Strategic Alliance Agreement Dated 07/23/02

EXHIBIT 10.5


STRATEGIC ALLIANCE AGREEMENT


This STRATEGIC ALLIANCE AGREEMENT ("Agreement") is entered into as of July 23, 2002 ("Effective Date") by QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC., a Delaware corporation ("Quantum") and IMPCO TECHNOLOGIES, INC., a Delaware corporation ("IMPCO"), each a "Party" and collectively the "Parties."


Recitals


A. Quantum designs, develops and manufactures advanced gaseous storage and handling modules, electronic controls and software, fuel storage, metering, regulating and delivery systems, and systems integration involving compressed gaseous fuels and supplies the same to original equipment manufacturers ("OEMs") for fuel cell applications and alternative fuel OEM vehicles.


B. IMPCO designs and develops, among other things, components and sub-systems for internal combustion engines utilizing alternative fuels.


C. The Parties seek to cooperate with each other under this Agreement, on the terms and conditions specified herein, (1) in performing joint development activities funded by IMPCO, and (2) in participating in joint marketing activities.


D. The Parties wish to set forth herein the terms and conditions upon which Quantum agrees to sell to IMPCO the Quantum Products (defined below), for use, sale and distribution in the Designated Markets.


Agreement


1 Definitions.


1.1 "Commercially Available" means that the relevant product is generally made available to customers, regardless of whether such customer: (a) is a reseller or an end user of the product; (b) subsequently sells the product as a stand-alone item; and/or (c) integrates the product as a component of the customer's or third party's product.


1.2 "Confidential Information" has the meaning set forth in Section 9.1.


1.3 "Customer" means any third party that has entered into an agreement with IMPCO to obtain an IMPCO Product that includes, incorporates or utilizes any Quantum Product.


1.4 "Designated Markets" means the following: (a) the worldwide automotive Aftermarket, consisting of Class 1 through Class 5 vehicles; (b) the worldwide bus and truck Aftermarket, consisting of Class 6 through Class 8 vehicles; (c) the worldwide industrial Aftermarket for vehicles with internal combustion engines including diesel engines and consisting of, without limitation, material handling, small and stationary engines, generators, pumps and other products not used for transportational purposes; (d) the worldwide diesel automotive Aftermarket, consisting of Class 1 through 5 diesel vehicles; (e) the worldwide diesel bus and truck Aftermarket, consisting of Class 6 through Class 8 diesel vehicles; (f) the worldwide industrial diesel Aftermarket, consisting of, without limitation, material handling, small and stationary engines, generators, pumps and other diesel products not used for transportational purposes; (g) the market for original equipment manufacturers of Class 1


through Class 5 vehicles with internal combustion engines in all countries in the world other than the United States and Canada; (h) the market for original equipment manufacturers of Class 6 vehicles with internal combustion engines in the United States and Canada; (i) the market for original equipment manufacturers of Class 6 vehicles with internal combustion engines in all countries in the world other than the United States and Canada; (j) the worldwide market for original equipment manufacturers of Class 7 and Class 8 vehicles with internal combustion engines; (k) the worldwide market for industrial original equipment manufacturers of items with internal combustion engines and diesel engines, including, without limitation, original equipment manufacturers of material handling engines, small and stationary engines, generators, pumps and other products not used for transportational purposes; and (l) the worldwide original equipment manufacturers of all types and classes of diesel vehicles, engines and products, including without limitation original equipment manufacturers of diesel vehicles in Class 1 through Class 8. As used herein, "Aftermarket" when used with respect to systems, components, parts or other items, shall mean the market for any such foregoing item after the title of which has been transferred from the manufacturer of such item to any third party, including without limitation wholesalers, consumers, dealers or any other third party.


1.5 "Development Program" means any activity either funded and directed by IMPCO under which IMPCO shall perform research and development or an activity funded and directed by IMPCO under which Quantum shall perform research and development, either individually by Quantum or jointly by the Parties. Any Development Program for IMPCO or jointly by the Parties shall be determined by the Strategic Alliance Committee and reflected in a Statement of Work.


1.6 "IMPCO Product(s)" shall mean any IMPCO products that are or become Commercially Available during the term of this Agreement.


1.7 "Intellectual Property Rights" means, collectively, Patents, Trade Secrets, Copyrights, Trademark Rights, moral rights, and all other intellectual property rights and proprietary rights, including any rights relating to trademarks, tradenames and logos, whether arising under the laws of the United States or any other state, country or jurisdiction, including all rights or causes of action for infringement or misappropriation of any of the foregoing, in each case now existing or hereafter developed. For purposes of this Agreement: (i) "Patents" mean all patent rights and all rights, title and interests in all patent applications and patents to issue on them, all letters patent or equivalent rights and applications, including any reissue, extension, division, continuation, or continuation-in-part applications throughout the world; (ii) "Trade Secrets" mean all rights, title and interests in and to all trade secrets and trade secret rights arising under common law, state law, federal law or laws of foreign countries, including, without limitation, all know-how, trade secrets, other confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints; (iii) "Copyrights" mean all copyrights, and all rights, title and interests in and to all copyrights, copyright registrations and applications for copyright registration, certificates of copyright and copyrighted interests throughout the world, all rights in mask works, and all rights, title and interests in related applications and registrations throughout the world; and (iv) "Trademark Rights mean all trademarks, servicemarks, trade names, rights in trade dress, and all trademark interests throughout the world, and all right, title and interest in related applications and registrations throughout the world, whether arising under the laws of the United States or any other state, country or jurisdiction, including all rights or


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causes of action for infringement or misappropriation of the foregoing, in each case now existing or hereafter developed during the Term of this Agreement. Either Party may use the Intellectual Property of the other Party in any Development Program.


1.8 "Purchase Order" means a written purchase order between the Parties pursuant to which Quantum will sell Quantum Products to IMPCO under the terms and conditions set forth in Section 4.


1.9 "Quantum Product(s)" shall mean all of Quantum's fuel metering products, fuel delivery products, fuel regulating products, fuel storage products, electronic control products and any related products that are or become Commercially Available during the term of this Agreement.


1.10 "Statement of Work" means a detailed plan to implement a Development Program, as more fully defined in Section 3. If a template Statement of Work is mutually agreed to by the Parties, it shall be attached hereto as Exhibit A after execution hereof by the parties.


1.11 "Strategic Alliance Committee" or "SAC" means the combination of representatives from each Party that will manage and coordinate the work under this Agreement as described in Section 2.


2 Strategic Alliance Committee.


2.1 Within ten (10) business days after the Effective Date, each Party shall assign two (2) qualified members (each a "Member") to the SAC to meet and cooperate to define and manage the efforts of SAC under this Agreement. Either Party may replace its Members in its sole discretion upon notice to the other Party. Each Party shall bear its own costs and expenses related to the SAC. The SAC shall meet once every six (6) months, at a minimum but more often if mutually agreed by the Parties, to satisfy its responsibilities under this Agreement. The responsibilities of the SAC shall include the following:


(a) In the event that IMPCO desires to purchase specific Quantum products that do not meet the definition of a Quantum Product, IMPCO shall bring this desire to the attention of the SAC, and the Members shall negotiate the request in good faith. In the event that the SAC determines that such Products should be sold by Quantum to IMPCO, (i) Quantum shall sell such products to IMPCO, and (ii) such products shall be deemed Quantum Products for purposes of this Agreement, and shall be treated as such, unless otherwise agreed to in writing by the Parties.


(b) The SAC shall identify potential Development Programs and, if mutually approved by both Parties, negotiate the terms and conditions of each Development Program, which shall be set forth in a written Statement of Work (as described in more detail in Section 3).


(c) The SAC shall modify and, if appropriate, expand the Designated Markets as needed, whether in their entirety or on a Customer-specific basis. Such a decision to modify the Designated Markets shall be based on all relevant factors, including, but not limited to: (i) the location and particular needs of the specific market or customer; (ii) individual customer requirements and requests; (iii) regulatory requirements relevant to the specific market or customer; and (d) specific capabilities of each Party with respect to any particular market or customer.


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(d) The SAC shall consider in good faith any joint marketing opportunities presented by the Members, and allocate the responsibilities between the Parties, including but not limited to: costs, schedules, and participation of the Parties.


(e) The SAC shall perform such other responsibilities as may be required from time to time for purposes of this Agreement.


(f) Either Party may unilaterally pursue a Development Program without the approval of the other Party if the Party pursuing the Development Program funds the Development Program itself.


2.2 At the first meeting of the SAC, to be held at a time and location as mutually agreed by the Parties, the Members shall discuss and approve the initial Development Programs and the amount of engineering resources to be allocated to each program by the Parties (the "Project Roadmap"). At least the first meeting of the SAC shall be face-to-face but all subsequent meetings may be held via conference call, videoconferencing or by other telecommunicative means. The SAC shall revise and publish the Project Roadmap as deemed necessary.


2.3 All decisions of the SAC must be made by a majority of the Members. If the Members cannot reach a decision on a particular issue, senior managers of Quantum and IMPCO will meet and negotiate in good faith to resolve the issue within a reasonable period of time. If the issue is not resolved within thirty (30) calendar days after the senior managers of Quantum and IMPCO have met, then either Party may elect to cancel the applicable Development Program(s), effective immediately, by providing written notice to the other Party. The SAC may not remove an IMPCO independently funded Development Program from the Project Roadmap.


3 Development


3.1 Agreement and Statement(s) of Work. The Parties acknowledge that this Agreement between Quantum and IMPCO relates to the terms and conditions that will apply to any Statement(s) of Work executed hereunder. The Parties understand that from time to time certain Development Programs may be proposed to the SAC. Each proposed Development Program must be approved by a majority vote of the SAC. If approved, the SAC shall undertake good faith negotiations to reduce the Development Program to a written Statement of Work within a reasonable period of time. If the SAC cannot agree on the terms and conditions of the Statement of Work within thirty (30) calendar days following approval of the underlying Development Program, senior managers of Quantum and IMPCO will meet and negotiate in good faith the terms and conditions of the applicable Statement of Work. If the terms and conditions of the applicable Statement of Work is not agreed to and the Statement of Work is not executed within thirty (30) calendar days following such escalation to the senior managers, either Party may elect to remove the underlying Development Program from the Project Roadmap by providing written notice to the other Party. A Development Program funded and directed by IMPCO under which IMPCO shall perform research and development shall not require approval of the SAC nor require a Statement of Work.


3.2 Each Statement of Work will set forth the timetable, performance, payment, ownership rights, license rights (if any), obligations of each Party to the other Party with respect to Jointly-Owned Technology, and delivery obligations of the Parties, and will be executed by both IMPCO and Quantum in order to be valid. Subject to the terms and conditions of this


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Agreement, the Parties agree to use commercially reasonable efforts to perform their obligations under each Statement of Work in accordance with the specifications and schedule set forth in such Statement of Work. The SAC shall determine the priority of different Statements of Work and the amount of engineering resources to be allocated to each Development Project. Finally, the Parties agree that there is no limit on the number of Statements of Work that may be executed during the term of this Agreement.


3.3 Reporting Development Progress. Each Party shall appoint a project manager who will coordinate and act as liaison with the other Party with respect to each Statement of Work. The project managers shall participate in project review meetings to be scheduled by mutual agreement of the respective project managers. IMPCO personnel shall be entitled to visit Quantum's place of business upon reasonable prior notice to Quantum to discuss and inspect the status of progress under any Statement of Work. Quantum shall keep IMPCO reasonably informed in writing of its progress under each Statement of Work.


3.4 Subcontractors. Either Party may use subcontractors to perform any task assigned to such Party under a Statement of Work, provided that such subcontractor (a) is approved in writing by the SAC to perform such task, (b) agrees in writing to keep confidential all information and data received from the Parties or generated under the subcontract or in performing any services, and (c) agrees in writing to assign to IMPCO and/or Quantum (as determined by the Parties and set forth in the applicable Statement of Work), before such subcontractor commences work, any and all materials, inventions, improvements and any other item developed, designed or created in connection with the services provided by such subcontractor or its employees.


3.5 Plant Visits. Personnel of either Party visiting facilities of the other Party will comply with all the then established and existing safety and environmental rules and regulations of the facility visited, provided that such rules and regulations are disclosed by the host Party to such personnel. The host Party shall not be responsible for death, damage, injury or loss suffered or incurred during visits to its facilities by any personnel in the employ of the other Party, except for death, damage, injury or loss resulting from the willful or negligent acts or omissions of the host Party, its agents, employees or third parties under the host Party's supervision or control.


4 Purchase Orders


4.1 Sales of Quantum Products. IMPCO shall have the right to sell Quantum Products only as incorporated components of IMPCO Products, not as stand-alone components, and solely in the Designated Markets unless otherwise approved by Quantum. Notwithstanding the foregoing, IMPCO may sell stand-alone Quantum Products solely as replacement parts or spare parts to Customers and users of IMPCO Products.


4.2 Terms and Conditions. During the term of this Agreement, IMPCO shall have the right to purchase Quantum Products from Quantum pursuant to the following:


(a) Purchases of Quantum Products shall be initiated by IMPCO via a written or electronically-dispatched Purchase Order which shall reference (a) the number of units of each type of the Quantum Products, (b) subject to Section 4.2(b), the applicable per-unit price as provided by Quantum, (c) a commercially reasonable carrier or means of transportation or routing, including, the place to which the Quantum Products are to be shipped, (d) packaging instructions, and (e) the requested delivery date. Quantum is not required to accept, but shall not


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unreasonably reject, any Purchase Order which specifies a delivery date earlier than thirty (30) days after the date such Purchase Order is submitted by IMPCO. Quantum shall be obligated to accept any Purchase Order which specifies a delivery date that is later than forty-five (45) days after the date such Purchase Order is submitted by IMPCO. Quantum shall respond to the proposed Purchase Order within ten (10) business days after receipt, by either: (i) rejecting the proposed Purchase Order and providing the good faith reasons in writing for such rejection, (ii) accepting the proposed Purchase Order, or (iii) accepting the proposed Purchase Order with modified terms, not inconsistent wit ...