Exhibit 10.1
* Certain confidential information
contained in this document, marked by brackets, has been omitted
and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment under Rule 24b-2
promulgated under the Securities Exchange Act of 1934, as
amended.
COOPERATION
AGREEMENT
ENTERED INTO this
23 rd day of April, 2009, by and
among Environmental Power Corporation (“EPC”), a
Delaware, USA corporation, and its subsidiary Microgy, Inc., a
Colorado, USA corporation formerly known as Microgy Cogeneration
Systems, Inc. (“Microgy”), and Xergi, A.S., a Danish
entity (“Xergi”), and its subsidiary Danish Biogas
Technology, A.S. (“DBT”), a Danish entity.
RECITALS
A. Microgy and DBT wish to
restructure their relationship in the manner set forth
herein.
B. DBT wishes to assist Microgy in
financing of the costs of license fees payable or to become payable
to DBT in relation to certain of Microgy’s projects by
accepting the Consideration (as defined herein) from EPC in payment
of such license fees, and otherwise to further the financing of
Microgy’s projects by the agreements set forth
herein.
FOR GOOD AND VALUABLE CONSIDERATION,
the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, the parties hereto agree as
follows:
The following capitalized terms have
the stated meanings (the singular includes the plural and vice
versa):
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1.1.
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“Aggregate Payment Amount” has the
meaning set forth in Exhibit A.
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1.2.
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“Commercial Operation” means when a
Project is through performance testing and has sold commercially,
or utilized commercially, energy (in the form of gas, electricity,
heat, steam etc.) derived from the operation of the
Project.
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1.3.
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“Confidential Data” has the meaning
set forth in Exhibit A.
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1.4.
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“Consideration” has the meaning set
forth in Exhibit A.
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1.5.
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“Control”, “Controls”,
or “Controlled” means possession, directly or
indirectly, of the power either to exercise, or to control the
exercise of, 50% or more of the rights to vote at general meetings
of a company.
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1.6.
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“DBT
Technology” means anaerobic-digester plants incorporating
above-ground digesters with mixers.
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1.7.
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“Effective Date” means the date as
of which EPC tenders the Consideration to DBT in accordance with
Article 2 of this Agreement.
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1.8.
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“EPC
Affiliates” means any person, partnership, joint venture,
corporation or other form of enterprise which directly or
indirectly Controls, is Controlled by, or is under common Control
with EPC and/or Microgy.
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1.9.
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“EPC
Parties” means EPC, Microgy, and EPC Affiliates.
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1.10.
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“Europe” means Albania, Andorra,
Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia &
Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,
Estonia, Faroe Islands, Finland, France, Georgia, Germany,
Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of
Man, Italy, Jersey, Kazakhstan, Kosovo, Latvia, Liechtenstein,
Lithuania, Luxembourg, Macedonia, Malta, Moldova, Monaco,
Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Russia,
San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland,
Turkey, Ukraine, United Kingdom.
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1.11.
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“Future
Projects” and “Fees for Future Projects” have the
meaning set forth in Exhibit A
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1.12.
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“North
America” means the United States of America and its
possessions and territories, Canada and Mexico.
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1.13.
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“Prior
Agreements” means the Technology Licensing Agreement dated
12 May 2000 between Microgy and DBT, amended by Addendum of
14 April 2003 and Addendum No. 2 of 7 March
2005.
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1.14.
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“Private
Placement Memorandum” means the Confidential Private
Placement Memorandum, dated March 30, 2009, prepared by EPC
and delivered to DBT prior to the execution of this
Agreement.
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1.15.
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“Project” means a facility utilizing
DBT Technology.
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1.16.
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“ROW” means the World excluding
North America and Europe as defined above.
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1.17.
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“SEC” means the United States
Securities and Exchange Commission.
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1.18.
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“Swift
Grand Island Fee” has the meaning set forth in Exhibit
A.
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1.19.
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“Term” means the period of five
years commencing as of the Effective Date.
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1.20.
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“Xergi
Parties” means Xergi and DBT.
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2
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2.
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CLOSING;
CONSIDERATION; EFFECTIVE DATE
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2.1.
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Closing shall
be deemed to take place at the offices of EPC simultaneously with
the execution and delivery of this Agreement. Execution may be in
counterparts. At the Closing, EPC shall tender the Consideration to
DBT. The Effective Date shall be deemed to have occurred as of said
tender. Should EPC fail to tender the Consideration to DBT within
45 days of the date first written above, DBT, at its option and
upon written notice to EPC, may cancel this Agreement. In the event
of any such cancellation, the Prior Agreements shall remain in full
force and effect, and no party shall have any liability or other
obligation to any other party under this Agreement.
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2.2.
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For the
avoidance of doubt, the Effective Date shall only be considered as
having occurred to the extent that the Consideration is delivered
for the account of DBT in book-entry form through the facilities of
the Depository Trust Company (“DTC”) in the manner
described in the Private Placement Memorandum. DBT will cooperate
with EPC in the delivery of the Consideration, including, without
limitation, by opening such brokerage or other accounts as may be
required to accept delivery of the Consideration in book-entry form
through the facilities of DTC.
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2.3.
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Notwithstanding
anything to the contrary, it is understood and agreed to by the
Parties hereto that the obligation of Microgy to pay the Swift
Grand Island fee is an absolute obligation which shall survive any
delay in the execution and delivery of this Agreement or
cancellation of this Agreement pursuant to any Section of this
Article. That is, Microgy shall make payments to DBT pursuant to
Paragraph 3 of Exhibit A of this Agreement regardless of the status
of this Agreement at the time such payments are due. Payment of the
Swift Grand Island fee pursuant to this Section shall relieve
Microgy of any obligation to make any other Swift Grand Island fee
payment pursuant to the Prior Agreements.
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3.
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TERMINATION OF
PRIOR AGREEMENTS
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The Prior Agreements shall be deemed
to be terminated by mutual agreement as of the Effective Date.
Termination of the Prior Agreements shall in no respect impair
(a) the prior grant by DBT of rights to the EPC Parties for
the design, construction and/or operation by the EPC Parties of DBT
Technology, or the sublicensing and/or collateral assignment of
such rights to third parties in connection with the design,
financing, construction and/or operation of such systems, or
(b) the prior receipt, through the Effective Date, by either
of the Xergi Parties of payments from the EPC Parties for licensing
or design fees, reimbursement of expenses, or any other
charges.
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4.
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RELATIONSHIP
FROM AND AFTER EFFECTIVE DATE
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4.1.
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Subject to the
terms of this Agreement, Microgy is hereby granted an irrevocable
and perpetual right and license to utilize DBT Technology in the
design, construction, and/or operation by EPC Parties of
anaerobic-digesters and related systems. The foregoing
grant:
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4.1.1.
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shall be deemed
to be fully paid upon fulfillment of the conditions set forth in
Section 5 (PAYMENTS);
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4.1.2.
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as to North
America commences as of the Effective Date, shall be exclusive for
the Term (subject to the terms of Section 4.3), and shall be
non-exclusive thereafter;
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4.1.3.
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as to Europe
commences upon the expiration of the Term and shall be
non-exclusive; and
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4.1.4.
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as to ROW
commences as of the Effective Date and shall be
non-exclusive.
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4.2.
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Commencing as
of the Effective Date either the EPC Parties or the Xergi Parties
may utilize digester technologies other than DBT Technology in
North America, Europe, and/or ROW.
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4.3.
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Neither of the
Xergi Parties may utilize DBT Technology in North America during
the Term, except that on a case-by-case basis, DBT is entitled to
provide engineering, design, control systems and technical services
related to DBT Technology in Canada and Mexico during the Term so
long as (a) the party purchasing these services is not a
direct competitor of Microgy and (b) the project is wholly
owned by the party purchasing these services from DBT. The
intention of the parties to this Agreement is that projects
performed by DBT under this clause are for companies with one to
two projects and therefore DBT will be able to service projects in
the market that Microgy will not or cannot service due to lack of
resources or interest. Microgy shall be granted a fee equal to 5%
of DBT’s turnover in connection with any such project, and
DBT shall use its best endeavors to ensure that Microgy is hired to
operate and maintain the project for a minimum of five years. Prior
to pursuing any such project, DBT agrees to disclose the intended
project to Microgy and Microgy will have 45 days to decide if it
will pursue the project. If Microgy elects to pursue the project,
then DBT will not be allowed to pursue the project unless
development activities are discontinued by Microgy. If Microgy
declines to pursue the project, or discontinues the development of
the project, or if the client decides not to have Microgy design,
build, and own the project, then DBT may pursue the project under
the above terms, with written declaration by DBT and consent by
Microgy (not to be unreasonably withheld or delayed) that one of
the referenced criteria is present. Microgy is obligated to give
consent when one the above criteria is clearly present. The consent
shall be issued within 21 days of request by DBT.
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4
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5.1.
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Starting from
the Effective Date, Microgy shall pay DBT up to the Aggregate
Payment Amount for licenses to utilize the DBT Technology on
Projects. Once DBT has received the Aggregate Payment Amount,
Microgy shall be released from further obligations with respect to
license fees or other payment obligations, and shall be deemed to
have a fully paid-up license to utilize DBT Technology in
perpetuity.
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5.2.
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Payments
counting toward the Aggregate Payment Amount shall include the
following as defined in Exhibit A:
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5.2.1.
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The
Consideration;
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5.2.2.
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The Swift Grand
Island Fee; and
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5.2.3.
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Fees for Future
Projects.
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5.3.
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If at the end
of the Term the Aggregate Payment Amount has not been received by
DBT, all Projects that have secured debt financing or other
financing at the end of the Term shall still be required to pay
license fees at the first of (a) when a sum equal to thirty
(30%) of the Project’s investment budget has been
utilized or (b) first draw of financing even if the first draw
occurs after the Term, unless the Aggregate Payment Amount has been
received by DBT. Payment of the license fees in these cases shall
be in accordance with the terms and conditions of Fees for Future
Projects as set forth in Exhibit A.
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During the Term the Xergi Parties
shall utilize proceeds received hereunder to support the
development of improvements, develop feed pre-treatment technology,
post digestion effluent treatment, and biogas utilization
technologies.
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7.
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OWNERSHIP OF
IMPROVEMENTS
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7.1.
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Notwithstanding
the terms of the Prior Agreements, DBT and Microgy shall be deemed
jointly to own all upgrades, modifications, or other changes or
enhancements to anaerobic-digester technology made by Microgy while
the Prior Agreements were in effect.
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7.2.1.
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Microgy shall
be offered access in North America to the Xergi Parties’
share of digestion-process technology developed by Novozymes A/S,
subject to Microgy bearing all cost and fees and fulfilling the
conditions related thereto; and
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5
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7.2.2.
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All
improvements, upgrades, modifications, or other changes or
enhancements to anaerobic-digester technology made by Xergi Parties
shall be shared with Microgy, and all improvements, upgrades,
modifications, or other changes or enhancements to
anaerobic-digester technology made by Microgy shall be shared with
DBT, each on the basis of good faith and mutual
cooperation.
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7.3.
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Following the
Term, each of Microgy and the Xergi Parties shall own their own
improvements, upgrades, modifications, or other changes or
enhancements to anaerobic-digester technology. Sharing-arrangements
shall be subject to mutual agreement.
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8.
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ADDITIONAL
COOPERATION
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8.1.
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If Xergi
Parties invest in a company or companies that own technology
(whether patented or not) for feed pre-treatment, post-digestion
effluent treatment, and/or biogas utilization technologies, nothing
in this Agreement shall be construed to limit the ability of these
companies to continue to commercialize their technologies in North
America. Xergi Parties shall use their best endeavors to secure for
Microgy a nonexclusive right to purchase a build and operate
license for the technology for use on Microgy-owned projects,
subject to Microgy paying the normal license-fee for the territory
as determined by the respective technology-holders. Xergi Parties
shall, where possible, utilize best-efforts to secure for Microgy a
right of first refusal to acquire
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