Cooperation Agreement

EXHIBIT 10.30
COOPERATION AGREEMENT


This Cooperation Agreement is made as of the 31 day of October, 1996 by and between The Israel Electric Corporation Ltd. ("IEC") and Electric Fuel (E.F.L.) Limited ("EFL").


1. Purpose and Background


1.1 The Electric Fuel System. EFL has developed and is the owner of a
proprietary system for powering electric vehicles ("the Electric Fuel
System") consisting of (i) a zinc-air battery containing a series of zinc
anode cassettes (such zinc anode cassettes are referred to herein as
"Electric Fuel"); (ii) systems for using electric power to produce or
recycle the Electric Fuel ("Regeneration"); and (iii) mechanical systems
for replacing spent Electric Fuel with fresh Electric Fuel ("Refueling").
EFL represents and warrants:


(a) that it is the owner or holder of all rights deriving from the patents
and patent applications relating to the Electric Fuel System and
component parts thereof listed in Schedule A (together with any
patents obtained and applications filed by EFL in the future in
connection with the Electric Fuel System, the "Patent Rights");


(b) that it has the right to certain technology consisting of all
confidential and proprietary know-how, data and information, whether
or not patentable, concerning the Electric Fuel System and all
component parts thereof (the "Technology"); and


(c) that it has the right, under the Patent Rights and Technology, to
grant the license to use the Electric Fuel System as granted below.


EFL makes and IEC receives no warranty or representation, express or
implied, except as specifically set forth above or elsewhere in this
Agreement.


1.2 The Demonstration Program. IEC will participate with EFL in the evaluation
and demonstration of the Electric Fuel System in Israel (the "Demonstration
Program"), and in consideration will receive from EFL a license for
production, distribution and marketing of Electric Fuel in Israel and
neighboring countries subject to the terms and conditions set out below
(the "License"). EFL reserves the right to modify the scope and timing of
the Demonstration Program, in its sole discretion, on the basis of such
technological and business developments as EFL deems relevant, provided
that EFL will provide IEC with notice and reasonable explanation of any
modifications to the Demonstration Program, and will make commercially
reasonable efforts to complete the Demonstration Program.


The goods and services to be supplied by EFL to IEC hereunder shall be
supplied on the terms set forth in this Paragraph 10.


10.1 Procurement from EFL. The infrastructure to be developed by IEC is based
on technology and processes developed by and proprietary to EFL. Basic
engineering, including process and instrumentation diagrams, and
proprietary equipment based on EFL technology (as set forth in Schedule D)
will be procured by IEC, its Affiliated Companies and its permitted
sublicensees solely from EFL. EFL will make its best efforts to provide the
required services and equipment as needed, and the prices charged and terms
of payment provided by EFL to IEC will be no less favorable than those
charged and provided by EFL to its best customers worldwide.


10.2 Technical Support. At the request of IEC, on terms to be agreed, EFL shall
provide detailed engineering, technical support and operating services for
the operation of the Electric Fuel System infrastructure. Subject to the
terms of Paragraph 10.3, EFL shall have a right of first refusal to provide
such services if IEC decides to subcontract all, or any portion of, such
services.


10.3 Sub-contracting by EFL. To the extent that EFL subcontracts the provision
of any portion of goods or services to be supplied by EFL to IEC, the price
charged to IEC shall not be greater than the price paid by EFL, plus EFL's
related expenses, by a factor of more than 10%, subject in all cases to the
provisions of the last sentence of Paragraph 10.1 above. IEC shall have the
right to suggest alternative subcontractors for the supply of goods and
services, subject to the consent of EFL. EFL shall not unreasonably
withhold consent to any alternate subcontractor that demonstrates that it
is able to meet EFL's technical and commercial standards, consistently
applied.


11. TRADEMARK USE; PRODUCT MARKINGS


11.1 Trademarks. During the term of this Agreement, IEC is authorized to use
and shall use the Electric Fuel registered trademark (together with the
Hebrew translation "ai(divided by) cuiie" or transliteration "ai(divided
by)ee(divided by) oeai" if desired) for all advertising and point-of-sale
signage relating to Electric Fuel products and services. All proposed uses
of EFL trademarks shall be subject to prior review and approval by EFL,
which approval shall not unreasonably be withheld. This requirement will
not limit the rights of IEC to use its own trademarks and service marks as
well.


11.2 Other Markings. IEC agrees to use any reasonable form of notice and
manner of affixing such notice as specifically requested by EFL as
reasonably deemed necessary by EFL to protect EFL's intellectual property
rights.


12. BOARD APPROVAL


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licensees may be made available to IEC without any additional
payment by IEC.


2.4 Financial Participation. Within thirty (30) days of the submitting by EFL
of a tax invoice following approval of the Agreement by the Board of
Directors of EFL and by the competent authorities of IEC, pursuant to
Paragraph 12 below, IEC will pay to EFL the NIS equivalent at the
Representative Rate of $960,000 (Nine Hundred Sixty Thousand U.S. Dollars)
plus V.A.T. IEC will also cover the costs of converting and adapting any
IEC vehicles for electric operation with EFL zinc-air batteries, and the
costs of operating said vehicles and exchanging batteries therein. [*]


3. THE LICENSE


This License obtained by IEC pursuant to this Agreement will have the terms
and conditions set out in this Paragraph 3.


3.1 Rights Granted. For the term of the License, in the designated Territory
(defined below), and subject to the Conditions (defined in Paragraph 4
below) and Payment (defined in Paragraph 5 below), IEC is granted (i) the
exclusive right to operate Regeneration facilities for the generation and
regeneration of Electric Fuel in the Territory, (ii) the exclusive right to
sell Electric Fuel to third parties in the Territory, and (iii) the
exclusive right to provide Refueling services to third parties in the
Territory. The field of the License shall be limited to on-road and off-
road electric vehicles.


3.2 Rights Retained. EFL retains all rights not granted to IEC above, as well
as the rights to produce Electric Fuel for its internal needs, for limited
demonstration and testing purposes, for limited experimental supply to
potential customers in the Territory, and for export to customers outside
of the Territory.


3.3 Term. The initial term of the License shall be 30 years, commencing upon
the date that this Agreement is executed, extending at the option of IEC
for an unlimited number of additional periods of ten years each, provided
in all cases that IEC is in compliance with all of the terms of the
License, including the Conditions.


3.4 Territory. The Territory shall include all areas controlled by the State
of Israel. The Territory will also include the Palestinian Authority,
Egypt, Jordan, Syria and Lebanon (the "Additional Jurisdictions"), in
accordance with Paragraph 6 below, and may include Saudi Arabia, Iraq,
Iran, and the United Arab Emirates (the "First Refusal Countries") as
described in Paragraph 7 below.


3.5 Sublicense of Refueling. IEC may at its discretion sublicense to third
parties part or all of its right to provide Refueling services in the
Territory. Sublicensees are subject to


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the approval of EFL, said approval not to be unreasonably withheld.
Sublicenses shall only be granted by written agreement which shall include
the following provisions:


(a) The sublicensee shall execute a confidentiality undertaking
substantially in the form of the Confidentiality and Non-
disclosure Agreement annexed as Schedule C to this Agreement.


(b) The sublicensee shall agree: (i) to maintain records and books of
account containing all data reasonably required for the full
computation of all payments due to IEC under the sublicense; (ii)
to permit the inspection of such records and books of account in
accordance with the procedures set forth in Paragraph 5.4 below;
and (iii) to take all reasonable steps to protect the intellectual
property of EFL in the Electric Fuel System, including the Patent
Rights and Technology; (iv) to use relevant Electric Fuel
trademarks pursuant to Paragraph 11 of this Agreement; (v) to
maintain all specifications and standards as necessary to meet the
quality and warranty standards of the Electric Fuel System as well
be determined pursuant to Paragraph 4.4 below; and (vi) to perform
the obligations delegated to it by IEC under this Agreement as if
this Agreement were binding upon it; and (vii) to be bound by all
other relevant obligations of IEC under this Agreement, including
without limitation Paragraph 10 below.


(c) IEC shall remain directly liable to EFL for the performance by the
sublicensee of all its obligations to IEC and EFL.


3.6 Assignment. Except as expressly provided in Paragraph 3.5 above, the rights
granted hereunder may not be assigned or sublicensed to any party other
than as follows:


(a) IEC may assign all or a substantial portion of its rights and
obligations under this Agreement to an "Affiliated Company" as
defined below, subject only to prior written notice to EFL,
provided that IEC shall continue to be directly liable to EFL for
compliance by the assignee with this Agreement.


(b) If at any time an Affiliated Company which is an assignee under
this Paragraph 3.6 ceases to be an Affiliated Company, then EFL
shall have the right to revoke the License upon thirty (30) days'
notice from EFL to both IEC and the assignee, unless within such
30-day period the assignee once again becomes an Affiliated
Company.


(c) For purposes of this Agreement, "Affiliated Company" shall mean
any company in which IEC owns or controls directly or indirectly
more than 50% of the shares carrying the right to vote at
shareholders meetings; provided, however, that no company shall be
deemed an Affiliated Company if a material portion


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of its shares is held by (i) a potential technological or business
competitor of EFL, as reasonably determined by EFL or (ii) a party
whose involvement may, in EFL's reasonable opinion, prejudice the
long term interests of EFL.


4. CONDITIONS


In order for the License to remain in effect, at all times during the term
of the License IEC must comply with the Conditions set forth below. If IEC
does not materially comply with any of the Conditions, then EFL may
terminate the License or, at its option, convert the exclusive aspects of
the License to non-exclusive. Such termination or conversion to non-
exclusive license may take place only after EFL has given prior written
notice to IEC of the grounds for termination or conversion to non-
exclusive, and IEC has failed to remove such grounds within the 45-day
period following receipt of such notice.


4.1 Development of the Market. IEC shall use all reasonable efforts, both on
its own and in cooperation with EFL, to engage in activities aimed at
maximizing the growth of the market in the Territory for Electric Fuel at a
reasonable rate, based among other things on the rate at which the market
for Electric Fuel has developed in other territories where EFL or its other
licensees are active .


4.2 Infrastructure Development Plan. Beginning with the approval of this
Agreement pursuant to Paragraph 12 below, IEC and EFL will jointly develop
and annually update a multi-year Infrastructure Development Plan that will
include agreed-upon projections for deployment of electric vehicles using
the Electric Fuel System. The Infrastructure Development Plan will be
based on actual sales, contracts under negotiation, letter of intent,
market surveys, and projected growth rates, and will include agreed-upon
projections for deployment and availability of Electric Fuel in the
Territory. To the extent possible and on terms to be agreed, EFL will make
its Bet Shemesh plant available for expansion if the parties determine that
this would prove to be the most cost efficient manner for IEC to meet its
obligation for the initial establishment of infrastructure pursuant to the
agreed Infrastructure Development Plan. In this connection, IEC shall at
its own expense apply for and secure all governmental and regulatory
approvals necessary to establish the infrastructure, sell Electric Fuel and
provide Refueling services. To the extent necessary, and at the expense of
IEC, EFL shall cooperate in the application for such approvals.


4.3 Supply of Electric Fuel. IEC shall supply on a timely basis to all
customers and refuelers/distributors in the Territory all demand for
Electric Fuel so long as that demand, in terms of quantities of zinc anodes
replaced [*] was projected by an approved Infrastructure Development Plan.
IEC will use its best efforts to supply all demand for Electric Fuel [*].
EFL reserves the right to supply Electric Fuel to any interested
creditworthy


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