Exhibit 10.3
BUSINESS AND DEVELOPMENT
AGREEMENT
This Business and
Development Agreement (this “Agreement”) is made and
entered into as of the 6 th day of February, 2008, by
and between Global Energy, Inc., a corporation organized and
existing under the laws of the State of Nevada
(“Global”), and Renewable Diesel, LLC, a limited
liability company organized and existing under the laws of the
State of Delaware (“Renewable”).
WHEREAS, AlphaKat
GmbH, a company organized and existing under the laws of Germany
(“AK”), owns or has certain rights to a proprietary
technology developed by Dr. Christian Koch to convert waste
material which contains hydrocarbons into diesel (as further
defined below, the “Technology”);
WHEREAS, AK and
Global formed AlphaKat - Global Energy GmbH, a company organized
and existing under the laws of Germany (“Licensor”), to
market the Technology in accordance with the agreements entered
into by AK and Global;
WHEREAS, Global
and Trianon Partners, a corporation organized and existing under
the laws of the State of Nevada (“Trianon”) and an
affiliate of Renewable, entered into a Joint Development Agreement
dated October 24, 2007 (the “JDA”) which contemplated,
among other things, (i) the execution of a license agreement
between Licensor and Trianon, (ii) the joint development of
projects using the Technology by Global and Trianon or a new entity
formed by the owners of Trianon and (iii) Trianon assisting Global
to install a plant in the United States, at Global’s sole
expense, to demonstrate the commercial viability of the
Technology;
WHEREAS, Trianon,
following the execution of the JDA, introduced Global to Covanta
Energy Corporation, a corporation organized and existing under the
laws of Delaware (“Covanta”), which is in the
waste-to-energy business;
WHEREAS, Trianon,
at the request of Global, worked with Global and Licensor to
structure a business relationship with Covanta, including the
negotiation and execution of (i) the License Agreement between
Licensor and Global of even date herewith and (ii) the Business and
Royalty Agreement between Global and Covanta of even date
herewith;
WHERAS, American
Renewable Diesel, LLC, a limited liability company organized and
existing under the laws of the State of Delaware
(“American”) and an affiliate of Trianon and Renewable,
is entering into a License Agreement of even date herewith with
Licensor;
WHEREAS, Global
and Trianon have agreed to terminate the JDA and to put in place a
modified set of agreements between Global and Renewable; and
WHEREAS, Global
and Renewable want to set forth their agreements;
NOW, THEREFORE, in
light of the mutual premises set forth herein and other good and
valuable consideration, the receipt and the sufficiency of which
are hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows.
ARTICLE 1 – DEFINITIONS AND
INTERPRETATION
Section 1.1 Capitalized Terms . Unless
otherwise specified herein, the following capitalized terms shall
have the following meanings:
“
Affiliate ” means, in relation to any Person, any
other Person that controls, is controlled by, or is in common
control with, such Person. For the purpose of this definition,
control means the direct or indirect control of fifty percent (50%)
or more of the voting rights in such Person or the power to direct
the management or policies of such Person, whether by operation of
law, by contract or otherwise. Except as shall otherwise be
expressly provided in this Agreement, and for the avoidance of any
doubt, as of the Effective Date, (i) Renewable, Trianon and
American are Affiliates, (ii) Licensor and AK are Affiliates and
(iii) Licensor and Global are Affiliates, but AK and Global are not
Affiliates.
“
Agreement ” has the meaning set forth in the first
paragraph hereof.
“ AK
” means AlphaKat GmbH, a company organized and existing under
the laws of Germany, and its successors and assigns.
“
American ” means American Renewable Diesel, LLC, a
limited liability company organized and existing under the laws of
the State of Delaware, and its successors and assigns.
“
Business and Royalty Agreement ” means the Business
and Royalty Agreement of even date herewith entered into by Global
and Covanta.
“
Consulting Agreement ” means the Consulting Agreement
entered into by Global and Trianon dated October 20, 2007.
“
Covanta ” means Covanta Energy Corporation, a
corporation organized and existing under the laws of the State of
Delaware, and its successors and assigns.
“ Covanta
License Agreement ” means the License Agreement entered
into by Licensor and Covanta of even date herewith, a copy of which
has been provided to the Parties by Licensor.
“
Default ” has the meaning set forth in Section
5.1.
“
Dispute ” has the meaning set forth in Section
7.1.
“
Effective Date ” has the meaning set forth in Section
4.1.
“
Feedstock ” has the meaning set forth in the License
Agreement.
“ Finding
Party ” has the meaning set forth in Section 2.1(a) .
“
Global ” means Global Energy, Inc., a corporation
organized and existing under the laws of the State of Nevada, and
its successors and permitted assigns.
“ Global
Percentage ” has the meaning set forth in Section 2.1(d)
.
“ ICC
” means the International Chamber of Commerce.
“ ICC
Rules ” has the meaning set forth in Section 7.1(c) .
“
Improvements ” means all the techniques, enhancements,
modifications, changes, experience, methods, information, data or
knowledge that will be created or acquired in the future relating
to the Technology and/or the manufacturing of such components for
Systems (whether or not patentable, useful or workable) through the
implementation, development, testing and improvement of the
Technology.
“ Initial
Period ” has the meaning set forth in the License
Agreement.
“ Interim
Period ” has the meaning set forth in the License
Agreement.
“
Investment Agreement ” means the Business and
Investment Agreement to be entered into by Covanta and
Renewable.
“ KDV
500 ” means the system of components, including all of
the structural steel, piping, pumps, vessels, control systems,
wiring, two proprietary “mixing turbine pumps” and the
operations, maintenance and start-up manuals provided by AK, to
convert hydrocarbon feedstock, including any Feedstock, into diesel
oil using the Technology which is capable of producing a minimum of
500 liters of diesel oil per hour.
“ License
Agreement ” means the License Agreement entered into by
American and Licensor of even date herewith, a copy of which has
been provided to the Parties by Licensor.
“
Licensor ” means AlphaKat - Global Energy GmbH, a
company organized and existing under the laws of Germany, and
includes its successors and assigns.
“
LLCA ” has the meaning set forth in Section 2.2(g)
.
“ Other
Party ” has the meaning set forth in Section 2.1(a) .
“
Parties ” means Global and Renewable.
“
Party ” means Global or Renewable, as the case may
be.
“
Person ” means any natural person, corporation,
company, partnership, business trust, governmental authority or
other entity.
“
Project ” means a project to convert a feedstock to
diesel using the Technology.
“ Project
Company ” has the meaning set forth in Section 2.2(g)
.
“ Project
Development Costs ” has the meaning set forth in Section
2.2(c) .
“
Purchase Order ” has the meaning set forth in the
License Agreement.
“
Renewable ” means Renewable Diesel, LLC, a limited
liability company organized and existing under the laws of the
State of Delaware, and its successors and permitted assigns.
“
Renewable Percentage ” has the meaning set forth in
Section 2.1(d) .
“ Subject
Project ” has the meaning set forth in Section 2.1(a)
.
“
System ” means any system of components, whether it is
in existence today or developed hereafter, including all of the
structural steel, piping, pumps, vessels, control systems, wiring,
the proprietary “mixing turbine pump(s),” any new
components of any future system of components and all of the
operations, maintenance and start-up manuals provided by AK, to
convert hydrocarbon feedstock, including any Feedstock, into diesel
oil using the Technology, including, for the avoidance of doubt,
the KDV 500.
“
Technology ” has the meaning set forth in the License
Agreement.
“
Territory ” has the meaning set forth in Section
2.1.
“
Trianon ” means Trianon Partners, a corporation
organized and existing under the laws of the State of Nevada, and
its successors and assigns.
Section 1.2 Interpretation . In this
Agreement, unless otherwise indicated or required by the
context:
(a) Reference to
and the definition of any document (including this Agreement) or
any applicable law shall be deemed a reference to such document or
applicable law as it may be amended, supplemented, revised or
modified from time to time;
(b) All references
to an “Article,” “Section” or
“Exhibit” are to an Article or Section hereof or to an
Exhibit attached hereto;
(c) Article and
Section headings and other captions are for the purpose of
reference only and do not limit or affect the meaning of the terms
and provisions hereof;
(d) Defined terms
in the singular include the plural and vice versa, and the
masculine, feminine and neuter gender include all genders;
(e) The words
“hereof,” “herein” and
“hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular provision of this
Agreement; and
(f) The words
“include,” “includes” and
“including” mean include, includes, and including
“without limitation” and “without limitation by
specification.”
ARTICLE 2 – RELATIONSHIP AND RIGHTS OF
THE PARTIES
Section 2.1 Rights of the Parties . Each
Party shall have the right during the Interim Period, the Initial
Period and the Extended Period, directly or through its Affiliates,
to identify and develop Projects in the Territory, subject to the
terms and conditions of this Agreement. As of the Effective Date,
the territory (the “Territory”) shall be the states of
California, New York and Texas. If American meets the two (2)
requirements set forth in the first sentence of Section 2.1(b) of
the License Agreement, the Territory shall be the states of
California, New York, Texas, New Jersey and Florida, it being
agreed that Global shall be entitled to develop Projects for its
own account in Florida and New Jersey prior to the date by which
Renewable must satisfy the requirement set forth in clause (ii) of
the first sentence of Section 2.1(b) of the License Agreement, but
Global shall not give any other Person the right to develop
Projects in such states prior to such date. The Parties further
agree as follows:
(a) The Party that
identifies a Project for development in the Territory shall be
referred to herein as the “Finding Party” and the other
Party shall be referred to herein as the “Other Party.”
The Project identified for development shall be referred to herein
as the “Subject Project.”
(b) If Global is
the Finding Party, it shall be required to notify Renewable about
the Subject Project and Renewable shall have the right to invest up
to twenty-five percent (25%) of the total equity required for the
Subject Project or such higher amount as may be offered by Global
in its sole discretion (but not less than five percent (5%) of the
total required equity), all as further provided for in Section 2.2.
If Renewable elects not to invest any equity in the Subject
Project, then Global shall be free to proceed with the Subject
Project without the further involvement of Renewable. For the
avoidance of any doubt, Covanta shall not have the right to invest
in any Subject Project identified by
Global unless Global or Renewable makes an offer
to allocate a portion of its equity investment rights to Covanta in
their sole discretion.
(c) If Renewable
is the Finding Party, it shall be required to notify Global about
the Subject Project and Global shall have the right to invest up to
fifty-one percent (51%) of the total equity required for the
Subject Project (but not less than ten percent (10%) of the total
required equity) and Covanta shall have the right to invest up to
twenty-four percent (24%) of the total equity required for the
Subject Project (but not less than ten percent (10%) of the total
required equity), all as further provided for in Section 2.2. If
Global elects not to invest any equity in the Subject Project, then
Renewable shall be free to proceed with the Subject Project without
the further involvement of Global.
(d) The equity
percentage to be provided by Global for a Subject Project shall be
referred to herein as the “Global Percentage.” The
equity percentage to be provided by Renewable for a Subject Project
shall be referred to herein as the “Renewable
Percentage.”
(e) Each Subject
Project identified by Renewable shall be developed by Renewable.
Each Subject Project identified by Global in which Renewable agrees
to invest a portion of the required equity shall by developed by
Renewable. Each Subject Project identified by Global in which
Renewable decides not to invest equity shall be developed by Global
unless the Parties agree otherwise at the time.
(f)
Notwithstanding anything that is contained herein to the contrary,
if either Party identifies a Carve-Out Project (as such term is
defined in the Business and Royalty Agreement) for development in
the Territory, Covanta shall be offered the right to invest one
third (1/3) of the total required equity in the Carve-Out Project
and the Parties shall each be entitled to invest one third (1/3) of
the total equity required for the Project.
Section 2.2 Project Investment Rights of
Other Party . Global hereby acknowledges that (i) Renewable has
committed to give Covanta the right to invest twenty-four percent
(24%) of the total equity required in all Subject Projects
identified by Renewable during the Initial Period and the Extended
Period on substantially the same terms as are being offered to
Global hereunder, such commitment and the terms and condition for
making such equity investment to be reflected in the Investment
Agreement, (ii) that Renewable and Covanta will follow
substantially the same procedures as are outlined below and (iii)
Global approves any such investment by Covanta. The following
procedures are agreed to by Global and Renewable:
(a) Equity
Investment Notice . If a Finding Party decides to pursue a
Subject Project, the Finding Party shall provide a written notice
to the Other Party (an “Equity Investment Notice”) to
advise the Other Party that the Finding Party wants to pursue the
development of a Subject Project, such notice to include as much
detail about the Subject Project as is available at the time,
including the name of the Subject Project, the type of waste and
supplier of waste for the Subject Project, any commercial terms
regarding the tipping fees for the Subject Project and potential
off-take arrangements, an estimate of the
cost of developing the Subject Project, the pro
forma for the Subject Project, if available, and any other
information which is available to the Finding Party that might be
relevant to the Other Party in making a decision to invest equity
in the Subject Project. The Other Party shall have forty-five (45)
days from the receipt of the Equity Investment Notice to review the
information about the Subject Project and decide whether the Other
Party wants to invest equity in the Project. During the forty-five
(45) day period, the Finding Party shall use all reasonable
business efforts to respond to any questions that are raised by the
Other Party, and the Parties shall meet to discuss the Subject
Project if either Party requests to do so. The Other Party shall
have the right, in its sole discretion, to invest up to its maximum
percentage of the total required equity for each Subject Project
that is the subject of an Equity Investment Notice as provided for
in Section 2.1, but in no event may the Other Party invest less
than its minimum percentage of the total equity required as
provided for in Section 2.1. If the Other Party elects to invest in
a Subject Project, the Other Party shall provide a written response
to the Finding Party (the “Equity Commitment Response”)
prior to the expiration of the forty-five (45) day period
indicating whether the Finding Party wants to invest equity in the
Project and, if so, the total percentage of the required equity
that it wants to invest. If the Other Party fails to respond in a
timely manner to an Equity Investment Notice, it shall be deemed to
be the delivery of a written notice that the Other Party is not
interested in investing equity in the Subject Project. If the
Equity Commitment Response indicates that the Other Party is not
interested in providing any of the required equity for a Project
(or if the Other Party is deemed to have delivered such a notice),
then the Finding Party shall be free to pursue the Subject Project
without any further obligation to offer the Other Party the right
to invest equity in such Subject Project.
(b) Equity
Commitment Letter . If the Other Party decides it wants to
invest a portion of the required equity for a Subject Project, the
Parties shall cooperate together, in good faith, to enter into an
equity commitment letter (the “Equity Commitment
Letter”) based upon the form of equity commitment letter
attached hereto as Exhibit 2 within thirty (30) days of the receipt
of the Equity Commitment Response, which letter shall set forth (i)
the total anticipated equity investment for the Subject Project,
(ii) a tentative budget for the development of the Subject Project
and a tentative schedule for the funding thereof, (iii) a tentative
schedule for the funding of the equity for the Subject Project
which shall be based on the anticipated terms for the relevant
Purchase Order and the costs and installation schedule for the
balance of the Subject Project, (iv) the percentage of the
development costs and the total required equity to be provided by
each Party and (v) such other terms as the Parties may mutually
agree. Each Party hereby acknowledges that the anticipated
development budget and funding schedule and the anticipated equity
investment and funding schedule will only be estimates and that the
actual development costs and funding schedule and the actual equity
investment and funding schedule shall be what is required for the
Subject Project. If Covanta agrees to invest a portion of the
equity required for a Subject Project, the Parties shall cooperate
with Covanta and include Covanta in the Equity Commitment
Letter.
(c) Project
Development Costs . Once Renewable identifies a Subject Project
and starts pursuing the development of such Subject Project (or
commences the development of a Subject Project identified by
Global), Renewable shall track all of the third party costs and all
of Renewable’s out-of-pocket expenses (the “Project
Development Costs”) incurred in connection with pursuing,
evaluating and developing the Subject Project until the development
of the Subject Project is completed.
(i)
Subject Projects Identified by Renewable . Global and
Renewable shall be responsible to fund the Global Percentage and
the Renewable Percentage, respectively, of the Project Development
Costs incurred for each Subject Project identified by Renewable.
Promptly following the execution of an Equity Commitment Letter for
a Subject Project that is identified by Renewable, Global shall
reimburse Renewable for a portion of the Project Development Costs
that Renewable has incurred through the date of the Equity
Commitment Letter, such amount to be determined by multiplying the
total Project Development Costs incurred through such date by the
Global Percentage. Renewable shall provide a schedule of the
Project Development Costs incurred to date to Global together with
copies of all the third party invoices and any significant
out-of-pocket costs. Thereafter, Global and Renewable (and Covanta
if it has also agreed to participate in the Project) shall fund its
share of the monthly estimate of the Project Development Costs, in
advance, such amount to be reconciled following the end of each
month by Renewable. If either Party (the “Failure to Fund
Party”) fails to fund its full agreed share of the Project
Development Costs on the required schedule and does not cure such
funding default within ten (10) days following the receipt of a
written notice to cure such funding default by the other Party,
then, unless the other Party agrees otherwise in its sole
discretion, the Failure to Fund Party shall forfeit its right to
fund any of the equity for the Subject Project and shall only be
entitled to receive a reimbursement of the Project Development
Costs it has funded through the date of such forfeiture at the time
that the Purchase Order for the Subject Project is issued by the
Project Company formed for such Subject Project.
(ii)
Subject Projects Identified by Global . Global shall be
responsible to fund 100 percent of the Project Development Costs
incurred for each Subject Project identified by Global. Promptly
following the execution of an Equity Commitment Letter for a
Subject Project identified by Global, Global shall reimburse
Renewable for all of the Project Development Costs that Renewable
has incurred through the date of the Equity Commitment Letter.
Renewable shall provide a schedule of the Project Development Costs
incurred to date to Global, together with copies of all of the
third party invoices and any significant out-of-pocket costs.
Thereafter, Global shall fund a monthly estimate of the Project
Development Costs, in advance, such amount to be reconciled
following the end of each month by Renewable. If Global fails to
fund the Project Development Costs on the required schedule and
does not cure such funding default within thirty (30) days after
the receipt of a written notice to cure such funding default by
Renewable, then Renewable shall suspend work on the Project unless
an alternate arrangement is reached by the Parties and Global shall
reimburse Renewable for the work performed to date on the Subject
Project.
d. Development
of Subject Project; Development Fee . All major decisions
regarding the development and financing of the Subject Project
shall be jointly made by Renewable and Global (and Covanta if it
has agreed to participate in the Subject Project), but Renewable
shall have lead responsibility for the development and financing of
the Subject Project. Global recognizes that Renewable will be
incurring the burdened costs for its own personnel that are working
on the development of the Subject Project and that such costs will
not be included as part of the Project Development Costs funded by
the Parties each month. To compensate Renewable for the burdened
costs of its personnel in developing each Subject Project, the
Parties agree that Renewable shall be paid a development fee of One
Hundred Thousand Dollars ($100,000) for each KDV 500 that is
installed as part of the Subject Project (such amount to be
increased if the Subject Project uses a System other than a KDV 500
in proportion to the increased diesel output of the System
installed), but in no event shall the development fee for a Subject
Project exceed the sum of Two Million Dollars ($2,000,000), such
fee to be paid as follows: (i) if the Subject Project is being
financed by a lender, such fee to be paid at the closing of the
financing for the Subject Project from the initial drawing of funds
under the loan (it being agreed that Renewable will agree to defer
up to fifty percent (50%) of such fee, if required by the lender(s)
for the Project, to the completion of the construction of the
Project); and (ii) if the Subject Project is not being financed by
a lender, fifty percent (50%) to be paid at the time the initial
payment is made under the Purchase Order for the Systems that are
ordered for the Project and the balance when the Project has been
accepted from AK.
(e) Equity
Investment in Subject Project . Prior to the execution of a
Purchase Order for the Systems required for a Project, Renewable
shall provide Global with an update of the total expected equity
required for the Project and an updated schedule for the
contribution of the equity. All equity invested in a Project shall
be invested as a capital contribution to the limited liability
company to be established by Renewable and Global for the Project.
If a scheduled equity funding commitment is pending and one of the
Parties (the “Delinquent Party”) determines it will not
be able to fund all or part of its obligation, the Delinquent Party
shall promptly provide written notice to the other Party (which
shall in no event be less than ten (10) days’ prior to
the
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