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MASTER DEVELOPMENT AGREEMENT
THIS MASTER DEVELOPMENT AGREEMENT (this “
Agreement ”) is entered into by and between
GEOTEC, INC., a Florida corporation (“
Geotec ”), GREEN ENERGY MANAGEMENT, LLC, a
Florida limited liability company (“ GEM
”) and TTI TECHNOLOGIES, INC., a Delaware corporation
(“ TTI ”) and is effective as of the
last date of execution set forth below. Geotec, GEM and
TTI are sometimes referred to herein individually as a “
Party ” and collectively as the “
Parties ”.
W I T N E
S S E T H :
WHEREAS, Geotec is engaged in the business of
the development and exploitation of proprietary enzyme/protein
technology (the “ Technology ”) used
in the production of enzyme materials (the “
Enzyme/Protein ”);
WHEREAS, GEM is the manager for Ecotec Coal, LLC
and other limited liability companies involved in the processing
of hydrocarbons utilizing the Technology;
WHEREAS, it is intended that, among other
applications, the Technology will utilize bio-refinery units
(each, a “ Facility ”) for the
production of saleable coal or the recovery of any other
substance that creates Revenue or otherwise generates cash, or
cash equivalents from the sale or assignment (the “
Product ”) from gob, culm, lignite, or other
lower grade or dirty coals or carbon fly ash and for the
remediation of soils (the “ Process
”);
WHEREAS, Geotec and GEM have completed
preliminary applications of the Technology to produce Product
and desire to engage TTI to advise and assist Geotec and GEM in
the further development of the Process and in the procurement
and construction of the initial equipment for the commercial
scale Facility (the “ Development Services
”);
WHEREAS, Geotec anticipates further development
of the Process by commercial producers of Product, whether by
Geotec, GEM or GEM controlled limited liability companies, or
through joint venture or a sale or supply arrangement, or
otherwise, with other Persons, as defined herein, or otherwise
(each such user, a “ Project Company
”);
WHEREAS, Geotec and GEM desire to offer to TTI
or one of its Affiliates, as defined herein, the right of first
refusal to render certain management, administrative,
operational and support services to any Project Company
utilizing the Process for the recovery of Product;
NOW, THEREFORE, in consideration of the mutual
agreements contained herein the Parties hereby agree as
follows:
1.
DEFINITIONS .
a.
As used herein, the terms “
Agreement ”, “ Development
Services ”, “ Facility
”, “ GEM ”, “
Geotec ”, “ Parties
”, “ Party ”, “
Process ”, “ Product
”, “ Project Company ”, “
TTI ” and “ Technology
” shall have the meanings ascribed to such terms above,
and the following terms shall have the following meanings:
“ Affiliate ” means
with respect to a particular Person, any other Person that
directly or indirectly controls, is controlled by, or is under
common control with, such Person.
“ Base Stock ” means
the protein/enzyme proliferation materials utilized to produce
the enzymes for a TTI Project.
“ Business Day ” means
a day on which commercial banks are open for normal business in
New York.
“ Carried Interest ”
in a TTI Project means an interest equivalent to a like
percentage of the Net Revenues attributable to TTI and its
Affiliates but without being subject to expenses of any Person
above the Project Company level (other than the cost of goods
sold, sales taxes and transportation costs), and in any other
Project means an interest equivalent to a like percentage of the
Net Revenues attributable to Geotec and its Affiliates and GEM,
but without being subject to expenses of any Person above the
Project Company level (other than the cost of goods sold, sales
taxes and transportation costs).
“ Claims ” has the
meaning specified in Section 8a hereof.
“ Code ” means the
Internal Revenue Code of 1986, as amended, or any successor law,
and regulations issued by the IRS pursuant to the Code, or any
successor law.
“ Commercially Reasonable
Efforts ” means the taking by a Person of such
action as would be in accordance with reasonable commercial
practices as applied to the particular matter in question to
achieve the result as expeditiously as practicable; provided,
however, that such action shall not require that such Person
incur unreasonable expense. The considerations would take
into account the experience and resources readily available to
the Person, the potential benefits to be derived by the Person
from successful completion of the endeavor in comparison to the
costs to be incurred, the likelihood of successful completion of
the endeavor (including the relative competitiveness of
alternatives available in the marketplace) and other factors
which would be deemed relevant by a reasonable Person in similar
commercial circumstances.
“ Confidential
Information ” has the meaning specified in
Section 9 hereof.
“ Control ” (including, with correlative
meanings, the terms, “controlled by” and “under
common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
“ Development Fee ”
has the meaning specified in Section 2a hereof.
“ Development Services
” has the meaning specified in the 3 rd Whereas
clause hereof.
“ Dispute ” has the
meaning specified in Section 10 hereof.
“ Expenses ” means,
for any period, all accounts payable and liabilities accrued as
of the end of such period and all disbursements of cash by or on
behalf of a Project Company during such period, in respect to
the costs and expenses incurred during such period in managing,
permitting, insuring, siting, owning, operating, enhancing,
maintaining and repairing a Facility, including without
limitation the fees and disbursements paid by or on behalf of
the Project Company under the Project Contracts, the general and
administrative expenses of the Project Company, including
franchise or similar taxes payable to any Governmental Body and
fees for qualifying as a foreign entity in any other
jurisdiction, and costs of Quarterly and Year-end reviews and
audits of the operations of the Facility and the financial
statements of the Project Company and the preparation of income
tax returns of same, all as computed and determined in
accordance with GAAP. Expenses for a period shall not
include (a) payments of or in respect to
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the purchase price for Project assets, (b) any
uninsured damages, costs or expenses arising from a breach by
the Project Company of any of the Project Contracts, unless such
a breach is caused by the wrongful acts or omissions of
Operator, (c) principal and interest as they become due and
payable on indebtedness of the Project Company that has been
incurred for purposes other than the installation, operation,
maintenance or repair of the Facility or the ownership of other
Project assets, and (d) any costs or expenses incurred which are
expressly excluded from this category by the Operating
Agreement.
“ Feedstock ” means
gob, culm, lignite, or other lower grade or dirty coals, or high
carbon fly ash, any other substance recovered from a Site that
creates Revenue or otherwise generates cash, or cash equivalents
from sale or assignment and is processed by the Facility in
order to make Product.
“ Feedstock Supply Agreement
” means any agreements or arrangements for the supply of
Feedstock to a Facility.
“ Fuel Sales Agreement
” means any agreements or arrangements for the sale of
Product produced at a Facility during the Term.
“ GAAP ” means
generally accepted accounting principles.
“ Governmental Body ”
means any of the following: (a) nation, state, county, city,
town, village, district, or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government; (c) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch,
department, official, or entity and any court or other
tribunal); (d) multi-national organization or body; or (e) body
exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
“ IRS ” means the
Internal Revenue Service or its successor.
“ Legal Requirement ”
means any applicable administrative (or quasi-administrative)
order, constitution, law, ordinance, principle of common law,
regulation, statute or treaty of any Governmental Body.
“ Monetizer ” means a
Person other than TTI or its Affiliates who purchases a Facility
or an interest in the entity owning or operating a Facility with
the agreement that Section 45 Tax Credits arising from the TTI
Production will be allocated to such Person.
“ Month ” means a
calendar month and “ Monthly ” means
each calendar month.
“ Net Revenues ”
means, in respect to a Project, Revenues less Project Operating
Expenses of the Project.
“ Ongoing Services ”
has the meaning specified in Section 2b hereof.
“ Operating Agreement
” means, as to each Project where TTI exercises its Right
of First Refusal, the standard form operating and management
agreement as set forth on Exhibit “A”
attached hereto, to be entered into between each Project Company
and the Operator for management and operating services for the
Project, and any amendments thereto and any successor or
replacement agreements thereof.
“ Operating Fee ” has
the meaning specified in Section 2e hereof.
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“ Operator ” means, as
to each Project, TTI, or such subsidiary of TTI as designated by
TTI, as the Operator under an Operating Agreement.
“ Payment Date ” means
the 20 th day of the following Month; provided that
if such day is not a Business Day, then the next Business Day
occurring after such 20 th day.
“ Person ” means a natural person,
partnership (whether general or limited and whether domestic or
foreign), limited liability company, trust, estate, association,
corporation, custodian, nominee or any other individual or entity
in its own or any representative capacity.
“ Production Fee ” has
the meaning specified in Section 2e hereof.
“ Project ” means the
business of operation of one or more Facilities by a Project
Company for the production of up to 20 million tons of Product
utilizing the Process.
“ Project Contracts ”
means any Fuel Sales Agreement, any Feedstock Supply Agreement,
any Services Agreement and any Site Lease for a Project.
“ Project Operating Expenses
” means, in respect to a Project, all Expenses incurred in
the operation of the Project, including without limitation any
Operating Fees or Technology Purchase Price incident to the
operation of the Project but excluding Production Fees or
Technology Fees.
“ Purchase Price ” has
the meaning specified in Section 3 hereof.
“ Quarterly ” means
each calendar quarter.
“ Refined Coal ” means
solid synthetic fuel produced by utilization of the Process.
“ Revenues ” means,
for any period, all cash received by or on behalf of a Project
Company or its Affiliates due to operation of the Project or the
sale of Refined Coal and any associated Product during such
period, plus any increases and less any decreases in the
aggregate balance of accounts receivable as of the end of such
period, in respect to the operation of the Project or the sale
of Refined Coal and any associated Product from the Facility
during such period, including without limitation sale proceeds
for Product, whether received by or due to the Project Company
or affiliated marketing agents or principals, and capital
contributions due to the Project Company or affiliated
principals incident to the generation of Section 45 Tax Credits
(excluding benefits to Monetizers) or emissions credits.
“ Right of First Refusal
” has the meaning specified in Section 2c
hereof.
“ Section 45 Tax Credits
” means the tax credits provided by Section 45 of the Code
for solid synthetic fuel produced from Feedstock and
constituting Refined Coal.
“ Services Agreement ”
means any agreement or arrangement, other than an Operating
Agreement or this Agreement, for the provision of services with
relation to operations of a Facility, and any amendments thereto
and any successor or replacement agreements thereof.
“ Site ” means the
premises owned, leased or licensed by a Project Company for the
location and operation of one or more Projects.
“ Site Lease ” means
any lease or license for a Site.
“ Supply Agreement ”
means, as to each TTI Project, the standard form agreement as
set forth on Exhibit “B” attached hereto, to
be entered into between TTI or one of its Affiliates
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and Geotec for the supply by Geotec of its
proprietary Base Stock or enzyme/protein materials constituting
the Technology to such TTI Project.
“ Technology Fee ” has
the meaning specified in Section 3 hereof.
“ Term ” has the
meaning specified in Section 4a hereof.
“ TTI Project ” has
the meaning specified in Section 3 hereof.
“ Year ” means a
calendar year.
b.
References; Gender; Number; Certain
Phrases . All references in this Agreement to a
“Section”, “Exhibit” or
“Schedule” are to a Section, Exhibit or Schedule of
this Agreement, unless the context requires otherwise.
Unless the context requires otherwise, the words
“this Agreement”, “hereof”,
“hereunder”, “herein”,
“hereby”, “thereof”,
“thereunder” or words of similar import refer to
this Agreement as a whole and not to a particular Section,
subsection, clause, or other subdivision hereof. Whenever
the context requires, the words used herein include the
masculine, feminine, and neuter gender, and the singular and the
plural. The words “include” and
“including” shall mean “include, without
limitation,” and “including, without
limitation,” respectively. The word “or”
is not exclusive.
2.
NATURE OF SERVICES .
a.
Development Services . For 12
Months following the date hereof, and for any extended period
agreed to hereafter in writing by the Parties, TTI will use its
Commercially Reasonable Efforts to advise and assist Geotec in
the procurement and construction of the initial equipment for
the first operable commercial scale Facility at the cost of
Geotec and/or one or more other Project Companies. These
Development Services will be provided at no cost to Geotec and
GEM or the other Project Companies. Although TTI will
assist Geotec and GEM in the selection, placement, development
and operating procedures of the Facility equipment, Geotec
and/or GEM or such other Project Company will make the final
decision regarding the equipment and TTI will not have any
liability for the functioning of the equipment nor for the
efficacy of the Process utilizing the equipment selected.
Thereafter, for each Project utilizing the Process where
TTI exercises its Right of First Refusal, the Operator will
provide the Ongoing Services pursuant to an Operating Agreement.
If a Project Company fails or elects not to properly
tender an Operating Agreement to TTI providing for the
Production Fee for a given Project, excluding TTI Projects,
Geotec and GEM will grant to TTI a development fee in an amount
equal to a 20% Carried Interest in the Net Revenues of each such
Project (the “ Development Fee ”);
provided that in no event will such Development Fee be an amount
less than 10% of all Net Revenues of the Project. The
Development Fee will be documented and payable Quarterly on the
basis and in the manner provided in Exhibit A. For
purposes of clarity, if the Operator under the Operating
Agreement for a Project receives a Production Fee for any given
production, TTI shall not also be entitled to a Development Fee
in respect to that production.
b.
Ongoing Services . TTI agrees that
at all times during the Term TTI will provide consulting
services to Project Companies under this Agreement in respect to
the structure, design, layout and operation of the Facilities
and Projects, as well as advice regarding the documentation of
the various relationships among the Project Companies and the
other Project participants (the “ Ongoing
Services ”). TTI will provide the Ongoing
Services to the Project Companies at no additional cost except
for the Monthly reimbursement by the appropriate
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Project Company of reasonable travel expenses
for TTI personnel assigned to prov
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