DEVELOPMENTAL
AGREEMENT
THIS DEVELOPMENTAL
AGREEMENT is made and entered into as of this 30
th day of July, 2007, by
and between FUEL FRONTIERS, INC. , a
Subsidiary Nuclear Solutions, Inc. (“FFI”) with a
place of business at 1025 Connecticut Avenue NW, Suite 1000,
Washington, DC 20036 and KENTUCKY FUEL ASSOCIATES
INC. (“KFA”),
with a place of business at 13050 Middletown Industrial
Boulevard, Suite C, Louisville, Kentucky 40223 (together
known as the “Parties”).
WHEREAS, FFI is in the
business of researching, developing and implementing
technologies for the conversion of gas to liquid fuels and
proposes to construct production facilities for the
production of synthetic fuels;
WHEREAS, KFA possesses
certain contacts and knowledge that may be beneficial to FFI
for the development of a coal to gas to liquid (CTL) fuels
production facility in the State of Kentucky,
WHEREAS, the parties are
desirous of combining their respective skills and expertise
and desire to enter this Agreement for the development of gas
to liquid fuel production facilities in the State of Kentucky
and throughout the United States,
NOW, THEREFORE, in
consideration of the mutual agreements contained herein, the
parties desire to enter into this Developmental Agreement as
follows:
1. Covenants of KFA . KFA hereby
agrees as follows:
A.
KFA shall utilize their knowledge, experience and
contacts to locate and obtain one or more sites, located in
the State of Kentucky and throughout the United States,
within FFI’s specifications, suitable for the
development of CTL fuel production facilities with annual
production volumes to be determined. The duties of KFA shall
include identifying and negotiating the acquisition of
suitable land, feedstock and offtake agreements and other
necessary instruments to reasonably develop CTL production
facilities.
B
. KFA shall utilize their knowledge, experience and
contacts to consult with and assist FFI in obtaining
permitting, funding, and approval for the development and
operation of CTL fuel production facilities. Notwithstanding
anything herein to the contrary, KFA will not, in any event,
be deemed as obligated or required to provide any form of
guarantee or bond which may be required to obtain or secure
the referenced permitting, funding, approval, or operation of
the production facility.
C.
KFA hereby agrees to work exclusively with FFI in
locating, developing, and consulting on coal, gas, and waste
to liquid fuel/alternative fuel projects and/or ventures; and
further agrees to otherwise refrain from engaging in any
activities or actions that either directly or indirectly
competes with the CTL businesses of
FFI.
D.
KFA shall provide FFI with an initial funding of two
million dollars ($2,000,000.00) which said payment shall be
tendered within 21 days of the execution of this Agreement.
If said funding is not completed within the allotted time,
KFA will provide evidence that complete funding is reasonably
expected and will indicate the date whereupon funding shall
be completed. Said funds shall be applied by FFI towards any
and all costs and expenses incurred in the ordinary course of
business for the development, construction and arranging of
financing to closure of the first KFA/FFI production facility
developed, including without limitation the following costs:
engineering, procurement, administrative, development
management, financing, legal, operations and maintenance
costs for each said fuel production facility. For each site
located thereafter by KFA and accepted by FFI for development
of a fuel production facility, KFA shall provide, FFI with
initial minimum project funding of two million dollars
($2,000,000.00) for any and all costs and expenses incurred
in the ordinary course of business for the development,
construction and arranging of financing to closure of the
production facility, including without limitation the
following costs: engineering, procurement, administrative,
development management, financing, legal, operations and
maintenance costs for each said fuel production
facility.
E.
In consideration for FFI granting KFA the exclusive
right to locate and develop CTL fuel production facilities
within the State of Kentucky, KFA hereby agrees to utilize
their knowledge and experience in the development of energy
production projects to consult with FFI on existing fuel
production facility projects.
2. Covenants of FFI. FFI hereby
agrees as follows:
A. FFI hereby grants KFA the exclusive right to
locate and develop CTL fuel production projects within the State of
Kentucky; and grants KFA the non-exclusive right to locate and
develop CTL fuel production projects throughout the remaining
states. KFA will also receive the right of first refusal to match
any third party’s proposed terms for any CTL facility in the
remaining states, subject to FFI approval, in conjunction with a
review of KFA resources and performance.
B. FFI hereby grants KFA the right to negotiate a
feedstock and land acquisition agreement as part of an overall site
development package in coordination with and subject to the review
and approval of FFI.
C. In consideration for each site located by
KFA pursuant to the terms of this Agreement, and accepted by FFI
for development, FFI agrees to pay KFA (7%) of the net pre-tax
income of each CTL fuel production facility identified by KFA and
developed by FFI for the entire lifetime of each production
facility, to be distributed on a quarterly basis, within 15 days of
FFI and/or its parent company Nuclear Solutions, Inc.’s
quarterly SEC filing. The computation of the quarterly net income
shall be in accordance with GAAP accounting standards. FFI would
have the right to retain up to 20% of the quarterly net pre-tax
income for extraordinary expenses; of each production facility; and
distributions to KFA would be reduced on a
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