanding common stock of Dow at any time during such 3 yearperiod.
 
JDAIntellectual Property” has themeaning given such term in the Cross Licensing Agreement.
 
JDAProducts” means,collectively, the Military Prototypes, the Military Products, the ConsumerPrototypes and the Consumer Products.
 
GovernmentAuthority” has themeaning given such term in the Stock Purchase Agreement
 
MCELConsumer Task” meanseach item that MCEL is required to perform pursuant to Sections 4.2(f),4.2(g),4.2(h),4.2(i), and4.2(j).
 
MCELMilitary Task” meanseach item that MCEL is required to perform pursuant to Sections 4.2(a),4.2(b),4.2(c),4.2(d) and4.2(e).
 
MilitaryContract” meansan agreement with a Military Customer.
 
MilitaryCustomer” meansany government or military entity.
 
MilitaryObjective” meanseach item listed under the “Military Objective” heading in the Milestone Tablewith respect to any Milestone.
 
MilitaryP.O.” means apurchase order with a Military Customer for the manufacture and production ofone or more units of the Military Product.
 
MilitaryProduct” means afinished cartridge and fuel cell system for military use.
 
MilitaryPrototype” means aprototype for supplying sub 50-watt solider power to a MilitaryCustomer.
 
MinimumSeries B Investment” has themeaning given to such term in the Stock Purchase Agreement.
 
A-2

 
OEM” means acommercial customer, original development manufacturer or original equipmentmanufacturer; provided, however, [***] shall not be deemed to be an “OEM” unless[***] has agreed to combine with a manufacturer or direct marketer thatcontributing at least [***] of payments under the applicable agreement with MCEL(or MCEL and a consortium).
 
OwnershipInterest” has themeaning given such term in the Stock Purchase Agreement.
 
PreferredShares” has themeaning given to such term in the Stock Purchase Agreement.
 
Production-ReadyMilitary Contract” meansan agreement with a Military Customer for the development of production-readyMilitary Prototypes and associated cartridges.
 
SeriesA Preferred Stock” has themeaning given such term in the Stock Purchase Agreement.
 
SeriesB Preferred Stock” has themeaning given such term in the Stock Purchase Agreement.
 
SteeringCommittee” meansthe committee formed pursuant to Section 2.3 of thisAgreement.
 
TransactionAgreements” has themeaning given such term in the Stock Purchase Agreement.
 
Warrants” has themeaning given such term in the Stock Purchase Agreement.
 
 
 
 
 
Informationmarkedby [***] has been omitted pursuant to a request for confidential treatment. Theomitted portion has been separately filed with the Securities and ExchangeCommission.
 
 
A-3

 
EXHIBITB
 
MILESTONETABLE
 
 
Milestone
 
Military Objectives and Consumer Objectives to meet Milestone
1
Milestone 1 will be achieved upon (i) the expiration of the 60 day period commencing on the Effective Date and (ii) the occurrence of either the Military Objectives set forth in subsection (a) below or the Consumer Objective set forth in subsection (b) below:
 
(a)    Military Objectives:
 
1. MCEL, either alone or with a consortium, has entered into a Military Contract whereby (i) the Military Customer party thereto is committed to fund at least [***] to one (1) or more entities (including MCEL) for the development of a Military Prototype and (ii) MCEL is entitled to receive at least 25% of such funds (assuming all parties to the Military Contract satisfy their obligations to receive such funds);and
 
2. MCEL, either alone or with a consortium, has developed, manufactured and delivered [***] working Military Prototype(s) to the Military Customer that comply with the specifications set forth in the Military Contract and received payment therefor.
 
(b)    Consumer Objective:
 
MCEL, either alone or with a consortium, has entered into a Consumer Contract whereby the OEM is committed to make a payment of at least [***] for the development of a Consumer Prototype.
2
Milestone 2 will be achieved upon the occurrence of either the Military Objectives set forth in subsection (a) below or the Consumer Objective set forth in subsection (b) below:
 
(a)    Military Objectives:
 
1. MCEL, either alone or with a consortium, has entered into a Production-Ready Military Contract whereby the Military Customer is committed to fund at least [***] for at least [***] production-ready Military Prototypes and associated cartridges.
 
2. MCEL, either alone or with a consortium, has developed, manufactured and delivered the production-ready Military Prototypes to the Military Customer that comply with the specifications set forth in the Production-Ready Military Contract and received payment therefor.
 
(b)    Consumer Objective:
 
MCEL, either alone or with a consortium, has developed, manufactured and delivered [***] working Consumer Prototypes to the OEM that comply with the specifications set forth in the Consumer Contract and received payment therefor.
3
Milestone 3 will be achieved upon the occurrence of the Military Objective set forth in subsection (a) below:
 
(a)    Military Objective:
 
MCEL, either alone or with a consortium, has entered into a Military P.O. whereby the Military Customer commits (i) to make payment for at least [***] for units of the Military Product or (y) to purchase at least [***] units of the Military Product.
 
The achievement of Consumer Objective Milestone 3 will be deemed to occur simultaneously with the achievement of Consumer Objective Milestone 4.
4
Milestone 4 will be achieved upon the occurrence of either the Military Objective set forth in subsection (a) below or the Consumer Objectives set forth in subsection (b) below:
 
(a)    Military Objective:
 
MCEL, either alone or with a consortium, has manufactured and delivered Military Products that comply with the specifications set forth in the Military P.O. and received at least [***] in payment therefor from the Military Customer.
 
(b)    Consumer Objectives:
 
1. MCEL, either alone or with a consortium, has entered into a Consumer P.O. for the manufacture and production of the Consumer Product, with the Consumer P.O. being for at least [***] for production of units of the Consumer Product; and
 
2. MCEL, either alone or with a consortium, has developed and manufactured at least one unit of the Consumer Product that complies with the specifications set forth in the Consumer P.O. and received at least [***] in payment therefor from the OEM.

Informationmarkedby [***] has been omitted pursuant to a request for confidential treatment. Theomitted portion has been separately filed with the Securities and ExchangeCommission.


       
       
B-1