PROJECT DEVELOPMENT AGREEMENT
|
|
EXHIBIT 10.8
|
|
This Agreement is entered into this 6th day of November, by and between
ALL
Energy Company, a Delaware corporation ( “Client”), and Delta-T Corporation, a
Virginia corporation ( “Delta-T”), which parties may be referred to individually
as a “Party” or jointly as the “Parties”, in light of the following
facts:
A. In September 2006, Client and ▇. ▇▇▇▇▇, inter alia, entered into a Stock
Subscription Agreement (the “Subscription”) relating to the sale and issuance of
common stock of Client, subject to certain terms and conditions;
B. One of the terms of the Subscription was an agreement by ▇. ▇▇▇▇▇,
as owner of Delta-T, to cause Delta-T to negotiate, in good faith, a development
agreement relating to the development of five ethanol production facilities
and
to enter into such contracts. Client agreed to so negotiate, in good faith,
and
to enter into such contract. It is the purpose of this Agreement to serve as
the
development agreement referred to in the Subscription;
C. The Subscription further stated that ▇. ▇▇▇▇▇ and ▇. ▇▇▇▇▇, as
majority owners of Pacesetter Management Group, LLC (“Pacesetter”), would cause
Pacesetter to negotiate, in good faith, an agreement under which Pacesetter
would manage the operations of the five ethanol production facilities intended
to be developed by Client (the “Pacesetter Agreement”). This Agreement is not
part of an agreement with Pacesetter;
D. This Agreement was termed the “Delta-T Agreement” in the
Subscription. The Subscription created a right in certain individuals to
purchase an aggregate of 714,285 shares of the common stock of Client. The
right
to purchase common stock of Client, as stated herein, was made conditional
on
the mutual execution of both this Agreement (the Delta-T Agreement therein)
and
the Pacesetter Agreement. This Agreement, upon its execution between Client
and
Delta-T, will constitute satisfaction of the condition precedent to the right
of
▇. ▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇., relating to the execution of this Agreement;
5. Delta-T is experienced in the business of developing ethanol
production projects, as well as in the design of ethanol processes using the
dry-milling method and in the supply of commercial technologies and other items
related to the production of fuel ethanol;
6. Client has determined to locate the first of the five ethanol
production facilities contemplated by this Agreement in the City of Manchester,
Iowa;
7. Client intends to develop a plant capable of producing
approximately 100,000,000 gallons per year of fuel ethanol, utilizing the
dry-milling process, together with all associated commercial
by-products;
8. Client desires to engage Delta-T as an independent contractor to
provide products and services as provided herein. Except as set forth in
paragraph VII hereinbelow, this engagement is not related to any other contract
or agreement with any person, firm or entity not a party hereto; and
9. Client has tentatively determined to engage ▇▇▇▇▇-▇▇▇▇▇▇▇▇
Construction Company, Minneapolis, Minnesota, as its prime contractor for the
design and construction of the proposed Manchester, Iowa, facility, on either
a
turn-key or cost-plus basis.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other valuable consideration, it is hereby agreed by and between
the
parties:
I. SCOPE OF ENGAGEMENT
The parties acknowledge and agree that this Agreement relates to the
development of five (5) ethanol plants to be built by Client. This Agreement
relates specifically to the Manchester, Iowa, site selected by Client for its
first facility, but also is applicable to four additional facilities, each
of
which will be the subject of a numbered addendum to this Agreement to identify
each new plant location and to republish and reaffirm this Agreement. Except
for
the changes in the plant-site identification, the terms and conditions of this
Agreement shall remain in force and constitute the continuing binding
obligations of the parties for a total of five plant development
projects.
It is agreed that the scope of the engagement of Delta-T in this
Agreement is the work required to put Client in a position to negotiate a
definitive design and build contract with the contractor of Client’s choice.
▇▇▇▇▇-▇▇▇▇▇▇▇▇ Construction Company is currently the choice of Client, but
the
final selection of a design and build contractor has not been made.
II. OBLIGATIONS OF DELTA-T
Delta-T agrees to perform the following tasks in furtherance of the
development of the project:
A. Scheduling. Delta-T is to develop and deliver to Client a ▇▇▇▇▇
Chart relating specifically to the tasks undertaken to be accomplished under
this Agreement in sub-paragraphs B. through I. below, as soon as practicable
after execution of this Agreement. The project time line on the ▇▇▇▇▇ Chart
shall not exceed 120 days;
B. Site Options. Delta-T is to assist Client or Client’s agent in
selection of the most appropriate technical and site options for site
utilization in conformity with the facility specifications;
C. Site Layout. Delta-T is to develop a preliminary general
arrangement drawing for the plant, utilizing Client’s site physical and
geo-technical data;
D. Plant Specifications. Delta-T is to create, in cooperation with
Client or Client’s agent, definitive physical plant specifications;
E. Plant Operations. Delta-T is to develop profitability analyses for
plant operation related to product selection alternatives;
F. Environmental. Provide definitive estimated plant emissions
projections for use of Client or Client’s agent in pursuing environmental
permits, certifications and/or licenses;
G. Business Plan. Delta-T is to assist Client in development of a
business plan for Client;
H. Project Financing. Delta-T is to develop professional
presentation-quality technical and economic date for Client’s use in making
presentation to investors and/or lenders; and
I. Process Engineering. Delta-T is to provide a process engineering
package providing sufficient data to be used as the basis of estimating the
construction costs of the processing aspects of the proposed facility (“Schedule
A Package”).
It is acknowledged by the parties that Client currently intends to
use a representative of ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Construction Company as its agent, and
references herein to “Client’s agent” refer to such person.
III. OBLIGATIONS OF CLIENT
Client agrees that, in effectuating this Agreement, it will take no
action adversely affecting the ability of Delta-T to perform its obligations
hereunder.
Client further agrees that:
A. It will cooperate fully with, and provide to, Delta-T all things
to be undertaken and provided under the provisions of subparagraphs B, C, D
and
G of paragraph II above, to the best of its ability; and
B. It will pay to Delta-T the agreed payments as provided in
paragraph IV, in a timely manner in accordance with the terms of said paragraph
IV.
IV. PAYMENT - TIME OF PAYMENT
Project Development Services. Client agrees to pay to Delta-T for the
performance by it of its obligations hereunder the aggregate amount of $500,000
for each of five (5) plants. Payment for each shall be made as
follows:
Plants 1 and 2
A. Payment of $100,000 on the mutual execution of this
Agreement;
B. Payment of $100,000 on the date that marks one-third of the total
project time set forth on the ▇▇▇▇▇ Chart prepared by Delta-T and delivered
to
Client pursuant to subparagraph A of paragraph II;
C. Payment of $100,000 on the date that marks two-thirds of the total
project time set forth on the said ▇▇▇▇▇ Chart; and
D. Payment of $200,000 (plus any remaining balances of B. and C.)
upon receipt of invoice from Delta-T certifying that the work contemplated
by
this Agreement is compete and the Schedule A Package has been
delivered.
Plants 3 – 5
Payment of $1,500,000 shall be made upon Client’s request for services on
any of the three remaining plants.
Late Payment Penalty. Client agrees to pay to Delta-T a late-payment
fee of 1% per month, until paid, on all sums owing to Delta-T hereunder that
are
thirty-days overdue.
V. CONFIDENTIALITY
It is acknowledged by the parties that certain of the information to
be provided by Delta-T in performance of its obligations hereunder will contain
proprietary, trade secret and copyrighted materials owned by Delta-T and
relating to its ethanol processing technology. Inasmuch as it is the intention
of this Project Development Agreement to put Client in a position to accept
proposals for design and build construction contracts for construction of the
proposed ethanol facility, it is necessary that Client have a limited license
with regard to such information in order to provide information for making
estimates as contemplated in subparagraph I of paragraph II, above. Execution
of
this Agreement by Delta-T will be deemed to be the grant of a limited license
to
use the proprietary, trade secret and/or copyrighted materials as necessary
in
presenting facility descriptive information to ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Construction
Company, or such other company chosen by Client, for the purpose of estimating
the cost of construction those parts of the facility designed specifically
to
accommodate Delta-T’s proprietary fuel ethanol production process. In this
regard, Client covenants that it will exploit its limited license for no other
purpose than that stated herein and that it will not copy, reproduce or
otherwise violate its limited license. It is agreed that the licensed
information, data, processes, copyrights and drawings depicting such items,
if
any, shall remain the property of Delta-T and shall be returned to Delta-T
at
such time as Client has entered into a definitive agreement for the design
and
construction of the proposed ethanol facility, or upon termination of this
Agreement.
Additionally, Client agrees that, prior to disclosure of any of
Delta-T’s proprietary, trade secret and/or copyrighted material to anyone, it
will first obtain a written confidentiality agreement to protect Delta-T from
unauthorized use of the licensed materials. Client will provide a copy of each
confidentiality agreement so obtained to Delta-T on execution thereof.
Furthermore, Client may disclose such confidential information as it is required
to disclose in order to comply with applicable law, rule or regulation, provided
that it takes whatever steps necessary to protect the confidentiality of such
information the full extent allowed by such law, rule or regulation.
VI. TERM AND TERMINATION
Term. The term of this Agreement shall be the period of time required
to provide services as provided hereunder for five ethanol plants to be built
by
Client. It is anticipated by the parties that this period of time will be of
approximately five (5) years duration.
Termination. This Agreement may be terminated by either party on the
default in performance of the obligations of a Party to this Agreement (the
“defaulting party”). In such event, the non-defaulting party shall give written
notice to the defaulting party of the failure of performance and the nature
thereof. The defaulting party shall have a reasonable time within which to
cure
such default in performance, but not in excess of ten (10) calendar days. Should
the defaulting party fail or refuse to cure the default in performance within
ten (10) calendar days from the date of notice thereof, then the non-defaulting
party may elect to terminate this Agreement as to the then current ethanol
plant
project or all subsequent projects.
A failure of a Party to notify a defaulting Party of a failure to
perform its obligations hereunder on any occasion shall not constitute a waiver
of its right to do so for that or any other or subsequent failure of
performance.
Project Financing. The Agreement shall terminate should Client fail
to obtain Project Financing within eighteen (18) months of its
execution.
VII. FUTURE AGREEMENTS
It is acknowledged by the Parties that Client intends to enter into a
design and build contract for the construction of the proposed ethanol plant
with ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Construction Company or another qualified contractor. Client
covenants that it will include in any such construction contract, the
following:
Process License. Client will require the contractor to provide in the
construction contract that the contractor will negotiate, in good faith, a
License Agreement with Delta-T permitting it to utilize Delta-T’s proprietary
fuel ethanol production process in the proposed ethanol facility. Delta-T shall
warrant the license is fit for the use for which it is intended. The license
fee
for the first plant is to be $3,000,000, which shall be paid in accordance
with
the terms and conditions of the License Agreement, provided, however, that
Client shall have secured project financing for construction of the proposed
facility.
Technology Transfer and Engineering Services Agreement. Client will
require the contractor to provide in the construction contract that the
contractor will negotiate in good faith a Technology Transfer and Engineering
Services Agreement with Delta-T under the terms of which agreement Delta-T
will
agree to provide full engineering as required to complete the process
engineering design for installation and use of Delta-T’s fuel ethanol production
process, review all engineering performed by others to assure that it conforms
to Delta-T’s process design and to train the personnel necessary to the proper
operation of the licensed process after installation. Delta-T shall be paid
a
fee for its services as negotiated between Delta-T and the contractor; provided,
however, that Client shall have secured project financing, as
aforesaid.
Procurement. Client will require the contractor to provide in the
construction contract that the contractor will negotiate, in good faith, a
contract for Delta-T to act as the procurement agent for the project for the
procurement of the equipment necessary to Delta-T’s licensed process, that is,
the process-engineered equipment that would not be needed for the project but
for the use of Delta-T’s proprietary process. Procurement will be limited to
those items of equipment identified by the Construction company in writing
as
being required.
VIII. INSURANCE
At all times during the term of this Agreement, Delta-T shall carry
general liability insurance, including contractual and completed operations
insurance. Client shall be named as an additional insured under Delta-T’s policy
of insurance and Delta-T shall cause such carrier to issue to Client a
Certificate of Insurance.
IX. INDEMNITY
Each of the Parties hereby indemnifies and holds harmless the other
Party from and against all third party property or personal injury claims,
loss,
damage or liabilities, including costs of defense and reasonable attorney’s
fees, to the extent caused by their respective negligent acts and omissions
and
arising out of their respective performances of this Agreement.
X. INDEPENDENT CONTRACTOR
The Parties agree that Delta-T and Client are independent contractors
and nothing in this Agreement shall be deemed to make either Party an agent
of
partner of the other, or to give either Party the right to bind the other in
any
way.
XI. DISPUTE RESOLUTION
Any dispute that arises regarding the formation or terms of
this Agreement, or the performance of the Parties hereunder, will be resolved
exclusively by arbitration before a panel of three (3) neutral arbitrators
in
Des Moines, Iowa. Each Party will select one arbitrator and the two (2) thus
selected shall jointly select the third. All arbitrators shall be individuals
who are licensed as lawyers by the State Bar of Iowa.
The arbitration shall be confidential and shall utilize the then
existing commercial arbitration rules of the American Arbitration Association.
The decision of the majority of the arbitrators shall be set forth in writing
and such decision shall be binding and enforceable in any court of competent
jurisdiction. The arbitrators shall award reasonable and actual attorneys fees
and costs to the prevailing party, which award shall be part of the decision
of
the panel. Either Party, in addition to all other rights available under
applicable federal or state laws, will be entitled to injunctive and other
forms
of equitable relief. This Section shall survive any termination of this
agreement regardless of the reason for such termination and regardless of
whether it is the result of any breach of this Agreement by either of the
Parties.
XII. ENTIRE AGREEMENT - AMENDMENTS
With the exception of the Non-Disclosure Agreement executed by the
Parties October 27, 2006, this Agreement contains the entire agreement between
the Parties hereto with respect to the subject matter hereof and supersedes
all
prior and contemporaneous agreements and understandings, oral or written, with
respect to this agreement. This Agreement may not be changed orally, but only
by
an agreement in writing signed by the Party against whom any waiver, change,
amendment, modification or discharge may be sought.
XIII. BINDING EFFECT; BENEFITS
This Agreement shall inure to the benefit of and shall be binding
upon the Parties hereto and their respective successors and assigns.
XIV. GOVERNING LAW
The validity, performance and enforcement of this Agreement shall be
construed in accordance with, and governed by the laws of the State of Iowa.
XV. FURTHER ASSURANCES
The Parties agree to do such further acts and things and to execute
and deliver such additional agreements and instruments as any Party may
reasonably require to consummate, evidence, or confirm any agreement contained
herein in the manner contemplated hereby.
XVI. MODIFICATION
Any modification or waiver of any term of this Agreement must be in
writing and signed by the Parties to be bound by the modification or
waiver.
XVII. SEVERABILITY
In the event any portion of this Agreement shall be declared by any
court of competent jurisdiction to be invalid, illegal, or unenforceable, such
portion shall be deemed severed from this Agreement, and the remaining parts
hereof shall remain in full force and effect as fully as though such invalid,
illegal, or unenforceable portion had never been part of this Agreement.
XVIII. TITLES AND HEADINGS
Titles and headings of sections of this Agreement are for the
convenience of reference only, are not intended to define, limit, or describe
the scope or intent of any provision of this Agreement, and shall not affect
the
construction of any provision of this Agreement.
XIX. COUNTERPARTS
This Agreement may be executed in counterparts, each of which, when
executed, shall be deemed to be an original and all of which together shall
be
deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
ALL ENERGY COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
DELTA-T CORPORATION
By: /s/ ▇.▇. ▇▇▇▇ ▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇ ▇▇▇▇▇
Title: CEO