Collaboration Agreement

COLLABORATION AGREEMENT


between


BALLARD POWER SYSTEMS INC.


and


UCAR CARBON COMPANY INC. 2
COLLABORATION AGREEMENT


THIS AGREEMENT is made May 3, 1999


BETWEEN:


BALLARD POWER SYSTEMS INC., a Canadian corporation having an office
at 9000 Glenlyon Parkway, Burnaby, British Columbia, Canada, V5J 5J9


("BPS")


AND:


UCAR CARBON COMPANY INC., a Delaware corporation having an office at
3102 West End Avenue, Suite 1100, Nashville, Tennessee 37203, USA


("UCAR CARBON")


WHEREAS:


(A) BPS has developed, is in the possession of and is the beneficial owner of, substantial and valuable expertise, know-how and certain intellectual property rights relating to the field of PEM Fuel Cells and the design, manufacture and marketing of PEM Fuel Cells and components therefor for the generation of electrical power for a variety of applications;


(B) BPS wishes to enhance its PEM Fuel Cell technology through the development of improved fuel cell components;


(C) UCAR CARBON has developed, is in the possession of and is the beneficial owner of, substantial and valuable expertise, know-how and certain intellectual property rights relating to the field of flexible graphite and treated natural graphite and sells such materials and articles made therefrom having mechanical, physical, chemical and electrical properties suitable for a wide variety of industrial uses;


(D) BPS and UCAR CARBON wish to co-operate in the research and development of the Target Products for use in PEM Fuel Cells and derivatives thereof and have entered into this Agreement for the purposes of the Collaboration;


(E) BPS intends to procure its supply of the Materials from UCAR CARBON for itself and possibly also for certain of its Affiliates and licensees if the development of the Target Products pursuant to the collaboration under this Agreement is successful;


(F) UCAR and BPS are parties to the Mutual Secrecy Agreement;


NOW THEREFORE this Agreement witnesses that the parties mutually covenant and agree as follows: 3
PART 1


DEFINITIONS AND INTERPRETATIONS


DEFINITIONS


1.1 In this Agreement, including the recitals, except as otherwise expressly provided or unless the context otherwise requires,


AFFILIATE, in relation to a specified Person, means a Person that
directly or indirectly controls, is under common control with, or is
controlled by the specified Person, and for the purposes hereof, a
Person will be deemed to control a corporation if


(a) securities of the corporation to which are attached
more than 50% of the votes that may be cast to elect
directors of the specified corporation or other rights to
elect a majority of the directors are held, other than by
way of security only, by or for the benefit of the Person,
and


(b) the votes attached to those securities are sufficient,
if exercised, to elect a majority of the directors of the
corporation,


ARISING IPR means, collectively, BPS Arising IPR and UCAR Arising
IPR arising pursuant to the Collaboration,


BACKGROUND IPR means, collectively, BPS Background IPR and UCAR
Background IPR,


BPS ARISING IPR means all IPR arising pursuant to the Collaboration
concerning any of the following:


(a) PEM Fuel Cells and PEM Fuel Cell components and
assemblies, including electrically conductive fuel cell
separator plates, the design, composition, manufacturing
techniques and methodology respecting any of the foregoing,
and applications thereof; and


(b) the use of any of the Materials in electrically
conductive fuel cell separator plates and manufacturing
techniques and methodology for fabrication of such plates
incorporating the Materials,


BPS BACKGROUND IPR means all IPR concerning any of the following:


(a) PEM Fuel Cells and PEM Fuel Cell components and
assemblies, including electrically conductive fuel cell
separator plates, the design composition, manufacturing
techniques and methodology respecting any of the foregoing,
and applications thereof, owned or controlled by BPS before
the Effective Date; and


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(b) the use of any of the Materials, in electrically
conductive fuel cell separator plates, owned or controlled
by BPS before the Effective Date,


BUSINESS DAY means a day that is not a Saturday or a Sunday or a
British Columbia provincial, Canadian federal, a United States
national or Tennessee state, holiday,


CHIEF EXECUTIVE OFFICER means, in the case of BPS, BPS's Chief
Operating Officer and in the case of UCAR CARBON, UCAR CARBON's
President,


COLLABORATION means the collaboration between the parties described
in Section 2.1 and includes the collaborative activities of the
parties set forth in the SOW which occur from and after the
Effective Date,


COLLABORATION PERIOD has the meaning ascribed to it in Section 2.3,


COMMITTEE has the meaning ascribed to it in Section 2.4,


CONFIDENTIAL INFORMATION means, in relation to a Person, information
known or used by such Person in connection with its business and
technology, including, but not limited to, such Person's
Intellectual Property, customer information, financial information,
marketing information, and information as to business opportunities
and research and development,


DISPUTE NOTICE has the meaning ascribed to it in Section 6.1,


EFFECTIVE DATE has the meaning ascribed to it in Section 2.3,


EVENT OF DEFAULT in relation to a party means an event of default
arising as a result of a party being subject to one or more of the
following circumstances:


(a) an order is made or a resolution is passed or a
petition is filed by such party for the liquidation,
dissolution or winding-up of such party,


(b) such party is in material breach of its obligations
under Part 4,


(c) such party commits a material default in observing or
performing any other material covenant, agreement or
condition of this Agreement on its part to be observed or
performed and, where such default is curable, such party
does not rectify or cure such default within 30 days after
receipt of written notice from the other party to this
Agreement specifying such default;


(d) an execution, sequestration or any other process of
any court becomes enforceable against such party or any
distress or analogous process is levied upon any material
part of the property, assets and undertaking of such party
and any such process or distress is not stayed or otherwise
suspended by a court of competent jurisdiction within 30
days and has, or could have, a material adverse effect on
the business or condition, financial or otherwise, of such
party;


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(e) such party applies to be put in bankruptcy, takes any
action that would permit its creditors to make an
application to put such party in bankruptcy, is adjudged or
declared bankrupt or makes an assignment for the benefit of
creditors, consents to a proposal or similar action under
any bankruptcy or insolvency legislation applicable to it,
or commences any other proceedings relating to it under any
reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any
jurisdiction whether now or hereafter in effect, or consents
to any such proceeding;


(f) a custodian, liquidator, receiver, receiver and
manager, receiver-manager, trustee or any other person with
similar powers is appointed for such party or in respect of
any material property or assets or material part of the
property or assets of such party and not discharged within
30 days after its appointment and before any action is taken
by it in respect of such property or assets which will
materially affect the rights of the parties to this
Agreement thereto; or


(g) a final, non-appealable, decision of any judicial,
administrative, governmental or other authority or
arbitrator is made which enjoins or restrains, or renders
illegal or unenforceable, the performance or observance by
such party of any material term of this Agreement,


EXCLUSIVE PERIOD has the meaning ascribed to it in Section 2.9,


INTELLECTUAL PROPERTY means in relation to a Person, each patent,
patent application, industrial design, invention, design, trade
secret, idea, work, methodology, technology, innovation, creation,
concept, moral right, development drawing, research, analysis,
know-how, experiment, copyright, data, formula, method, procedure,
process, system or technique of such Person but does not include
trademarks or tradenames,


IPR means Intellectual Property rights,


MATERIALS means any one or more of treated graphite flakes, expanded
graphite flakes and flexible graphite (commonly referred to as
graphite sheet or foil) [text redacted] as well as such materials
developed by UCAR CARBON before the Effective Date, including, but
not limited to the materials listed in Schedule B,


MUTUAL SECRECY AGREEMENT means the secrecy agreement made effective
May 17, 1996, a copy of which is annexed hereto as Schedule C,


NOTICE has the meaning ascribed to it in Section 8.4,


PEM FUEL CELL means a solid polymer fuel cell and includes a direct
oxidation fuel cell,


PERSON means an individual, corporation, body corporate, firm,
limited liability company, partnership, syndicate, joint venture,
society, association, trust or unincorporated organization or
trustee or other such legal representative,


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PROJECT MANAGER has the meaning ascribed to it in Section 2.7,


SOW means the Statement of Work annexed hereto as Schedule A,


SUPPLY AGREEMENT DEADLINE DATE has the meaning ascribed to it in
Section 5.1,


TARGET PRODUCT means an electrically conductive fuel cell separator
plate developed pursuant to the Collaboration utilizing any of the
Materials,


UCAR ARISING IPR means all IPR arising pursuant to the Collaboration
concerning


(a) any of the Materials,


(b) articles made from the Materials, other than
electrically conductive fuel cell separator plates,


(c) compositions which include one or more of the
Materials for use in applications other than in electrically
conductive fuel cell separator plates,


(d) methodology relating to, or relating to the use of,
any of the foregoing other than methodology relating to, or
relating to the use of any of the foregoing in, electrically
conductive fuel cell separator plates,


but excludes IPR concerning electrically conductive fuel cell
separator plates as well as everything comprising the BPS Arising
IPR, and


UCAR BACKGROUND IPR means all IPR concerning any of the following:


(a) treated graphite flakes, expanded graphite flakes and
flexible graphite [text redacted] by UCAR CARBON, its
Affiliates or subcontractors [text redacted], compositions
which include one or more of the foregoing, and articles made
therefrom and methodology relating thereto, and methodology
relating to the use of any of the foregoing, which were owned
or controlled by UCAR CARBON before the Effective Date; and


(b) the materials described in Schedule B, but excludes
everything comprising the BPS Background IPR.


INTERPRETATION


1.2 In this Agreement, except as otherwise expressly provided or unless the context otherwise requires,


(a) "this Agreement" means this Collaboration Agreement as from
time to time supplemented or amended by one or more agreements
entered into pursuant to the applicable provisions hereof,


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(b) the headings in this Agreement are inserted for convenience
only and do not form a part of this Agreement and are not intended
to interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof,


(c) the word "including", when following any general statement
or term, is not to be construed as limiting the general statement or
term to the specific items or matters set forth or to similar items
or matters, but rather as permitting the general statement or term
to refer to all other items or matters that could reasonably fall
within its broadest possible scope,


(d) except where otherwise specified, all references to currency
mean currency of the United States of America,


(e) a reference to a statute includes all regulations made
thereunder, all amendments to the statute or regulations in force
from time to time, and any statute or regulation that supplements or
supersedes such statute or regulations,


(f) a reference to an entity includes any successor to that
entity,


(g) words importing the masculine gender include the feminine or
neuter, words in the singular include the plural, words importing a
corporate entity include individuals, and vice versa,


(h) a reference to "approval", "authorization" or "consent"
means written approval, authorization or consent,


(i) a reference to a Part is to a Part of this Agreement and the
symbol Section followed by a number or some combination of numbers
and letters refers to the section, paragraph, subparagraph, clause
or subclause of this Agreement so designated.


SCHEDULES


1.3 The following schedules are incorporated in to this Agreement by reference and form a part hereof:


Schedule A - Statement of Work
Schedule B - List of Materials
Schedule C - Mutual Secrecy Agreement


PART 2


COLLABORATION


COLLABORATION


2.1 BPS and UCAR CARBON will work jointly and individually at their respective facilities and will co-operate in their research and development activities as may be required or expedient


6 8 to produce or create commercially viable versions of the Target Products primarily for use in PEM Fuel Cells.


LIMITED PURPOSE


2.2 The Collaboration will be for the purposes of research and development only, will include the activities described in the SOW, and will encompass all research, design, development, improvement and other experimentation and performance testing of the Target Products during the Collaboration Period and the provision of reports and advice by the parties to one another with respect to the development of such products and techniques and methods of their manufacture and exploitation.


COLLABORATION TERM


2.3 The term of the Collaboration (the "Collaboration Period") will be three years commencing on the date set forth on page 1 of this Agreement (the "Effective Date") subject to extension or earlier termination as provided in this Agreement or as may be mutually agreed to by the parties.


STEERING COMMITTEE


2.4 The parties will establish a steering committee (the "Committee") comprising two representatives of each party. Each party may replace, from time to time, any member appointed by it on the Committee by giving written notice thereof to the other party. The Committee will meet regularly but not less than twice per year and meetings of the Committee may be held by telephone conference. The decisions of the Committee will be made unanimously by all of its members. All proceedings and decisions of the Committee will be recorded in minutes which will be signed by at least one member of the Committee appointed by each party.


DUTIES OF COMMITTEE


2.5 The Committee will, among other things,


(a) monitor the progress and review the performance of each of
the parties,


(b) oversee all work to be performed by each of the parties
pursuant to the Collaboration (including, but not limited to, the
work for which each party is responsible as may be described in any
work-plan pertaining to the Collaboration),


(c) review patent-related and other intellectual property issues
and define the parties' general strategy concerning the same,


(d) promptly resolve problems and disputes submitted to the
Committee by either party,


(e) evaluate the results of each phase of the Collaboration and
discuss all technical issues arising with regard to the
Collaboration,


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(f) determine the ownership of Arising IPR which may result
pursuant to the Collaboration but only to the extent the same is not
provided for in this Agreement,


(g) modify the SOW as and when deemed necessary,


(h) review, on a regular basis, the cost of developing and
producing the Materials and the projected date of commercialization
of PEM Fuel Cells containing Target Products and make
recommendations to the parties regarding the same, and


(i) review, and where appropriate approve the written summaries
prepared by the Project Managers pursuant to Section 2.7(d).


WORK AND COSTS


2.6 Each party will use all reasonable efforts to successfully, diligently and on a timely basis, carry out the portion of the work for which it is responsible as set forth in the SOW for the achievement of the objectives of the Collaboration. Unless otherwise agreed, each party will bear all its own costs and expenditures in connection with its activities pursuant to the Collaboration except that jointly incurred costs will be borne by the parties equally.


PROJECT MANAGER


2.7 Each of the parties will appoint and maintain, until the expiry of the Collaboration Period, a project manager ("Project Manager") and may from time to time change its Project Manager, upon prior written notice to the other party. Each party's Project Manager will be responsible for that party's performance under this Agreement and will coordinate and cooperate with the Committee concerning the management, coordination and administration of the activities of such party under this Agreement. Specifically, the Project Managers will


(a) exchange results and all other relevant information arising
pursuant to the Collaboration,


(b) specify detailed objectives of the Collaboration, the work
to be performed by each party and relevant specifications and
appropriate targets, to the extent deemed necessary for the success
of the Collaboration,


(c) maintain books and written records of the dates on which
technology is disclosed by one party to the other pursuant to the
Collaboration, and


(d) jointly prepare a written summary for the Committee every
six months on the results and progress of the Collaboration.


PRODUCT DEVELOPMENT LEAD TIME


2.8 During the Collaboration Period,


(a) UCAR CARBON will not, and it will ensure that its Affiliates
will not, directly or indirectly,


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(i) be involved with any Person other than BPS in any
development of electrically conductive fuel cell separator
plates or enter into any negotiations with any Person
regarding the same, or


(ii) develop or manufacture fuel cells or electrically
conductive fuel cell separator plates or market, or offer for
sale or sell fuel cells or electrically conductive fuel cell
separator plates, whether for development, testing or other
purposes, except for and on behalf of and at the request of
BPS, and


(b) BPS will not, and it will ensure that its Affiliates will not,
directly or indirectly,


(i) be involved with any Person other than UCAR CARBON in
any development of the Materials for use in electrically
conductive fuel cell separator plates or enter into any
negotiations with any Person regarding the same, or


(ii) except as specifically permitted under Section 2.9
and Part 7, develop or manufacture the Materials for use in
electrically conductive fuel cell separator ...