Joint Development Agreement

MILLENNIUM CELL INC. and GECKO ENERGY TECHNOLOGIES, INC.



JOINT DEVELOPMENT AGREEMENT



THIS JOINT DEVELOPMENT AGREEMENT (this " Agreement ") is made and entered into on this 15th day of February, 2006 (the " Effective Date ") by and between GECKO ENERGY TECHNOLOGIES, INC., a Delaware corporation (" Gecko "), and MILLENNIUM CELL INC., a Delaware corporation (" MCEL "). Gecko and MCEL also may be referred to herein individually as a " Party " or collectively as the " Parties ."



Recitals



WHEREAS, MCEL has technology which includes expertise in the design, manufacturing, and development of various means for chemically producing hydrogen gas and delivering said hydrogen gas for conversion to power, and part of this technology includes various know-how, patent rights and other intellectual property rights associated with such means;



WHEREAS, Gecko has expertise in the design, manufacturing, and development of planar fuel cells and a non-exclusive license to various intellectual property, including various patents and know-how, in the field of fuel cells;



WHEREAS, MCEL and Gecko wish to pursue their respective businesses in an environment of mutual assistance and to work together to develop planar fuel cell products and systems which embody and/or are developed from synergistic applications of the combined expertise of the Parties;



WHEREAS, the Parties entered into an Amended and Restated Term Sheet Agreement, dated as of December 15, 2005 (the "Term Sheet"), pursuant to which, among other things, the Parties outlined the terms of a proposed joint development arrangement designed to accelerate product development through a combination of complementary technologies, improve customer proposition, and optimize resources through co-localization of facilities at MCEL's premises; and



WHEREAS, pursuant to the Term Sheet, Gecko agreed to perform certain Interim Activities (as defined therein) to the satisfaction of MCEL, to use its best efforts to assemble and demonstrate an operational unit/strip cell, and to develop a Business Plan that is satisfactory to MCEL, as a condition precedent to entering into this Agreement.



NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, the Parties agree as follows:



1. Definitions




1.01 "Affiliate(s)" means, with respect to any Party, any person or entity which, directly or indirectly, controls, is controlled by, or is under common control with such Party, including, without limitation, any partner, officer, director, or member of such Party. For the purposes of this definition, "control", as used with respect to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person or entity, whether through the ownership of voting securities, by agreement or otherwise).




1.02 "Bankruptcy Event" means, with respect to a Party, any (i) assignment by such Party for the benefit of creditors, (ii) application by such Party for the appointment of a trustee, liquidator, receiver or custodian of any substantial part of such Party's assets, (iii) filing of a petition or commencement of a proceeding by such Party relating to itself under any bankruptcy, reorganization, arrangement or similar law, (iv) filing of a petition or commencement of a proceeding under any bankruptcy, reorganization, arrangement or similar law against such Party where either (A) such Party has effectively given its consent or (B) such proceeding has continued undischarged and unstayed for a period of sixty (60) days.




1.03 "Chemical Hydride Fuel System" means any system, apparatus or method for making chemical hydrides and/or converting chemical hydrides either directly to electricity or to hydrogen.




1.04 "Confidential Information" means all technical or business information or samples or prototypes disclosed under this Agreement or the Term Sheet by one Party to the other and which is labeled "Confidential ?, "Proprietary", "Secret" or the like or is confirmed in writing by one Party to the other as provided in Article VII below. All technical or business information developed under this Agreement directed to MCEL's Field shall be the Confidential Information of MCEL. All technical or business information developed under this Agreement directed to Gecko's Field shall be the Confidential Information of Gecko. All technical or business information developed under this Agreement directed to the Integration Field shall be the Confidential Information of both parties. All technical or business information developed under this Agreement directed to fields other than MCEL's Field, Gecko's Field and the Integration Field shall be the Confidential Information of both parties unless otherwise agreed to in writing by both parties.




1.05 "Definitive Agreements" means this Agreement, the Stock Purchase Agreement, the Stockholders Agreement and the Employment Agreements.




1.06 "Employment Agreements" means the Employment Agreements dated as of the date hereof between Gecko and each of Ronald J. Kelley (" Kelley ") and Steven D. Pratt (" Pratt ").




1.07 "Fuel Cartridge" means any apparatus which stores the fuel components for generating hydrogen and which may include components of hydrogen generation systems to produce and deliver hydrogen that is replaceable and/or disposable.




1.08 "Fuel Cell" means any substantially planar and passive electrochemical apparatus which converts hydrogen and an oxidant into electricity.




1.09 "Gecko Know-How" means all Know-How directed to Gecko's Field that is owned or controlled by Gecko at the Effective Date of this Agreement with (i) the right to grant further rights by sublicenses or (ii) the right to make, have made, or sell products embodying or developed from such Know How.




1.10 "Gecko Patent Rights" means all of the legal rights conferred upon Gecko under all patents and patent applications, foreign and domestic, which patent and patent applications are based upon an invention conceived or reduced to practice any time prior to the Effective Date of this Agreement and under which Gecko has (i) the right to grant further rights by sublicenses or (ii) the right to make, have made, or sell products embodying or developed from such patents or patent applications.




1.11 "Gecko's Field" designates (a) the field of Fuel Cells, and (b) packaging methods, control strategies and containers related to Fuel Cells.




1.12 "Hydrogen On Demand" designates means and methods for producing or generating hydrogen gas chemically from sodium borohydride or other boron hydrides and delivering hydrogen gas.




1.13 "Integration Field" refers to (i) the combination of a Fuel Cell with the engagement mechanisms and physical arrangement (e.g., visual, physical, tangible and aesthetic parameters) of the interface for the integration and interconnection of Fuel Cell to a Chemical Hydride Fuel System and/or a Fuel Cartridge or other means for the delivery of hydrogen gas to the Fuel Cell and (ii) the interaction or functions of components of a Fuel Cell, Chemical Hydride Fuel System, and a Fuel Cartridge to ensure safe, reliable and efficient generation and delivery of hydrogen gas to the fuel cell. The said interface enables transfer of mass or energy including fluid, electrical and data exchange and includes the integration and interconnection and related control strategies for the interconnection of hydrogen fuel cells and chemical hydride hydrogen fuel generators for the delivery of hydrogen gas to the fuel cell.




1.14 "Integration Field Rights" means all patent rights, Know-How, and other rights and interest of any kind relating to the Integration Field, first conceived, first created, first developed or first reduced to practice by either Party under the Term Sheet or this Agreement.




1.15 "Know-How" means all factual knowledge and proprietary information including trade secrets, whether or not capable of precise separate description, but which alone or when accumulated confer upon one acquiring it an ability to study, test, produce, manufacture and/or market something which one otherwise would not have known to study, test, produce, manufacture, and/or market in the same way.




1.16 "MCEL Know-How" means all Know-How directed to MCEL's Field that is owned or controlled by MCEL at the Effective Date of this Agreement with the right to grant further rights by sublicenses.




1.17 "MCEL Patent Rights" means all of the legal rights conferred upon MCEL under all patents and patent applications, foreign or domestic, which patents and patent application are based upon an invention conceived or reduced to practice at any time prior to the Effective Date of this Agreement and under which MCEL has the right to grant further rights by sublicenses.




1.18 "MCEL's Field" designates (i) the field of Chemical Hydride Fuel Systems, including Hydrogen On Demand and the Fuel Cartridge, and covers utilizing Hydrogen On Demand technology to generate hydrogen gas, (ii) all packaging methods, control strategies, and, containers related to Hydrogen On Demand technology, Fuel Cartridges, and Chemical Hydride Fuel Systems, and, (iii) formulations, packaging methods, containers and manufacturing technology related to chemical hydride fuels.




1.19 "Project Technology" or "Project Technology Rights" means all inventions, patents and patent rights, Know-How, or other developments first conceived, first designed, first created, first developed or first reduced to practice by a Party during the term of this Agreement or under or as part of the Term Sheet or the Statement of Work, including but not limited, to technology within the scope of the Integration Field. Project Technology does not include any inventions, Know-How or other developments developed solely by MCEL, solely by a third party or jointly by MCEL and a third party outside the Joint Development Program as defined in Article II. Project Technology does not include any inventions, Know-How or other developments developed solely by a third party or jointly by Gecko and a third party outside the Joint Development Program as defined in Article II.




1.20 "Services" has the meaning set forth in Section 2.02. For purposes of Article III of this Agreement, the Services shall be valued at $500,000 per year effective as of the first day of each calendar year during the term of this Agreement.




1.21 "Statement of Work" means a complete written description of the joint development program which shall be based at least in part on the Business Plan of the Term Sheet and may include the following: (i) specifically identified tasks to be performed by Gecko; (ii) a timetable for completion of such tasks; and (iii) a description of the materials, ingredients or compositions, if any, to be delivered by Gecko to MCEL at the completion of each task. The Statement of Work is initially described in Appendix A (hereto attached). The Statement of Work may be amended from time to time in writing by the Parties pursuant to Article IX.




1.22 "Steering Committee" means a management group made up of at least two (2) representatives from each Party as defined in Article IX.




1.23 "Stockholders Agreement" means the Stockholders Agreement dated as of the date hereof among Gecko, MCEL, Kelley and Pratt.




1.24 "Stock Purchase Agreement" means the Stock Purchase Agreement dated as of the date hereof between Gecko and MCEL.






2. Joint Development Program




2.01 From the Effective Date of this Agreement, the Parties shall conduct a "Joint Development Program" to, among other things as specified herein and in the Statement of Work attached hereto, develop planar fuel cell products and associated fuel systems and/or ancillary equipment and technology. The term of the Joint Development Program shall commence on the Effective Date of this Agreement and continue, unless terminated or extended as set forth below, until December 31, 2008. The term of the Joint Development Program can be extended or terminated by agreement of the Parties in writing, or terminated by termination of this Agreement in accordance with Article XIII.




2.02 MCEL will provide the following services and facilities (the " Services ") to support Gecko's operations: (1) Finance and Accounting: accounts payable, accounts receivable and bookkeeping services; (2) Information Technology: infrastructure and support (e.g., networking, application environment); (3) Human Resources and Administration (e.g., hiring staff (excluding recruiting fees and commissions), benefits, payroll); (4) Facilities: To be mutually determined, MCEL will provide appropriate lab and office space (not to exceed 5,000 square feet at any time) in MCEL's facility in Eatontown, New Jersey; (5) Business Development: assistance regarding market definition, reasonable access to key original equipment manufacturers and trade show support (excluding trade show fees and equipment); (6) Government Programs: access to MCEL's lobbying firm and MCEL government staff in addition to military agency access through ex-agency personnel on retainer to MCEL; (7) Intellectual Property Management: With the prior approval of MCEL, MCEL staff will be available to manage the process of invention disclosure through the prosecution of patent applications, assess competitive threats and other reasonable IP management activities (excluding legal fees and expenses); (8) Public Relations: MCEL staff will provide assistance in the management of PR activities and will provide, at the appropriate time, access to investors; and (9) Chemistry/Engineering: At the sole discretion of MCEL, access to MCEL's technical staff and to The Dow Chemical Company's (" Dow Chemical ") technical expertise, consistent with the requirements of MCEL's Joint Development Arrangement with Dow Chemical. However, MCEL shall have no obligation to provide to Gecko more than 2 full time equivalent headcount at any time. Any incremental costs incurred by MCEL during the performance of such Services are the express responsibility of Gecko; provided , that any single cost, or series of related costs, that exceeds $2,000 shall require Gecko's written consent. Following the term of this Agreement, MCEL may continue to provide services (or any combination of services and facilities that is agreed on) to Gecko at a mutually agreeable rate.




2.03 During the Joint Development Program, Gecko shall use its best efforts, including without limitation, hiring additional staff, to fulfill its obligations under the Statement of Work and to design, construct, test, and commercialize planar fuel cell products using Gecko Know-How and Gecko Patent Rights in accordance with the Statement of Work. Gecko will not take any action that is inconsistent with or contrary to the Statement of Work.




2.04 MCEL shall provide for use in the Joint Development Program MCEL Know-How, MCEL Patent Rights, and Project Technology Rights that are necessary and sufficient to allow MCEL and Gecko to carry out the objectives of the Joint Development Program.




2.05 Gecko shall provide for use in the Joint Development Program Gecko Know-How, Gecko Patent Rights, and Project Technology Rights that are necessary and sufficient to allow MCEL and Gecko to carry out the objectives of the Joint Development Program.




2.06 The Parties' Patents, Parties' Know-How, and Project Technology are provided under this Agreement on an "as is" basis for use by each Party in accordance with the terms of this Agreement at the using Party's sole risk and responsibility. Express or implied warranties, including but not limited to the implied warranties or merchantability and fitness for a particular purpose, are excluded hereunder. Unless expressly set forth herein, neither Party makes any warranty, expressed or implied, as to the accuracy, safety, or utility of any of the Parties' Patents, Parties' Know-How, and Project Technology.






3. Financial Provisions.




3.01 First Year Financings.




(a) Interim Funding Amount . The Parties acknowledge and agree that MCEL has provided funding to Gecko in an aggregate amount equal to $100,000 (the " Interim Funding Amount ") in fulfillment of MCEL's obligation to provide funding for the Interim Activities pursuant to the Term Sheet. Except as otherwise specified in this Agreement, Gecko acknowledges that MCEL is not obligated to provide any additional funding or materials in connection with the Interim Activities.




(b) First Closing Amount . At the First Closing (as defined in the Stock Purchase Agreement), MCEL shall pay to Gecko $350,000 in cash. In exchange for such amount, the Interim Funding Amount and the Services with respect to the first calendar year following the date of the First Closing (collectively, the " First Closing Amount "), Gecko shall issue to MCEL at the First Closing, pursuant to the terms and subject to the conditions set forth in the Stock Purchase Agreement, 59.0673 shares of Gecko's common stock, no par value (" Common Stock "), which amount shall represent a percentage of the outstanding capital stock of Gecko determined by multiplying 48.00% by a fraction, (A) the numerator of which is the value of the First Closing Amount and (B) the denominator of which is $2,000,000.




(c) Additional First Year Financings . On or prior to December 31, 2006, MCEL or its assignee shall provide additional financing (each, an ? Additional First Year Financing ") to Gecko in an aggregate amount that, when added to the First Closing Amount, shall equal $2,000,000. MCEL may provide any such Additional First Year Financing in the form of (i) cash, (ii) shares of common stock, par value $.001 per share, of MCEL which are tradable in accordance with the provisions of Rule 144 promulgated under the Securities Act of 1933, as amended (the " Securities Act "), as such provisions apply to securities other than restricted securities (" MCEL Stock "), which shares of MCEL Stock shall be valued in accordance with Section 3.01(d), or (iii) both cash and shares of MCEL Stock. Contemporaneously with the provision of each Additional First Year Financing by MCEL, or at such other time as the Parties shall otherwise agree, the Parties shall conduct a closing (each, an " Additional First Year Closing "). MCEL shall consider in good faith Gecko's cash flow needs in determining the timing and amount of each Additional First Year Financing. At each Additional First Year Closing, pursuant to the terms and subject to the conditions set forth in the Stock Purchase Agreement, in exchange for all Additional First Year Financings provided by MCEL to Gecko since the First Closing or the immediately preceding Additional First Year Closing, as the case may be, Gecko shall issue to MCEL an amount of additional shares of Common Stock representing a percentage of the outstanding capital stock of Gecko determined by multiplying 48.00% by a fraction, (A) the numerator of which is the value of all Additional First Year Financings provided by MCEL to Gecko since the First Closing or the immediately preceding Additional First Year Closing, as the case may be, and (B) the denominator of which is $2,000,000.




(d) Valuation of Shares of MCEL Stock Used in Financings . MCEL will not issue shares of MCEL Stock hereunder unless the resale of such shares is covered by an effective registration statement or by an applicable exemption from the registration requirements of the Securities Act. The value of any MCEL Stock issued in connection with any financing hereunder will be measured by the proceeds earned by Gecko as a result of the sale(s) of such MCEL Stock. MCEL Stock issued pursuant to this Agreement may only be sold by Gecko to fund its operations in connection with the Joint Development Program. Gecko shall use commercially reasonable efforts to sell its shares of MCEL Stock for the highest possible price per share and shall comply with all applicable securities laws relating to any sale of MCEL Stock. Within thirty (30) days following the end of each calendar quarter during the term of this Agreement, the Parties shall compare the proceeds of the sale(s) of MCEL Stock by Gecko during the immediately preceding calendar quarter to the portion of the financing that MCEL was required to fund in the form of such sold shares of MCEL Stock. To the extent that the proceeds of the sale(s) of MCEL Stock by Gecko are less than the portion of the financing that MCEL was required to fund in the form of MCEL Stock, MCEL agrees to promptly pay Gecko the amount of such deficit in cash or additional shares of MCEL Stock. To the extent that the proceeds of the sale(s) of such MCEL Stock by Gecko are in excess of the portion of the financing that MCEL was required to fund in the form of MCEL Stock, MCEL will have the option to require Gecko to promptly pay such excess amount to MCEL in cash or to apply such excess amount to the next Additional First Year Financing or to exercise a part of the Purchase Option (as defined and described in Section 3.02), if any. It is understood and agreed by the Parties that all of the reasonable costs of registration and sale by Gecko of the MCEL Stock (including with respect to state securities laws filings, if any, but excluding broker's commissions) shall be borne solely by MCEL, except to the extent that the actions of Gecko contribute to such costs.




(e) Registration Statements With Respect To MCEL Stock . With respect to any registration statement (each, a " Registration Statement ") to be prepared for filing with the Securities and Exchange Commission by MCEL covering (i) the sale of MCEL Stock to Gecko in connection with any Additional First Year Financing or any exercise of the Purchase Option or (ii) the subsequent sale of such shares of MCEL Stock, Gecko shall furnish to MCEL such information regarding Gecko, shares of Gecko Common Stock to be issued to MCEL hereunder, and the intended method of disposition by Gecko of MCEL Stock received hereunder, as shall be reasonably required to effect any Registration Statement.




3.02 Purchase Option at Election of MCEL.




(a) MCEL Purchase Option . MCEL shall have an option (a " Purchase Option "), exercisable in accordance with the procedures set forth in this Section 3.02, to acquire additional shares of Gecko Common Stock representing up to an additional 32.00% of Gecko's then outstanding capital stock ( i.e. , MCEL's aggregate ownership of the then outstanding capital stock of Gecko may be increased up to a maximum of 80%, subject to Section 3.04), at an exercise price equal to the then fair market value of the Gecko Common Stock determined in accordance with Section 3.02(b) (the " Exercise Price "). Subject to the terms of this Section 3.02, the Exercise Price shall be paid in the form of (w) cash, (x) shares of MCEL Stock valued in accordance with Section 3.01(d), (y) Services performed by MCEL hereunder, or (z) a combination of the foregoing, in the sole discretion of MCEL. To the extent that MCEL has elected to exercise the Purchase Option in accordance with Section 3.02(b), each quarterly installment payment of the Purchase Option will be in a minimum amount of cash and/or shares of MCEL Stock equal to $375,000 (the " Minimum Exercise Amount "). If MCEL makes an installment payment of the Purchase Option during any calendar quarter of calendar years 2007 and 2008 in an amount of cash and/or shares of MCEL Stock in excess of the Minimum Exercise Amount, then the Minimum Exercise Amount required for the immediately following calendar quarter(s) shall be reduced by the amount of such excess. In connection with the first exercise of the Purchase Option in each of calendar years 2007 and 2008, if any, a portion of the Exercise Price payable at the Purchase Option Closing (as defined below) with respect to such exercise shall be comprised of the value of MCEL's performance of the Services for such entire calendar year ( i.e. , $500,000); provided , however , that if MCEL elects not to exercise the Purchase Option with respect to the second, third and fourth calendar quarters of 2007 pursuant to Section 3.02(b), then Gecko shall have a right to require MCEL to surrender to Gecko an amount of the shares of Common Stock sold to MCEL at such Purchase Option Closing in respect of such Services equal to the percentage of such Services that are ultimately not rendered by MCEL to Gecko (taking into account the extent to which Gecko exercises any right hereunder to continue to receive certain Services and facilities from MCEL after the termination of this Agreement or the ceasing of funding by MCEL). Notwithstanding the foregoing, to the extent that MCEL acquires 80% (subject to Section 3.04) of the outstanding capital stock of Gecko on a fully diluted basis pursuant to this Agreement for less than (i) a total of $4,500,000 in cash and/or shares of MCEL Stock (including the First Closing Amount and the Additional First Year Financings) and (ii) the performance of the Services until December 31, 2008, MCEL shall (A) pay to Gecko, as a contribution to capital, the amount by which $4,500,000 exceeds the value of the cash and shares of MCEL Stock paid or issued by MCEL to Gecko in exchange for 80% (subject to Section 3.04) of the outstanding capital stock of Gecko, which payment shall be made by MCEL in cash or additional shares of MCEL Stock in the sole discretion of MCEL, and (B) perform the Services for Gecko until December 31, 2008; provided , however , that MCEL shall receive no additional equity ownership in Gecko for the payment of such excess amount or the performance of the Services as provided in clauses (A) and (B) above.




(b) Exercise of Purchase Option; Exercise Price . On or prior to September 30, 2006, MCEL shall provide written notice to Gecko stating whether or not MCEL elects to exercise the Purchase Option with respect to the first calendar quarter of 2007. On or prior to December 31, 2006, MCEL shall provide written notice to Gecko stating whether or not MCEL elects to exercise the Purchase Option with respect to the second, third and fourth calendar quarters of 2007. On or prior to September 30, 2007, MCEL shall provide written notice to Gecko stating whether or not MCEL elects to exercise the Purchase Option with respect to calendar year 2008. If MCEL elects not to exercise the Purchase Option with respect to the second, third and fourth calendar quarters of 2007, then MCEL shall not be entitled to exercise the Purchase Option with respect to any period during calendar year 2008 without the prior unanimous written consent of the Board of Directors of Gecko. Each of the foregoing election notices (each, an " Option Exercise Notice ") shall include (i) the percentage of Gecko's then outstanding Common Stock for which the Purchase Option will be exercised pursuant to such Option Exercise Notice, (ii) MCEL's good faith determination of the Exercise Price for the Common Stock for which the Purchase Option will be exercised, and (iii) all necessary backup for MCEL's calculation of the Exercise Price. If Gecko wishes to dispute MCEL's determination of the Exercise Price as set forth in the Option Exercise Notice, Gecko must provide written notice thereof (the " Dispute Notice ") to MCEL no later than twenty (20) days following receipt of the Option Exercise Notice, which Dispute Notice shall also contain Gecko's calculation of the Exercise Price and shall be accompanied by all necessary backup for Gecko's determination of the Exercise Price. If MCEL and Gecko are unable to agree on the Exercise Price within a reasonable time, but in any event with twenty (20) days, following MCEL's receipt of the Dispute ...