Exhibit 10.4
LICENSE AGREEMENT
This License
Agreement (this “Agreement”) is made and entered into
as of the 6 th day of February, 2008, by and between
AlphaKat - Global Energy GmbH, a company organized and existing
under the laws of Germany (“Licensor”), and American
Renewable Diesel, LLC, a limited liability company organized and
existing under the laws of the State of Delaware
(“American”).
WHEREAS, AlphaKat
GmbH, a company organized and existing under the laws of Germany
(as further defined below, “AK”), has granted certain
rights to Licensor with respect to a proprietary technology to
convert waste material that contains hydrocarbons into diesel oil
(as further defined below, the “Technology”) in various
countries, including the United States;
WHEREAS, American
is interested in obtaining license rights from Licensor with
respect to the Technology, all on the terms and conditions set
forth herein, to secure or to help secure orders for the sale of
the equipment that utilizes the Technology; and
WHEREAS, Licensor
is willing to grant such license rights to American, all on the
terms and conditions set forth herein;
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) Licensor and AK are Affiliates
and (ii) Licensor and Global are Affiliates, but AK and Global are
not Affiliates.
“
Agreement ” has the meaning set forth in the first
paragraph hereof.
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“ AK
” means AlphaKat GmbH, a company organized and existing under
the laws of Germany, and its successors and permitted assigns.
“
American ” has the meaning set forth in the first
paragraph hereof and includes its successors and permitted
assigns.
“
Commercial Waste ” means all non-hazardous solid waste
that is collected from commercial establishments, including
residential apartment buildings, office buildings, restaurants,
industrial parks, all other business facilities and all recyclable
materials from recycling facilities.
“
Competitor of Licensor ” means a Person, directly or
through Affiliates, engaged primarily in the business of selling
equipment that converts waste or organic feedstock(s) containing
hydrocarbon materials into diesel fuel or any Person that is
involved primarily in the development of such equipment or the
technology on which it is based.
“
Contracted Waste” means all non-hazardous waste,
regardless of the source of such waste, which is under contract to
be delivered to Covanta or any of its Affiliates for disposal in,
or processing by, one of the facilities owned or operated by
Covanta or any of its Affiliates.
“
Covanta ” means Covanta Energy Corporation, a Delaware
corporation.
“ Covanta
License Agreement ” means the License Agreement of even
date herewith entered into between Licensor and Covanta, a copy of
which is attached hereto as Exhibit 1.
“
Customer ” means any Person that is not owned or
controlled by American that wants to purchase a System for its own
account.
“
Default ” has the meaning set forth in Section
10.1.
“
Demonstration Plant ” means the System to be purchased
by Covanta as provided for in the Covanta License Agreement, the
order for which has been procured by American.
“
Dispute ” has the meaning set forth in Section
9.1.
“
Effective Date ” has the meaning set forth in Section
5.1.
“
Extended Period ” means the period that begins on the
date that the Initial Period terminates and ends on the date that
this Agreement terminates.
“
Feedstock ” means Household Waste, Contracted Waste,
Commercial Waste or Radial Biomass, as the case may be.
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“ Full
Right ” means that the Person being granted the right(s)
described herein shall be the only Person that is entitled to
exercise such right(s) so long as this Agreement is in effect and
that no other Person shall be authorized, by the grantor of such
right(s), to exercise such right(s) or be granted such
right(s).
“
Global ” means Global Energy, Inc., a Nevada
corporation.
“
Household Waste ” means all non-hazardous,
post-recycled municipal solid waste which is collected from
residences, which waste is of the type normally accepted for
processing at waste to energy facilities in the United States.
“ ICC
” means the International Chamber of Commerce.
“ ICC
Rules ” has the meaning set forth in Section 9.1.
“
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 ” means the period which begins on the date that
the Interim Period ends and terminates on the second (2
nd ) anniversary thereof.
“
Intellectual Property ” means any intellectual
property and/or proprietary information and materials relating to
the Technology along with all rights therein, whether existing
before or conceived or developed after the Effective Date (except
as otherwise expressly provided), including: (i) patents, patent
applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice), including the
Patents; (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos, slogans and Internet domain names, together
with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) trade secrets,
confidential information and know-how (including ideas, formulae,
compositions, manufacturing and production processes and
techniques, research and development information, test data and
results, drawings, specifications, designs, supplier lists and
related information); and (vi) registrations, applications,
divisionals, continuations, continuations-in-part, foreign
counterparts and renewals for any of the foregoing.
“ Interim
Period ” means the period which begins on the Effective
Date and ends twelve (12) months following the date that the
Demonstration Plant has been successfully commissioned and is ready
for commercial operation; provided , however , that
if the Demonstration Plant passes the performance test that is
agreed to by AK and Covanta (all as further provided for in Section
2.2(c) of the Covanta License Agreement) more than thirty (30) days
prior to the scheduled end of the Interim Period, the Interim
Period shall terminate thirty (30) days following the date that the
Demonstration Plant has passed
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such performance test, Licensor to provide a
notice to such effect to American in writing; provided
further , however , that the Interim Period shall in no
event be longer than two (2) years.
“ 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.
“
Licensor ” has the meaning set forth in the first
paragraph hereof and includes its successors and permitted
assigns.
“
Parties ” means Licensor and American.
“
Party ” means Licensor or American, as the case may
be.
“
Patents ” means any existing or future patent
applications, patents, registrations, utility models and utility
model applications relating to the Technology which are necessary
or useful to manufacture or to sell, offer for sale, use or
otherwise make available Systems or the components of Systems,
including those set forth in Exhibit 2 attached hereto.
“
Person ” means any natural person, corporation,
company, partnership, business trust, governmental authority or
other entity.
“
Purchase Order ” has the meaning set forth in Section
2.5.
“
Purchaser ” has the meaning set forth in Section
2.5.
“
Qualified Right ” means that the Person being granted
the right(s) described herein shall be entitled to exercise such
right(s) so long as this Agreement is in effect, but the grantor of
such right(s) shall be entitled to grant such right(s) or allow
such right(s) to be exercised by all other Persons except a Person
that is precluded from exercising such right(s) under the express
terms hereof.
“ Radial
Biomass ” means biomass, including wood, wood waste and
other types of cellulosic materials which are collected within or
from an area within a 100 mile radius of any biomass facility owned
by Covanta or an Affiliate of Covanta in the states of California
or New York as of the Effective Date.
“ Rights
Agreements ” means (i) the “Terms of
Agreement” dated May 2, 2007, (ii) the
“Shareholders’ Agreement” dated July 10, 2007 and
(iii) the Articles of Association of Licensor dated November 14,
2007 and November 22, 2007, a copy of each of which is attached
hereto in Exhibit 2.
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“
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 ” means the proprietary, renewable diesel
technology developed by Dr. Christian Koch (as well as any related
technology licensed to Dr. Christian Koch or to AK) to convert
municipal solid waste, organic materials, sludge and other
hydrocarbon materials, including Feedstock, to diesel oil,
including all Improvements to such technology made or acquired from
time to time, including Intellectual Property, Systems, the
formulation of catalysts used in Systems and all related materials
and information.
“
Territory ” has the meaning set forth in Section
2.1.
“ Third
Party Purchaser ” has the meaning set forth in Section
2.5.
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.”
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ARTICLE 2 – LICENSE RIGHTS
Section 2.1 Grant of License Rights .
Subject to the terms of this Agreement, Licensor hereby grants
American the Full Right in the Territory to market and sell Systems
and utilize the Technology. As of the Effective Date, the territory
(the “Territory”) shall be the states of California,
New York and Texas, it being agreed that Licensor shall not grant
any Person the right to sell Systems in New Jersey or Florida
before the date by which American must satisfy the requirement set
forth in clause (ii) of the first sentence of Section 2.1(b) . For
the avoidance of doubt, American shall be entitled to exercise any
or all of the license rights that are granted to it in the
Technology itself or through any of its Affiliates, but American
shall not have the right to issue sublicenses to any Person other
than an Affiliate. The Parties further agree as follows:
(a)
Notwithstanding anything that is contained herein to the contrary,
American shall be credited for the sale of all of the Systems sold
to Covanta during the term of this Agreement regardless of whether
such Systems are for use inside or outside the Territory.
(b) American shall
be required to secure or to help Licensor or Global to secure (i)
an order for one KDV 500 prior to the end of the Interim Period (it
being agreed that the Purchase Order being placed by Covanta for
the Demonstration Plant satisfies this requirement) and (ii) orders
for an additional two KDV 500s prior to the end of the Initial
Period. If American fails to secure or help Licensor or Global to
secure orders for a total of three KDV 500s prior to the end of the
Initial Period, Licensor shall have the right, in its sole and
absolute discretion, to notify American that it must give up its
Full Rights for one (1) of the states in the Territory (such state
to be selected by American). If American meets the two (2)
requirements set forth in this Section 2.1(b), the Territory
thereafter shall be the states of California, New York, Texas, New
Jersey and Florida. The phrases “secure orders” as used
herein mean that a Person has executed a Purchase Order for one or
more KDV 500s and made the initial deposit thereunder.
(c) Licensor
acknowledges and agrees that the ability of American to meet the
requirements set forth in this Section 2.1 will depend, in part, on
the initial three KDV 500s installed in the United States
(including the Demonstration Plant) demonstrating the technical and
financial viability of the Technology. Notwithstanding anything
contained herein to the contrary, (i) if there is any delay in the
installation of any of the initial three (3) KDV 500s in the United
States, including the Demonstration Plant (with such KDV 500s
meeting all performance guarantees), beyond the date committed by
AK in the applicable Purchase Order or (ii) if any such KDV 500s
experience operating or financial problems due to a failure of the
KDV 500 to operate in accordance with its performance guarantees,
then all of the time periods set forth in this Section 2.1 shall be
extended automatically for the full period of all such delays for
all purposes hereof.
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(d) During the
Extended Period, American shall be required to secure orders for:
(i) two (2) KDV 500s per year for each of the first two (2) full
calendar years of the Extended Period; (ii) five (5) KDV 500s per
year for each of the next two (2) calendar years of the Extended
Period; and (iii) ten (10) KDV 500s per year for each calendar year
thereafter, each such determination to be made on a cumulative
basis (such that American shall be entitled to credit additional
KDV 500s sold in one year above the minimum requirement for that
year to a later year). If American fails to meet any such targets
in any calendar year during the Extended Period, Licensor shall
have the right, in its sole discretion, to notify American that it
shall only have a Qualified Right in all of the states in the
Territory to market and sell Systems and utilize the Technology for
the remainder of the term of this Agreement. Licensor agrees that
all Systems sold by Licensor outside the Territory that are
pursuant to a referral made by American shall count towards
American’s minimum purchase requirements hereunder. However,
none of the Systems purchased by Covanta or an Affiliate of Covanta
for its own account during the Extended Period shall count towards
meeting American’s minimum purchase requirements unless the
sale of Systems is to a project developed by American or an
Affiliate of American in which Covanta is an investor.
(e) For purpose of
meeting any of the minimum order thresholds for KDV 500s which are
set forth in this Section 2.1, if a System is developed by AK (such
as the “KDV 2000” which is currently under development
by AK) that is capable of producing a higher amount of diesel oil
per hour than a KDV 500 (expected to be 2,000 liters per hour in
the case of a “KDV 2000” as compared to 500 liters per
hour for a KDV 500), then such System will count as more than one
KDV 500 based on the amount of diesel oil per hour capable of being
provided (expected to be four KDV 500s in the case of a “KDV
2000”).
(f)
Notwithstanding anything contained herein to the contrary, American
shall not lose its Full Rights in any state in the Territory if it
fails to meet the cumulative order requirements in Section 2.1(b)
or (d) if (i) AK is not able to produce enough Systems to meet the
Purchase Orders secured by American, Licensor and Global or (ii)
any problems experienced with the Technology in the Systems
installed by AK make it commercially unreasonable for American to
secure orders for any additional Systems until such problems have
been resolved, in which case the Parties shall agree to an
equitable adjustment, in good faith, to the cumulative requirements
provisions of Sections 2.1(b) and (d) or extend the date for such
requirements to be performed.
(g) If American
fails to meet its performance obligations under this Section 2.1
and Licensor elects to require American to give up its Full Rights
in one or more of the states in the Territory as further provided
for herein, American’s sole penalty will be for its rights in
such state(s) to become a Qualified Right to market and sell the
Technology for the remainder of the term of this Agreement.
Section 2.2 Obligation to Make Referrals
. If any Person contacts Licensor or any of its Affiliates
regarding the purchase of one or more Systems for installation in
the Territory, Licensor shall refer such Person to American.
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Section 2.3 Sales to Covanta Energy . The
sale of all Systems to Covanta or to any of its Affiliates,
including the Demonstration Plant, shall be pursuant to Purchase
Orders placed with AK through Licensor, and American shall derive a
license fee on all such sales. Licensor shall mark up the cost of
all of the Systems that are sold to Covanta or any of its
Affiliates (other than the System for the Demonstration Plant) by
[*****] percent [*****] and pay [*****] percent [*****] of such
amount to American as its commission. Such commissions shall be
paid to American as the payments that are due from Covanta or its
Affiliates are received under the applicable Purchase Order.
Section 2.4 Commission on Sales to Other
Customers . American shall be entitled to a commission of
[*****] percent [*****] on all Systems that are sold in the
Territory. If American identifies a Customer that is interested in
purchasing one or more Systems in an area that is outside the
Territory, American shall refer such Customer to Licensor and, if
such sale is completed (the decision to complete such sale to be
made by Licensor in its sole discretion), American shall be
entitled to a commission of [*****] percent [*****] on such sale.
Licensor shall mark up the cost of all of the Systems on which
American is entitled to a commission by [*****] percent [*****] and
pay [*****] percent [*****] of such amount to American as its
commission. Commissions shall be paid to American as the payments
that are due under the applicable Purchase Orders are received. For
the avoidance of doubt, in connection with Customers that are
identified by American outside of the Territory, Licensor shall be
obligated to pay the commission to American if the System is sold
within two (2) years after the Customer is identified to Licensor
by American.
Section 2.5 Purchase Orders . All
purchase orders for System(s) (“Purchase Orders”) shall
be entered into by and between AK (or its designee) and the
ultimate purchaser of such System(s) (the “Purchaser”),
although all Purchase Orders shall be placed through Licensor and
provide for the payment of a sales commission to Licensor (except
for the Systems sold for the Demonstration Plant). Each Purchase
Order shall include a set of representations and warranties made by
AK to the Purchaser which are consistent with those provided by
Licensor to American in Article 8 and a non-exclusive, irrevocable
and perpetual license (a “Use License”) for the
Purchaser to (i) use, practice, operate
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