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Amended And Restated Business And Royalty Agreement

Royalty Agreement

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GLOBAL ENERGY INC | Covanta Energy Corporation | Covanta Holding Corporation | Global Energy, Inc

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Title: AMENDED AND RESTATED BUSINESS AND ROYALTY AGREEMENT
Governing Law: Nevada     Date: 10/4/2011
Industry: Chemical Manufacturing     Sector: Basic Materials

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Exhibit 10.1

 

AMENDED AND RESTATED

BUSINESS AND ROYALTY AGREEMENT

 

This Amended and Restated Business and Royalty Agreement (this “Agreement”) is made and entered into as of the 19 th day of September, 2011, by and between Global Energy, Inc., a corporation organized and existing under the laws of the State of Nevada (“Global”), and Covanta Energy Corporation, a corporation organized and existing under the laws of the State of Delaware (“Covanta”).

 

WHEREAS, Global and Covanta entered into a Business and Royalty Agreement dated as of February 6, 2008 (as the same has been amended through the date hereof, the “Original Agreement”); and

 

WHEREAS, Global and Covanta want to amend and restate the Original Agreement to incorporate various modifications and clarifications;

 

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.

 

AK ” means AlphaKat GmbH, a company organized and existing under the laws of Germany, and its successors and permitted assigns.

 

American ” means American Renewable Diesel, LLC, a Delaware limited liability company, and its successors and assigns.

 

 

 


 

 

Approved Supplier ” means any Person securing rights from AlphaKat to make or have made Systems and Parts and/or to sell Systems and Parts.

 

Approved Supplier Purchase Order ” means any purchase order to sell one or more Systems entered into by and between an Approved Supplier (other than Covanta or an Affiliate of Covanta), as the seller, and any Person as the purchaser.

 

Assumptions ” has the meaning set forth in Section 5.3.

 

Base Price ” means the price being charged for the purchase of a System pursuant to a Covanta Purchase Order which shall include Covanta’s direct costs, indirect costs, applied overhead, manufacturer’s profit and the cost of providing a one-year warranty, but shall not include, for the avoidance of doubt, (i) the amount of (a) the Commissions payable by Covanta to Licensor and American under the License Agreement and (b) the Supplemental Commissions payable to Global hereunder, (ii) the royalties payable by Covanta to AK pursuant to the Manufacturing Agreement, (iii) any sales taxes, use taxes, value added taxes or any other type of taxes whatsoever, (iv) any import duties or other similar charges or fees on the importation or delivery of equipment, (v) fees separately charged to provide an extended warranty on, or perform operation and maintenance services for, the Systems being sold and (vi) any other types of charges not typically included in the sale price of a product.

 

Carried Interest ” has the meaning set forth in Section 2.2(c).

 

Code ” means the Internal Revenue Code of 1986.

 

Commission ” means the commissions which are payable by Covanta to Licensor and American pursuant to the terms of the License Agreement in connection with the purchase of Systems under a Licensor Purchase Order or a Covanta Purchase Order.

 

Competitor ” means a Competitor of Covanta or a Competitor of Global, as the context requires, it being agreed for all purposes of this Agreement that none of (i) Global and its Affiliates, (ii) Covanta and its Affiliates or (iii) Renewable and its Affiliates shall be treated as Competitors.

 

Competitor of Covanta ” means a Person, directly or through Affiliates, engaged primarily in the business of (i) waste disposal, including the energy from waste business and/or (ii) the processing or conversion, or the selling of equipment or development of technology for the processing or conversion, of waste or organic feedstock(s) containing hydrocarbon materials, including Feedstock, into diesel fuel.

 

Competitor of Global ” means a Person, directly or through Affiliates, engaged primarily in the business of the processing or conversion, or the selling equipment or development of technology for the processing or conversion, of waste or organic feedstock(s) containing hydrocarbon materials, including Feedstock, into diesel fuel.

 

 

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Conversion Date ” has the meaning set forth in Section 2.2(b).

 

Conversion Notice ” has the meaning set forth in Section 2.2(b).

 

Conversion Option ” has the meaning set forth in Section 2.2.

 

Conversion Period ” has the meaning set forth in Section 2.2(a).

 

Covanta ” has the meaning set forth in the first paragraph hereof and includes its successors and permitted assigns.

 

Covanta Purchase Order ” means any purchase order to sell one or more Systems entered into by and between any Person (including Covanta or any Affiliate of Covanta) as the purchaser and Covanta, any Affiliate of Covanta or any supplier to Covanta or any Affiliate of Covanta, as the seller.

 

Covanta Rights ” has the meaning set forth in Section 2.1.

 

Default ” has the meaning set forth in Section 7.1.

 

Demonstration Plant ” has the meaning set forth in the License Agreement.

 

Development Costs ” means all the third party costs that are incurred by Covanta in connection with the development of a Project, including (i) costs for service providers that are not employees of Covanta, including engineers, attorneys and consultants, (ii) the cost for acquiring land rights, easements and other similar items, (iii) the travel expenses of the employees of Covanta working on such Project and (iv) amounts paid to feedstock suppliers and fuel off-takers to secure contracts required for the Project.

 

Development Fees ” has the meaning set forth in Section 2.2(d).

 

Diesel Royalty ” has the meaning set forth in Section 5.1.

 

Dispute ” has the meaning set forth in Section 9.1.

 

DP Site ” means the site on which the Demonstration Plant is installed.

 

DP System ” means the System purchased by Covanta for the Demonstration Plant.

 

Effective Date ” has the meaning set forth in Section 6.1.

 

Extended Period ” has the meaning set forth in the License Agreement.

 

Feedstock ” means any material capable of being processed by the Technology.

 

 

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Fuel Royalty ” has the meaning set forth in Section 5.1.

 

Global ” means Global Energy, Inc., a Nevada corporation.

 

Governmental Organization ” has the meaning set forth in the License Agreement.

 

ICC ” means the International Chamber of Commerce.

 

ICC Rules ” has the meaning set forth in Section 9.1(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 the Systems and Parts (whether or not patentable, useful or workable) through the implementation, development, re-design, testing, operation, maintenance, monitoring, control, modeling, fabrication and improvement of the Technology and/or the manufacturing of the Systems and Parts and/or the operation of Systems.

 

Initial Period ” has the meaning set forth in the License Agreement.

 

Interim Period ” has the meaning set forth in the License Agreement.

 

KDV 500 ” means a System capable of producing a minimum of 500 liters of diesel oil per hour.

 

License Agreement ” means the License Agreement entered into by Covanta and Licensor dated as of February 6, 2008, as amended by the First Amendment to License Agreement dated as of July 8, 2008 and the Second Amendment to License Agreement dated as of November 23, 2010, a copy of each of which has been provided to Global.

 

Licensor ” means AlphaKat - Global Energy GmbH, a company organized and existing under the laws of Germany, and its successors and permitted assigns.

 

Licensor Purchase Order ” means any purchase order to sell one or more Systems entered into by and between Covanta or any Affiliate of Covanta as the purchaser and Licensor or AK as the seller.

 

LLCA ” has the meaning set forth in Section 2.3(f).

 

Manufacturing Agreement ” means the License and Manufacturing Agreement dated March 11, 2010, entered into by and between AK and Covanta.

 

Members ” has the meaning set forth in Exhibit 1 attached hereto.

 

Net Cash Flow ” has the meaning set forth in Section 2.2(c).

 

 

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Net Financing Proceeds ” means the gross amount actually received by a Project Company from a financing or refinancing of a Project less (i) the fees and other amounts paid to the lender(s) providing such financing, (ii) all amounts to be used to fund capital improvements or other costs for which such financing was secured, (iii) the debt service, maintenance and all other reserves required by the lender(s) providing such financing and (iv) the amount required to repay any Working Capital Loans.

 

Parties ” means Global and Covanta.

 

Party ” means Global or Covanta, as the case may be.

 

Parts ” means any subsystem, component, item of equipment (including the KDV Turbine), part, spare part and any other items which are used in the operation of the System.

 

Person ” means any natural person, corporation, company, partnership, business trust, governmental authority or other entity.

 

Project ” means any project constructed during the term of this Agreement (other than the Demonstration Plant) to convert Feedstock to diesel using the Technology (i) for use in Territory A or Territory B which is initiated, developed and owned (in whole or in part) by Covanta or a Covanta Affiliate or (ii) for use in Territory A which is owned by a Governmental Organization where and for so long as the System(s) which comprise the project are being operated by Covanta.  For the avoidance of any doubt, a project which is identified by Covanta, is developed by Renewable or by any other Person on behalf of Covanta and is owned (in whole or in part) by Covanta or a Covanta Affiliate shall be a Project for all purposes of this Agreement, including the payment of a Fuel Royalty.

 

Project Company ” has the meaning set forth in Section 2.3(f).

 

Purchase Order ” has the meaning set forth in the License Agreement.

 

Reference Rate ” means a rate per annum which is equal to the lesser of (a) two percent (2%) above the interest rate (sometimes referred to as the “base rate”) for large commercial loans to creditworthy entities announced from time to time by Citibank, N.A. (New York), or its successor bank, or, if such rate is not announced, the rate published in The Wall Street Journal as the “prime rate” from time to time (or, if more than one rate is published, the arithmetic mean of such rates), in either case determined as of the date the obligation to pay interest arises, and (b) the maximum rate that can be charged under law.

 

Renewable ” means Renewable Diesel, LLC, a limited liability company formed under the laws of Delaware, and its successors and assigns.

 

 

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RIN Credits ” means the amounts paid for any Renewable Identification Number (RIN) credits generated and sold by a Project to any Person in accordance with applicable requirements under the United States Environmental Protection Agency Renewable Fuels Standard regulations.

 

RIN Credits Royalty ” has the meaning set forth in Section 5.1.

 

System ” means any system of components (consisting primarily of the required KDV Turbines, the feed preparation system, the ash handling system, any system control hardware and software, structural steel, piping and electrical wiring), including all Parts, whether it is in existence today or developed hereafter by AK, Covanta or any other Person, and any future system of components to convert Feedstock into diesel oil using the Technology.

 

Technology ” has the meaning set forth in the License Agreement.

 

Territory A ” means the United States.

 

Territory B ” means China, the United Kingdom, the Republic of Ireland and Canada.

 

Working Capital Loans ” has the meaning set forth in Section 2.2(i).

 

Section 1.2                       Interpretations .  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;

 

(f)            The words “include,” “includes” and “including” mean include, includes, and including “without limitation” and “without limitation by specification;”

 

 

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(g)           The phrase “exclusive right(s)” as used herein is intended to have the same meaning as the term “Full Right(s)” as used and defined in the License Agreement and the phrase “non-exclusive right(s)” as used herein is intended to have the same meaning as the term “Qualified Right(s)” as used and defined in the License Agreement;

 

(h)           All the references herein to the terms “diesel,” “diesel oil” or “diesel fuel” or any similar term shall include kerosene, jet fuel and any other fuel that Feedstock can be converted into using the Technology; and

 

(i)            All references to Covanta in its capacity as a manufacturer of Systems shall include any Affiliate of Covanta, any Person (that is not an Affiliate of Covanta) that is manufacturing Systems in which Covanta or an Affiliate of Covanta has an ownership interest and any contractor or supplier manufacturing systems under an agreement with Covanta or any Affiliate of Covanta.

 

ARTICLE 2 – RELATIONSHIP AND RIGHTS OF THE PARTIES

 

Section 2.1                       Rights of Covanta .  Subject to the terms of this Agreement, and intending to be consistent with the terms and conditions of the License Agreement, during the Interim Period, the Initial Period and the Extended Period, Global hereby grants the following rights to Covanta to the extent now or hereafter held by Global during the term of this Agreement (the “Covanta Rights”):  (i) the exclusive right to market, offer for sale and sell Systems for use in Territory A, the exclusive right to market, offer for sale and sell Systems to Governmental Organizations for use outside Territory A and the right to sell Systems to Global or any of its Affiliates for projects outside of the Territory owned by Global, any of its Affiliates or any entity in which Global or any of its Affiliates holds an ownership interest; (ii) the exclusive right to use, practice and make improvements to the Technology (including the Systems and Parts) in Territory A (subject to the rights granted to Renewable by Covanta to develop projects in Territory A); (iii) the non-exclusive right in Territory B to use, practice and make Improvements to the Technology (including the Systems and Parts) in connection with Projects using Feedstock; and (iv) the right to manufacture or have manufactured and sell Systems as contemplated by the terms of the Manufacturing Agreement.  Global expressly agrees that it shall not do anything in connection with the Technology, during the term of the License Agreement or the term of the Manufacturing Agreement, as the case may be, which is inconsistent with (i) any of the exclusive rights granted by Licensor to Covanta as part of the Covanta Rights pursuant to the License Agreement regardless of whether such rights have been or will be granted to Global by Licensor or (ii) the manufacturing rights granted by AK to Covanta pursuant to the Manufacturing Agreement regardless of whether such rights have been or will be granted to Global by AK.  For the avoidance of doubt, Covanta shall be entitled to exercise any or all of the license rights and manufacturing rights granted to it in the Technology itself or through any of its Affiliates, but  Covanta shall not have the right to issue sublicenses to any Person other than an Affiliate or American, Global or their respective Affiliates.

 

 

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Section 2.2                       Conversion Option .  Covanta grants to Global an option (the “Conversion Option”) to convert its right to receive Fuel Royalties in all Projects which are developed after the Conversion Date to a Carried Interest in all such Projects, subject to the further provisions and procedures of this Section 2.2. For the sake of convenience and simplicity, unless the Parties otherwise agree with respect to one or more Projects, whether a Project has been developed following the Conversion Date shall depend on whether the Project Company that is intended to own such Project has been formed prior to the Conversion Date.  If a Project Company is formed prior to the Conversion Date, then the Carried Interest shall not apply to such Project Company unless the Parties otherwise agree.  If a Project Company is formed after the Conversion Date, the Carried Interest shall apply to such Project Company even if the Project which is to be owned by such Project Company has been under development for a period of time prior to the Conversion Date.

 

(a)            Time to Exercise Conversion Option .  Global shall be entitled to exercise the Conversion Option at any time during the period (the “Conversion Period”) beginning on the first day of the Initial Period (as such term is defined in the License Agreement) and ending on the fifth anniversary of such date.  For the avoidance of doubt, if Global does not exercise the Conversion Option during the Conversion Period, it shall no longer have the right to exercise the Conversion Option.

 

(b)            Manner of Exercising Conversion Option .  If Global elects to exercise the Conversion Option at any time prior to the end of the Conversion Period, it shall provide a written notice to Covanta (the “Conversion Notice”) that it is exercising the Conversion Option.  The Conversion Notice shall set forth the date (the “Conversion Date”) on which the Conversion Option is to take effect, such date to be not less than sixty (60) days nor more than one hundred twenty (120) days following the date of the Conversion Notice.

 

(c)            Carried Interest; Net Cash Flow . If Global exercises the Conversion Right, Global shall be given a non-voting membership interest (the “Carried Interest”) in each of the Project Companies formed after the Conversion Date entitling Global to ten percent (10%) of the distributions of the Net Cash Flow of each such Project Company and the other rights of ownership as provided for herein.  The term “Net Cash Flow” shall mean for any calendar quarter (or for such other period as is provided below or as otherwise agreed to by the Parties in a LLCA) (i) the gross cash revenues from the operation of the Project plus Net Financing Proceeds plus the proceeds of any sale or other disposition of all or a substantial portion of the Project less (ii) all costs of operating, maintaining and improving the Project (including development design and construction costs relating to any such improvements) and all amounts payable to a lender other than Covanta (or any Affiliate of Covanta) for debt service, fees or other obligations under the loan agreements with such lender less (iii) for the working capital requirements of the Project Company, reasonable cash reserves that are required under any loan agreements, any funds that are required for improvements that are planned or for overhaul reserves.  If Covanta makes any Working Capital Loans to a Project Company, until such Working Capital Loans have been repaid in full, eighty percent (80%) of the Net Cash Flow that is otherwise available for distribution to the Members shall be used to repay such Working Capital Loans prior to making any such distributions to the Members.  Notwithstanding anything contained herein to the contrary, Covanta shall have the right to treat all the distributions to Global (or any of its Affiliate) in respect of the Carried Interest as “guaranteed payments” pursuant to Section 707(c) of the Code.  If a Project Company closes a financing or any refinancing or if it receives proceeds from the sale or other disposition of all or a substantial portion of the Project or its assets, the Net Cash Flow available at the end of the month in which such financing, refinancing or sale or other disposition occurs shall first be distributed to each of the Members with a positive capital account (pro rata in accordance with their capital accounts) until all such capital accounts have been reduced to zero prior to making any other distributions to all Members pro rata in accordance with their membership interests.

 

 

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(d)            Recovery of Development Costs; Payment of Development Fees .  Global recognizes that Covanta, in connection with each of the Projects in which Global may have a Carried Interest, will be incurring Development Costs and the burdened costs for its own personnel that are working on the development of such Projects.  To minimize the difficulties associated with the tracking of such burdened costs, the Parties agree that Covanta shall be entitled to receive a development fee (the “Development Fee”) equal to One Hundred Thousand Dollars ($100,000) for each KDV 500 which is installed as part of a Project (such amount to be increased or decreased, as the case may be, if the Project uses a System other than a KDV 500 in proportion to the increased or decreased diesel output of the System which is installed), but in no event shall the Development Fee for a Project exceed One Million Dollars ($1,000,000).  Covanta shall be reimbursed for all the Development Costs for each Project and paid the Development Fee for such Project from one hundred percent (100%) of the Net Cash Flow of the Project until Covanta is paid in full.  Notwithstanding the fact that the Development Costs may have to be capitalized as part of the basis of the Project, the intention of the Parties is to allow such Development Costs to be recovered by Covanta from the Net Cash Flow of the Project on a priority basis as compared to the payment of distributions of Net Cash Flow to the Members (including Global) pro rata in accordance with their membership interests.  Following the Conversion Date, Covanta shall provide Global, for each of the Projects as to which the Carried Interest applies, with a schedule of all of the Development Costs, the applicable Development Fee and the total Project cost within sixty (60) days after such Project has achieved commercial operation.

 

(e)            Operation and Maintenance of Projects by Covanta .  Global acknowledges that Covanta will likely be operating and maintaining all of the Projects in which Global may be entitled to a Carried Interest. Following the Conversion Date, Covanta shall, if an operations and maintenance agreement (the “OMA”) has not already been put in place by Covanta (or a Covanta Affiliate) and a Project Company as to which the Carried Interest applies, put the OMA in place for such Project with such Project Company.  Unless the Parties otherwise agree, for the first five (5) years following the Conversion Date, the OMA for each Project shall be based on a standard “cost plus” structure and provide a fixed annual fee of Four Hundred Thousand ($400,000) as of January 1, 2008 (such amount to be adjusted each year by the increase in the Consumer Price Index published by the U.S. Department of Labor Bureau of Labor Statistics CPI-U for All Urban Consumers, US City Average (Table 1)).  Prior to the end of the five (5) year period, the Parties will review the amount of the fee and whether different fixed fees should be charged for Projects with different numbers of Systems.  Under the OMA, Covanta or its Affiliate shall be reimbursed for all direct costs of operating the Project and for the burdened costs of the operators and all supervisory personnel dedicated to the operation of the applicable Project.

 

 

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(f)            Negotiation and Execution of LLCA .  Unless the Parties agree otherwise, each Project as to which the Carried Interest applies shall be owned by a separate limited liability company (each, a “Project Company”) formed to own and operate such Project.  The members of each such Project Company shall enter into a limited liability company agreement (the “LLCA”).  Following the Conversion Date, the Parties shall negotiate the LLCA for each applicable Project Company, in good faith, based on a standard form of LLCA to be agreed to by the Parties, it being agreed that each Project will have its own unique requirements that will have to be addressed in the LLCA for the applicable Project Company.  Within sixty (60) days following the Conversion Date, Covanta shall provide a proposed form of LLCA based on the relevant provisions of this Agreement and the terms set forth in Exhibit 1 attached hereto.  During the sixty (60) day period following the delivery of the initial draft of the LLCA, the Parties shall negotiate the standard form of LLCA to be used as the model for the future LLCAs to be entered into by the Parties.  Once the Parties have finalized the standard form of LLCA, the Parties shall execute a document confirming that such document is the standard form of LLCA and it shall replace Exhibit 1.  If the Parties agree to extend the Carried Interest to any of the Project Companies that were formed prior to the Conversion Date, the Parties shall amend and restate the LLCA for each such Project Company to become effective on the first day of the first full month after the Conversion Date to reflect the Carried Interest.  The Parties shall negotiate each such amended and restated LLCA in good faith, consistent with the terms and provisions hereof.

 

(g)            Sale of Interest in Projects .  Global will be entitled to sell its entire Carried Interest in any Project Company but not a portion of such interest.  If Global wants to sell any such Carried Interest after the Conversion Date, it shall first be required to offer to sell the Carried Interest to Covanta pursuant to a written notice (the “ROFO”).  Any such sale shall be subject to the restrictions and all other conditions as set forth in the LLCA for the Project Company.  The LLCA shall provide for any such sale to be in accordance with a formula price or appraisal process, as the Parties shall determine when the standard form of LLCA is negotiated.  If Covanta does not agree to purchase the Carried Interest within the applicable period of time as provided for in the LLCA, Global shall be entitled to sell the Carried Interest to any Person other than a Covanta Competitor during the ninety (90) day period following the decision (or deemed decision) of Covanta not to purchase the Carried Interest.  If Global does not sell the Carried Interest during such ninety (90) day period, then the ROFO shall once again apply to the sale of the Carried Interest.

 

 

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(h)            Financing of Projects .  Global acknowledges that Covanta does not intend to secure debt financing for all Projects, particularly in the case of the initial Projects that it develops, and that Covanta may elect to build multiple Projects on an all equity basis and later seek to secure a take-out financing for such Projects some time after the Projects have achieved commercial operation.  The decision to finance each Project and the terms of such financing shall be made in the sole discretion of Covanta.

 

(i)             Working Capital Loans .  Global acknowledges that each Project Company may require additional funding from time to time for working capital requirements and/or for the funding of capital improvements.  Covanta shall have the right to fund any or all such requirements with a loan (each, a “Working Capital Loan”) which shall bear interest at the Reference Rate so Covanta can recover such funds on a priority basis as provided for in Section 2.2(c).

 

Section 2.3                       EPA Registration .  Covanta will use commercially reasonable efforts during the term hereof to register the diesel oil produced by the Demonstration Plant as a motor fuel with the United States Environmental Protection Agency.  Covanta shall take the lead with respect to the necessary activities for securing such registration, including preparing and submitting applications to the United States Environmental Protection Agency, and Global shall reasonably cooperate with such efforts to be undertaken by Covanta.

 

Section 2.4                       Payment of Supplemental Commissions .  For each Project with respect to which Covanta is required to pay a Commission to Licensor or American pursuant to the License Agreement, Covanta shall pay a supplemental commission (the “Supplemental Commission”) directly to Global as follows:

 

(a)           The amount of the Supplemental Commission shall be two point five percent (2.5%) of the Base Price of each System.

 

(b)           For confidentiality reasons, the amount of the Supplemental Commission shall not be included in the Covanta Purchase Order.  In the case of a Licensor Purchase Order, the Supplemental Commission shall not be reflected.

 

(c)           Except as provided in Section 2.4(f), the obligation to pay a Supplemental Commission on each System for a Project shall accrue when each such System has been delivered to the site of the Project.

 

(d)           The Supplemental Commissions shall be payable to Global on a quarterly basis, each payment to be made within forty-five (45) days following the end of the quarter.  Each Supplemental Commission payment shall be accompanied by a statement that will set forth (i) the total number of Systems delivered to Projects in the quarter and the type of Systems, (ii) whether such Systems are supplied under a Licensor Purchase Order or a Covanta Purchase Order, (iii) the name of the Project Company purchasing each System and where each such System is to be deivered, (iv) the Base Price of each System, (v) the amount of the Supplemental Commission that is due under each Covanta Purchase Order or Licensor Purchase Order, as the case may be, and the remaining Supplemental Commission that is due under each such purchase order and (vi) any other information which is relevant to the calculation of the total amount of the Supplemental Commission that is payable for such quarter to Global.

 

 

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(e)           The Supplemental Commission payments to Global shall be made by wire transfer in U.S. Dollars to the bank account and in accordance with the wire transfer instructions provided by Global to Covanta from time to time.  Covanta shall use the exchange rate in effect on the last business day of the calendar quarter to calculate the amount payable to Global in Euros.

 

(f)            Notwithstanding anything which is contained herein to the contrary, in the case of the first Project following the Effective Date, the Supplemental Commission shall be paid to Global in twelve (12) equal installments, with the first installment paid on the first day of the first full month following the issuance of a purchase order to any Person to manufacture any of the equipment required for such Project and each of the subsequent installments paid monthly thereafter; provided , however , that if all of the equipment that is required for the Systems comprising such first Project is delivered prior to the date that the last installment of the Supplemental Commission is paid, all remaining installments shall be paid within fifteen (15) days of the delivery of such equipment.

 

ARTICLE 3 – COMMITMENT TO PROVIDE SYSTEMS

AND TO PROVIDE EQUIPMENT FINANCING

 

Section 3.1                      Availability of Systems .  Covanta acknowledges (i) the role played by Global in assisting Covanta in securing the manufacturing rights under the Manufacturing Agreement and the expansion of the Covanta Rights under the License Agreement and (ii) the disadvantages to Global if Global is not able to purchase from Covanta the Systems required by Global for its projects and its customers.  In partial consideration thereof, Covanta agrees that it shall (a) taking into account at the time that Global seeks to put in place a Covanta Purchase Order for itself or a customer (I) the limits of Covanta’s manufacturing capabilities, (II) Covanta’s existing Purchase Orders (including those for Projects) and (iii) the requireme


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