Exhibit 10.1
M
ARKETING
AND
L
ICENSE
A
GREEMENT
T HIS IS A M ARKETING AND L ICENSE A GREEMENT (“Agreement”), entered into this
20 th day of October, 2005 (the
“Effective Date”), by and among X
ETHANOL
C
ORPORATION
(“Xethanol”), a
Delaware corporation with a place of business at 1185 Avenue of the
Americas, 20th Floor, New York, NY 10036, and DDS T
ECHNOLOGIES
USA, I
NC
.
(“DDS”), a
Nevada corporation with a place of business at 150 East Palmetto
Park Road, Suite 510, Boca Raton, FL 33432.
R ECITALS
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A.
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DDS is the
owner of certain rights with respect to dry disaggregation
technology products;
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B.
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Xethanol wishes
to assist DDS in the marketing of such products and also to obtain
a license with respect to such DDS technology for purposes of
processing and extraction of materials from agricultural
commodities, including but not limited to, corn and cellulosic
biomass, in all cases within the United States of
America;
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C.
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DDS wishes to
obtain such assistance and also to grant such a license on the
terms and conditions set forth below; and
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D.
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Xethanol and
DDS have been engaged in a dispute regarding the existence and
details of a certain joint venture agreement between them, and have
entered into this Agreement as part of the overall and final
settlement of such dispute.
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N OW T HEREFORE , for
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as
follows:
A GREEMENT
1. D EFINITIONS . Capitalized terms used in this Agreement shall
have the following meanings:
“AAA” shall have the meaning assigned to it in
Subsection 12.3 (“Arbitration”).
“Authorized Purpose”
shall mean the operation of Machines
solely to produce Ethanol Feed Stock and Byproducts from
agricultural commodities, including but not limited to, corn and
cellulosic biomass, in the Authorized Territory.
“Authorized
Territory” shall mean the United States of America and its
possessions.
“Byproducts”
shall mean any substance produced
directly or indirectly by use of the Machines which is not Ethanol
Feed Stock, and shall include without limitation cattle feed,
fibrous materials and Xylitol.
“Claims” shall have the meaning assigned to it in
S ECTION
10 (“I
NDEMNITY
”).
“Confidential
Information” shall have the meaning assigned to it in
S ECTION
7 (“C
ONFIDENTIAL
I NFORMATION ”).
“Contract Year”
shall have the meaning assigned to
it in Subsection 5.1(C) (“Minimum
Royalties”).
“Customer Agreement”
shall have the meaning assigned to
it in Subsection 2.4 (“Sales”).
“Customers”
shall mean third parties to whom
Machines shall be Sold for use by such Customers in their own
businesses and not for further distribution, but shall not include
the Excluded Customers.
“Disclosing Party”
shall have the meaning assigned to
it in S ECTION 7 (“C ONFIDENTIAL I NFORMATION ”).
“Effective
Date” shall
have the meaning assigned to it in the first paragraph of this
Agreement.
“Ethanol”
shall mean any ethyl or other
alcohol produced directly or indirectly from Ethanol Feed
Stock.
“Ethanol Feed Stock”
shall mean any substance produced
directly or indirectly by use of the Machines which is suitable for
further processing into Ethanol.
“Excluded
Customers” shall mean Archer Daniels Midland Company and
Treasure Valley Renewable Resources, LLC.
“Fee” shall have the meaning assigned to it in
Subsection 3.3 (“Fee Calculation”).
“Indemnified Party”
shall have the meaning assigned to
it in S ECTION 10 (“I NDEMNITY ”).
“Indemnifying Party”
shall have the meaning assigned to
it in S ECTION 10 (“I NDEMNITY ”).
“Leads” shall have the meaning assigned to it in
Subsection 2.1 (“Leads”).
“Machines”
shall mean DDS machines which are
Sold to Customers to be used solely for the Authorized
Purpose.
“Patents”
shall mean patents, utility models
and applications therefor, including any and all divisionals,
continuations, re-examinations, renewals, provisionals,
continuations-in-part, or re-issues owned by DDS (including without
limitation U.S. Pat. No. 6,848,582), and which are in
existence as of the Effective Date, or which come into existence at
any time thereafter and embody any Trade Secrets.
“Plant” shall mean a factory, plant or other industrial
facility which is substantially owned, operated or controlled,
directly or indirectly, by Xethanol or its affiliates, and at which
any Machines are located.
“Purchase Agreement”
shall have the meaning assigned to
it in Subsection 5.1 (“Purchase of Machines and
Royalties”).
“Receiving Party”
shall have the meaning assigned to
it in S ECTION 7 (“C ONFIDENTIAL I NFORMATION ”).
“Required Volume”
shall mean the sum number of all
Machines: (a) Sold by DDS pursuant to S
ECTION 2 (“S ALES ”); and also (b) purchased and paid for
by Xethanol pursuant to Subsection 2.3 (“Marketing and
Demo Machine”) and Subsection 5.1 (“Purchase of
Machines and Royalties”).
“Sale”, “Sales”,
“Sell”, “Sells”,
“Selling” or “Sold ” shall mean,
with respect to the Machines any sale, lease, license, transfer,
distribution or rental thereof by DDS to any Customer, but in all
cases solely for use by such Customer for the Authorized
Purpose.
“Term” shall have the meaning assigned to it in
S ECTION
6 (“T ERM AND T ERMINATION ”).
“Trade Secrets”
shall mean all ideas, concepts,
know-how, formulas, techniques, procedures, and other non-public
information of DDS regarding the use or operation of Machines
existing on or before the Effective Date, including without
limitation materials described as such in E
XHIBIT A (“T RADE S ECRETS ”).
2. S ALES .
2.1 Leads.
During the Term, Xethanol agrees to
use its diligent efforts to locate and identify to DDS potential
Customers who in Xethanol’s reasonable judgment would be
likely to wish to purchase Machines from DDS (collectively,
“Leads”). Xethanol shall provide all information
reasonably requested by DDS to identify such Leads, including the
correct “contact person” at each such Lead.
2.2 Exclusivity and Loss of
Exclusivity. The parties
agree that DDS shall not appoint any other party to perform
Lead-seeking services similar to those provided by Xethanol
hereunder during the Term; provided, however, that in the event
that the Required Volume is less than that described in
E XHIBIT
D (“R
EQUIRED V OLUME ”) then in such case DDS shall have the
right to appoint any and all such third parties, without notice to
or permission from Xethanol.
2.3 Marketing and Demo
Machine. Xethanol shall
cooperate reasonably with DDS to assist DDS in marketing Machines
to Leads as DDS may request. The parties understand and agree that
DDS shall have no obligation to market Machines to any particular
Lead, but shall consider in good faith all Leads provided to DDS as
described in Subsection 2.1 (“Leads”). Xethanol
agrees that upon the Effective Date it shall purchase one
(1) Machine according to the terms described in the Purchase
Agreement. Xethanol shall use such Machine for its own internal
business purposes at Xethanol’s Ethanol Feed Stock and
Byproduct production location in Blairstown, IA, and shall also use
such Machine to assist DDS in marketing Machines as hereinabove
described as “demo” Machine. Such “demo”
Machine, and any additional Machines purchased by Xethanol pursuant
to Subsection 5.1 (“Purchase of Machines and
Royalties”), shall be subject to the provisions of
Subsection 5.5 (“Licenses”).
2.4 Sales.
The parties understand and agree
that Xethanol shall have no right to negotiate on behalf of DDS
with any Lead, and that in particular the prices, terms, and
specifications of each Machine shall be determined solely upon
agreement between DDS and such Lead, and shall be included in a
written agreement between DDS and such Lead (each, a
“Customer Agreement”).
2.5 Prices.
The parties understand and agree
that the prices for purchases of Machines by Xethanol shall be
equivalent to DDS’s lowest commercially reasonable prices for
such Machines, as determined by DDS, but subject to adjustment from
time to time by DDS. DDS shall set the prices for all Sales of
Machines pursuant to each Customer Agreement, but it is DDS’s
intention to set such prices at a profit-maximizing
level.
3. S TOCK AND F EES .
3.1 Stock.
Within five (5) days from the
Effective Date, DDS shall provide to Xethanol two hundred thousand
(200,000) shares of the restricted stock of DDS, with
“piggyback” rights where permitted, according to the
stock purchase agreement described in E
XHIBIT E (“S TOCK P URCHASE A GREEMENT ”).
3.2 Cash Payment.
Within five (5) days from the
Effective Date, DDS shall pay to Xethanol fifty thousand dollars
($50,000).
3.3 Fee Calculation.
For all Sales of Machines during
the Term (and regardless of whether such Sales were made pursuant
to any Leads provided by Xethanol pursuant to Subsection 2.1
(“Leads”) ), DDS shall pay to Xethanol a fee
(“Fee”) calculated at *** of all amounts actually paid
to DDS by Customers for each such Sale; provided, however, that any
Sales of Machines to any Restricted Customer shall not be subject
to the foregoing, and there shall be no amount owed or paid to
Xethanol in connection therewith. Provided, further, that in no
event shall any royalties or other payments from Customers be
subject to the foregoing Fee payment obligation. The parties
further agree that any sales of other devices or machines
(including without limitation any devices or machines which are
similar to Machines, but which are not used for the Authorized
Purpose, and may instead be used for other purposes in other
industries or markets) shall likewise not be subject to the
foregoing, and there shall be no amount owed or paid to Xethanol in
connection therewith.
3.4 Payment.
DDS shall pay Fees to Xethanol
within thirty (30) days of receipt by DDS of the corresponding
amounts by DDS for each Sale. Each payment of Fees shall be
accompanied by written documentation reasonably sufficient to
explain the amount and calculation of such Fees.
3.5 Currency.
All amounts owed or paid under this
Agreement by DDS shall be calculated and paid in United States
currency; provided, however, that as to Fees based on Sales made in
other than United States current, such Fees shall be paid by DDS in
such foreign currency as corresponds to such Sale.
4. R ETURN OF M ACHINE AND R ELEASE .
4.1 Return.
Promptly following the Effective
Date, Xethanol shall make available for pick up by DDS that
particular Machine currently located at Xethanol’s facility
in Hopkinton, IA, and shall take all steps to ensure that such
Machine is delivered “as is” to DDS, free of all liens,
security interests or other encumbrances.
4.2 Release.
Upon the Effective Date, the parties
hereto shall execute a mutual general release in substantially the
form described in E XHIBIT C (“G ENERAL R ELEASE ”).
5. P URCHASE OF M ACHINES , R OYALTIES AND L ICENSES .
5.1 Purchase of Machines and
Royalties.
A. Purchase of
Machines. From time to
time during the Term, Xethanol may issue purchase orders to
purchase Machines from DDS. Xethanol may, as a matter of
administrative convenience use its standard form of purchase order
for such purposes, provided that any terms contained thereon shall
have no effect whatsoever. Such Machines shall be used solely by
Xethanol and solely for the Authorized Purpose (and in no event
shall be purchased for resale), and shall be subject to the
purchase agreement (“Purchase Agreement”) described in
E XHIBIT
B (“P
URCHASE A GREEMENT ”). Xethanol agrees that it shall not use, or permit
or encourage the use of, such Machines purchased by Xethanol for
any purpose other than the Authorized Purpose.
B. Royalties.
In addition to payment for the
purchase of Machines, Xethanol shall also pay to DDS certain
royalties (“Royalties”) as follows:
(i) Ethanol.
The Royalty payable with respect to
amounts directly or indirectly paid or owed to Xethanol by third
parties for Ethanol which is produced using such Machines shall be
*** until such time, if ever, as the provisions of Subsection
2.2 (“Exclusivity and Loss of Exclusivity”) shall
apply and DDS shall appoint any third party to perform Lead-seeking
services, in which case such Royalty payable thereafter shall be
***; and
(ii) Byproducts.
The Royalty payable with respect to
amounts directly or indirectly paid or owed to Xethanol by third
parties for Byproducts shall be ***.
D. Payment.
Xethanol shall pay Royalties to DDS
within thirty (30) days of receipt by Xethanol of the
corresponding amounts by Xethanol. Each payment of Royalties shall
be accompanied by written documentation reasonably sufficient to
explain the amount and calculation of such Royalties.
5.2 Milestone
Payments. In addition to
payment for the purchase of Machines and payment of Royalties,
Xethanol shall also pay to DDS certain milestone payments as
follows: *** for each *** of annual nameplate capacity for each
Plant. Xethanol shall pay such milestone payments within thirty
(30) days