Exhibit 10m
The omitted portions indicated by brackets have been separately filed with
the Securities and Exchange Commission pursuant to a request for
confidential treatment under Rule 406, promulgated under the Securities Act
of 1933, as amended.
SUPPLY AGREEMENT
between
CLEAN DIESEL TECHNOLOGIES, INC.
and
XXXX XXXXX INTERNATIONAL LTD.
AGREEMENT as of the 12th day of September, 1996 between Clean Diesel
Technologies, Inc., a Delaware corporation ("CDTI"), with a place of
business at Xxxxx 000, 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx, X.X.X.
00000 and Xxxx Xxxxx International Ltd. an English Company ("Holts"), with
a place of business at Lloyds House, Alderley Road, Wilmslow, Cheshire SK9
1QT, U.K.
Whereas CDTI desires to sell to Holts quantities of a proprietary, platinum
fuel catalyst and Holts desires to purchase quantities of such catalyst for
use with its diesel fuel additives.
NOW THEREFORE, the parties agree as follows:
1. Definitions.
(a) "Holts" shall mean Xxxx Xxxxx International Ltd. and the subsidiaries
of its ultimate holding company identified in Schedule C.
(b) "PFC" shall mean CDTI's proprietary Platinum Fuel Catalyst more
particularly identified as Platinum Plus(R) 3100-SC, a superconcentrated
product containing 2.0% by weight of platinum metal in a fuel soluble form,
and, the specified dose rate of 0.61 ml per 50 liters of diesel fuel,
providing 0.25 ppmw of platinum metal in treated fuel. Specifications for
the PFC are set on Schedule A-2.
(c) "Additives" shall mean Holts' diesel fuel additives containing or
intended to contain the PFC.
(d) "Application" shall mean the blending at Holts' expense of the PFC with
the Additives in containers of up to five liters for use in after-treatment
of fuel for both new and used diesel engines in the consumer car care
market.
(e) "Patents" shall mean those patents owned or licensed to CDTI as more
specifically set out on Schedule B-1.
(f) "Territories" shall mean each national jurisdiction or state worldwide
except in North, Central or South America.
(g) "Xxxx" shall mean the CDTI trademark "Platinum Plus(R)."
(h) "Minimum Performance Levels" shall mean the annual quantity in gallons
of PFC attributable to Holts' sale of its Additives in a particular
Territory.
(i) "Gallons" shall mean U.S. gallons, equivalent to 3.785 liters per
gallon.
(j) "Fixed Term" of this Agreement shall mean the term from the execution
of this Agreement until the tenth anniversary thereof.
(k) "Extended Term of this Agreement" shall mean the term from the
expiration of the Fixed Term until cancellation of this Agreement by either
party on ninety (90) days notice.
2. Purchase and Sale.
CDTI agrees to supply and sell quantities of the PFC exclusively to Holts
for the Application for sale of the Additive in the Territories. Holts
agrees to accept and purchase the PFC exclusively from CDTI or its licensed
manufacturers only for the Application for sale in the Territories and to
pay to CDTI the price therefor set out below.
3. License.
(a) CDTI does for the Fixed and Extended Terms of the Agreement license
Holts under the Patents to use and sell the PFC and to use the Xxxx, on an
exclusive, royalty-free basis, for the Application for sale of the
Additives in the Territories only. CDTI shall execute and deliver to Holts
from time to time such registered user agreements as may be appropriate to
use of the Xxxx in the Territories by Holts. Notwithstanding the foregoing,
Holts acknowledges CDTI's ownership of and interest in the Xxxx and agrees
that its use of the Xxxx shall not create in Holts favor any right, title
or interest in or to the Xxxx.
(b) Subject to agreement on Minimum Performance Levels by April 30, 1997,
CDTI shall not license any other party to use the Xxxx for diesel fuel or
diesel fuel additives in a Territory during the Fixed or Extended Terms of
this Agreement when Holts shall hold an exclusive license for the PFC and
the Xxxx for the Application in such Territory. CDTI shall itself retain
the right to market and sell the PFC to blenders and fuel suppliers under
the Xxxx.
4. Obligations of Holts.
(a) Holts agrees to use its best efforts in the Territories to promote the
use of PFCs for the Application as beneficial in mobile diesels both new
and retrofit and will at its expense apply for certification of the PFC, or
the Additives as the case may be, with appropriate regulatory authorities
in the Territories.
(b) Holts will use the PFC according to the blending specifications agreed
by CDTI attached as Schedule A-1 and Holts will use all reasonable efforts
to assure that PFC is blended by Holts or its blenders at the concentration
recommended by CDTI. Holts will use due care in the blending of the PFC
with the Additives with a view toward protection of its employees or the
employees of its agents and contractors.
(c) Holts will use the Xxxx on the Additives containing the PFC and in all
advertising concerning such products and only on such Additives and in such
advertising. The packaging or labels for such Additives shall identify CDTI
as owner of the Xxxx in such style as from time to time may be approved by
CDTI, who shall act reasonably.
(d) Holts will notify CDTI as to those jurisdictions in the Territories and
to the classes where the Xxxx shall not have been registered and where
Holts requires the Xxxx to be registered in order to further project
sales of the Additives therein. CDTI will at its expense apply for
registration of the Xxxx in such jurisdictions. CDTI shall be the owner of
the Xxxx when so registered. Holts will reimburse CDTI for one-half of the
cost of the registration and annual maintenance of the Xxxx in such
jurisdictions, and for the classes where Holts requires the Xxxx to be
registered.
5. Obligations of CDTI.
(a) CDTI will use its best efforts to assist Holts in its registration of
the Additives or the PFC, as the case may be, with the appropriate
regulatory authorities in the Territories, such efforts, however, shall not
require the preparation, compilation or delivery of data except data as
CDTI shall actually possess and shall not require testing expense, travel
expense, legal fees and filing fees to be incurred by CDTI.
(b) CDTI will provide to Holts standard product specification sheets (flash
point, dosing, etc.), material safety data sheets, and blending
instructions.
(c) CDTI will cause to be made a standard QC analysis on product provided
to Holts and make such analyses available to Holts.
(d) CDTI will not during the term of the Agreement sell PFC to other
parties for the Application (for the sale of additives similar to the
Additives) in the Territories, providing that by March 31st of each
calendar year the parties shall have used their reasonable efforts to agree
on Minimum Performance Levels for each territory for that calendar year. If
the parties cannot agree on a Minimum Performance Level for a specific
Territory, then Holts will have a non-exclusive license for that specific
Territory for the remainder of that calendar year which non-exclusive
license shall continue thereafter for the Fixed or Extended Terms of this
Agreement unless such non-exclusive license for such Territory is canceled
by CDTI with 90 days written notice.
(e) In the event that CDTI formulates an additive package that is
technically and commercially suitable for petrol engines, then CDTI shall
offer Holts the first right of refusal on a license on terms similar to
this Agreement. Product specifications and pricing may differ from this
Agreement.
6. Pricing.
(a) The price per gallon of PFC through the year ended December 31, 1996 on
aggregate orders up to 100 gallons is:
Volume $/gal PP 3100-SC
------ ----------------
Up to 100 gal. $[ ]
(b) The price per gallon of PFC in excess of 100 gallons in 1996 and after
December 31, 1996 and through December 31, 1999, will be adjusted based on
the formula set out on Schedule D. After December 31, 1999, pricing of
orders will be agreed between CDTI and Holts in a written amendment to this
Agreement. If the parties cannot agree in good faith then this Agreement
may be terminated by either party with 90 days written notice. In the
course of such good faith negotiations either party may invoke the services
of a London U.K.-based mediator and the other party shall cooperate with
such mediator and both parties shall share the reasonable costs of such
mediation.
(c) Payment shall be net thirty (30) days from date of receipt at Holts
principal sites in the U.K. and France. Delayed payments shall incur a
service charge of 1.5% of the unpaid balance per month.
(d) Prices are exclusive of freight, customs duties, non-U.S. VAT sales or
similar taxes and any local transportation expense following the point of
delivery, such costs being for the account of Holts. Prices are inclusive
of shipping insurance premiums which are for the account of CDTI.
7. Infringement.
(a) CDTI represents and warrants that to the best of its knowledge and
belief the use or sale of the PFC or the use of the Xxxx will not infringe
upon the claims of any patent or any trademark issued or to be issued to
third parties in the Territories.
(b) In the event of an infringement suit, or threatened infringement suit,
against Holts by reason of the use of the Xxxx or the use or sale of the
PFC furnished hereunder for the Application, and provided that Holts
notifies CDTI promptly in writing of any claim, or threatened claim, of
infringement and tenders to CDTI the defense thereof, CDTI at its option
agrees either to:
(i) control and conduct at its own expense the defense of any such
claim or suit provided that Holts furnishes such assistance and information
at CDTI's expense as CDTI shall reasonably request, in which case CDTI
indemnifies Holts against all reasonable costs, losses and expenses
incurred and CDTI agrees to keep Holts informed of the progress of any such
matter, or
(ii) reject the tender of the defense in which case CDTI indemnifies
Holts against all reasonable costs, losses and expenses of Holts in
defending against the claims of suit, provided that CDTI shall have the
right to be defended by its own counsel in such suit.
(c) Regardless of the option selected by CDTI in (b) above, its liability
shall not exceed the purchase price of the allegedly infringing goods, nor
shall CDTI be liable to Holts for any consequential or punitive damages. If
any injunction is issued against the further use of the allegedly
infringing goods, CDTI shall have the option of procuring for Holts the
right to use the goods or replacing them with a non-infringing product, as
long as Holts agrees that such product achieves the same performance as PFC
in the Application or of removing them and refunding the purchase price,
including costs of duty and freight.
8. Prosecution of Infringements.
Both parties shall notify the other of facts which suggest that an
infringement of the Patents or the Xxxx in the Territories may be occurring
and shall consult as to the manner of dealing with such infringements.
9. Orders; Quantities; Packing; Claims.
CDTI agrees to provide reasonable quantities of PFC in one (1) gallon
containers for trial market launches through April 30, 1997. For all orders
in quantity up to 100 gallons, Holts shall give CDTI thirty (30) days
notice of the quantity to be purchased and shipped each contract month and
for orders in excess of 100 gallons, Holts shall give CDTI ninety (90) days
notice thereof. No order shall be less than five (5) gallons. Unless Holts
specifies otherwise in writing, PFC orders will be packed as CDTI may deem
proper for protection against normal handling. An extra charge will be made
for special requirements imposed by Holts for preservation, waterproofing
and similar added protection or special packing of the PFC. The weights,
tares and tests fixed by CDTI's invoice shall govern unless proven to be
incorrect. Claims relating to quantity, quality, weight, condition and loss
of or damage to any of the PFC sold hereunder shall be waived by Holts
unless made in writing within thirty (30) days after receipt of a
particular PFC shipment by Holts at its manufacturing sites in the U.K. or
France.
10. Title and Risk of Loss.
Title and Risk of Loss of all PFC shipments shall pass to Holts upon
delivery of a shipment by CDTI to Holts' specified point of delivery.
11. Warranties.
CDTI warrants that (a) the PFC is of the quality set forth in CDTI's
specifications, attached as Schedule A-2, or as may be otherwise expressly
stated in this Agreement, and (b) the title conveyed is good and the
product is free from any lawful security interest, lien or encumbrance.
CDTI MAKES NO FURTHER REPRESENTATIONS OR WARRANTIES AS TO THE PFC, EXPRESS
OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
12. Limitation of Liability; Insurance.
(a) With respect to the purchase and sale of the PFC hereunder, Holts'
exclusive remedy and CDTI's exclusive liability under the Agreement or
otherwise, shall be for compensatory damages for CDTI's breach of warranty
set forth herein, such liability shall not exceed so much of the purchase
price as is applicable to that portion of a particular shipment for which
damages are claimed and neither party shall be liable to the other for
consequential, statutory or punitive damages.
(b) Each of the parties hereto represents and warrants to the other that it
or its subsidiaries shall maintain during the Fixed and Extended Terms of
this Agreement, product liability insurance cover up to the limit of $2
million (U.S. dollars) in the aggregate and $1 million (U.S. dollars) per
claim, and $11 million of total overall coverage for claims arising out of
injury to persons or property alleged to have been caused by defects in or
use of either the Holts additives or the CDTI PFC, as the case may be. Such
policies of insurance shall be with insurance carriers of such standing and
capacity as shall be reasonably approved by the other party and shall be
properly licensed to issue the coverage contemplated herein.
(c) Each of the parties hereto does hereby indemnify and hold harmless the
other and the shareholders, directors, officers, and employees of the
other, but only up to the amount of the product liability insurance cover
required to be maintained hereunder, for all cost, expense (including the
fees and expenses of legal counsel), liability and damages imposed on such
other party and found to have been caused by defects in or use of the
party's product as contemplated hereunder, being Holts' additives or CDTI's
PFC, as the case may be.
(d) Each of the parties hereto shall cause the other party to be designated
as an additional insured under such party's product liability insurance
required hereunder and shall, from time to time on request of the other
party, procure from its insurance carrier and furnish to such other party
certificates evidencing such additional insured status.
(e) Each of the parties hereto shall cause its insurance carriers providing
the product liability cover required hereunder to waive subrogation with
respect to the other party.
13. Force Xxxxxx.
Neither party shall be liable for its failure to perform hereunder if due
to any contingency beyond the reasonable control of the party affected,
including but not limited to acts of God, war, fire, bad weather, flood,
accident, labor trouble or shortage, civil disturbance, plant shutdown,
equipment failure, voluntary or involuntary compliance with any applicable
governmental regulation or order, or shortage or inability to obtain (on
terms deemed practicable by the party affected) any raw material (including
energy), equipment or transportation. CDTI shall not be obligated to
deliver the product from other than CDTI's production site in the U.S. and
there shall be no obligation to rebuild or repair any damage or destruction
to such production or shipping points in order to fulfill this contact.
During any period when CDTI is unable to supply the contract quantity of
the PFC, whether caused by the circumstances above or otherwise, CDTI may
allocate any available product among its customers on such basis as CDTI
deems fair and reasonable.
14. Governmental Regulation.
CDTI may discontinue, limit or curtail production and sale of PFC due to
the requirements of governmental regulation, and may terminate the
Agreement on thirty (30) days written notice to Holts, if in CDTI's sole
and reasonable opinion such governmental regulations render the production,
marketing or transportation of PFC economically, technically or
commercially not feasible.
15. Term of Agreement.
This Agreement shall remain in effect during the Fixed and Extended Terms
hereof.
16. Applicable Law and Arbitration.
This Agreement shall be governed by the internal substantive laws of the
State of Delaware U.S.A. and the Federal Arbitration Act. This Agreement
and all questions of its interpretation or any claims or disputes with
respect to any of the transactions contemplated herein shall be determined
exclusively in binding arbitration before a single arbitrator under the
rules then in force of commercial arbitration of the American Arbitration
Association in New York, New York, U.S.A. Any award in such arbitration may
be entered in and enforced by any court having jurisdiction. Prior to
initiating arbitration the parties agree that they will for a period of not
less than sixty (60) days attempt to mediate all disputes and such
mediation shall involve at least one face to face discussion between the
parties. No arbitrator hereunder shall have any power to award
consequential, statutory or punitive damages. Notwithstanding the forgoing,
claims or disputes between the parties hereto shall be determined
judicially, where such claims or disputes arise in the course of a judicial
proceeding brought by a third party against one or both of the parties
hereto and one of such parties hereto shall seek reimbursement or indemnity
from the other party hereto and each of the parties hereto consents to the
jurisdiction of any court in which such judicial proceeding shall arise.
17. Assignment.
Neither this Agreement nor any right or obligation hereunder is assignable
or transferable by either party in whole or in part without the prior
written consent of the other party and any such purported assignment
without such consent shall be void, except, however, upon a sale by a party
of all or substantially all of its business as a going concern.
18. Notices.
All notices hereunder shall be in writing and directed to the addresses of
the parties set forth above or to such other address as shall be provided
by notice as stipulated herein, and shall be deemed received upon
transmission if by facsimile or hand delivery, or five (5) days after
transmission, if by mail.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of
the date first written above.
CLEAN DIESEL TECHNOLOGIES, INC. XXXX XXXXX INTERNATIONAL LTD.
By: By:
--------------------------- ----------------------------
Title: Title:
--------------------------- ----------------------------
SCHEDULE A-1
CDTI/HOLTS SUPPLY AGREEMENT
PLATINUM PLUS(R) 3100-SC
------------------------
PRODUCT BLENDING AND USE SPECIFICATIONS
---------------------------------------
1. Holts will blend Platinum Plus(R) 3100-SC with its additives according
to the product application sheet supplied by CDTI so as to provide for
a concentration of 0.25 ppm platinum in fuel treated with Platinum
Plus(R) 3100-SC.
2. Holts will use all reasonable means including the establishment of
blending procedures and appropriate analyses of blended additives to
assure that Holts and its blenders conform to the blending
specifications.
3. These specifications may not be altered without written authorization
from CDTI.
SCHEDULE A-2
CDTI/HOLTS SUPPLY AGREEMENT
PLATINUM PLUS(R) 3100 SC
PRODUCT SPECIFICATIONS
----------------------
SPECIFIED PHYSICAL PROPERTIES
-----------------------------
Min. Max.
---- ----
Pt Content, Wt % 2.00 2.08
Specific Gravity, 23-24oC 0.88 0.90
Total Halide Content, ppm --- 500
(Full specifications to follow.)
SCHEDULE B-1
CDTI/HOLTS SUPPLY AGREEMENT
PATENTS LICENSED BY JURISDICTION
--------------------------------
Country Patent No. Issue Date Title
------- ---------- ---------- ------
Australia Xxx. 583,580 05/04/89 Fuel Additives and Fuel
Containing Soluble Platinum
Group Metal Compounds and
Use in Internal Combustion
Engines
Europe (designated Xxx. 0189642 03/06/91 Fuel Additives and Fuel
contracting states: Containing Soluble Xxxxxxxx
XX, XX, XX, XX, XX, Group Metal Compounds and
LI, LU, NL, SE) Use in Internal Combustion
Engines
Spain Xxx. 548,951 04/12/88 Fuel Additives and Fuel
Containing Soluble Platinum
Group Metal Compounds and
Use in Internal Combustion
Engines
United Kingdom Xxx. 2,178,757 10/19/88 Fuel Additives and Fuel
Containing Soluble Platinum
Group Metal Compounds and
Use in Internal Combustion
Engines
Greece Xxx. 85.2745 03/14/86 Fuel Additives and Fuel
Containing Soluble Platinum
Group Metal Compounds and
Use in Internal Combustion
Engines
Ireland Xxx. 58,723 10/21/93 Fuel Additives and Fuel
Containing Soluble Platinum
Group Metal Compounds and
Use in Internal Combustion
Engines
Japan Xxx. 1,931,531 05/12/95 Fuel Additives and Fuel
Containing Soluble Platinum
Group Metal Compounds and
Use in Internal Combustion
Engines
SCHEDULE B-2
CDTI/HOLTS SUPPLY AGREEMENT
PLATINUM PLUS
FOREIGN TRADEMARK APPLICATIONS
------------------------------
Country Filing Date Serial No. Registration No.
------- ----------- ---------- ----------------
China Not available Not available
China Not available Not available
China Not available Not available
EU Community Not available Not available
France 11/28/95 95/599 379 95/599 379
Great Britain 11/23/95 2,046,018
Indonesia Not available Not available
Indonesia Not available Not available
Indonesia Not available Not available
Xxxxx 00/0/00 000000/00
Xxxxx 12/5/95 000000/00
Xxxxx 12/5/95 125417/95
Korea 11/27/95 44777/95
Korea 11/27/95 44778/95
Korea 12/27/95 00000/00
Xxxxxx 12/6/95 249,675
Mexico 12/8/95 249,891
Taiwan 7/12/96 85034640
Taiwan 7/12/96 85034641
SCHEDULE C
CDTI/HOLTS SUPPLY AGREEMENT
HOLTS SUBSIDIARIES COVERED UNDER THE AGREEMENT
----------------------------------------------
Xxxx Xxxxx International Ltd. U.K.
Xxxx Xxxxx Ltd. U.K.
Xxxx Xxxxx Export Ltd. U.K.
Xxxx & Day & Xxxxxx Ltd. U.K.
Xxxx Xxxxx SA France
Xxxx Xxxxx GmbH Germany
Xxxx Xxxxx BV Holland
Xxxx Xxxxx Europa BV Holland/Belgium
Xxxx Xxxxx SpA Italy
Xxxx Xxxxx Ltd. Ireland
Xxxx Xxxxx SA Spain
Xxxx Xxxxx Australasia Pty. Ltd. Australia
Xxxx Xxxxx Ltd. New Zealand
Xxxxxx Environmental Services Ltd. New Zealand
Musashi Xxxx XX Japan
Holts Pty. Ltd. South Africa
Xxxx Xxxxx International Ltd. has a 35% shareholding in Xxxx Xxxxx & Xxxxxx
Lda., Portugal.
SCHEDULE D
PLATINUM PLUS(R) 3100-SC
PRICE ADJUSTMENT SCHEDULE
-------------------------
(Valid after December 31, 1996
and through December 31, 1999)
1. Base pricing is based on platinum at $400/T.O. and a product price of
$3,300/U.S. gallon for the first 100 gallons, or through December 31,
1996, whichever occurs first.
2. Price on orders subsequent to December 31, 1996, and through December
31, 1999 will be adjusted based on the following formula:
Adjusted Price of Platinum
Product Price = at time of Order (FN*) x (0.40) ($[ ]) + 0.60 ($[ ])
-----------------------
Base Price @ $400/T.O.
3. Notwithstanding the foregoing, CDTI shall be entitled to a price
adjustment if it shall be determined that the above pricing as
escalated shall be grossly inequitable. In the course of discussions
to alter this pricing structure, either party may invoke the services
of a London U.K.-based mediator and the other party shall cooperate
with such mediator and both parties shall share the reasonable costs
of such mediator.
(FN*) Defined as platinum price confirmed by Xxxxxxx Matthey on date of
written acceptance by CDTI of order.
