Exhibit 10.17
Clean Coal Power Initiative
Repayment Agreement
Between the U.S. Department of Energy and ADA-ES
In consideration of the United States Department of Energy ("DOE")
support for a clean coal technology demonstration project under DOE's
Clean Coal Power Initiative ("CCPI"), for which ADA-ES, Inc., (defined
herein as the "Obligor"), acknowledges it shall receive substantial
benefit, Obligor hereby agrees to repay the Department of Energy in
accordance with the terms and conditions set forth below.
ARTICLE I. OBJECTIVE
The purpose of this Repayment Agreement is to set forth the terms and
conditions under which Obligor shall repay to DOE an amount up to, but
not to exceed, the DOE share paid under Cooperative Agreement DE-FC26-
03NT41766 awarded to Wisconsin Electric Power Company (We Energies).
The Cooperative Agreement includes: (i) the demonstration of EPRI's
TOXECON technology (U.S. Patent No. 5,505,766), as further defined
herein below; (ii) testing of mercury Sorbents including activated
carbon (AC) and testing of Sorbents for removal of SOx, NOx or other
toxic gases; (iii) the demonstration of mercury continuous emission
monitor (CEM) technology; and, (iv) testing of sorbent injection
systems (SIS).
ARTICLE II. DEFINITIONS
"AC" (activated carbon) means any activated carbon used in conjunction
with TOXECON Demonstration Technology, regardless of whether such
activated carbon is tested during the CCPI Project.
"CCPI Project" means the work conducted pursuant to the Cooperative
Agreement.
"CEM Equipment" means equipment required in a commercial installation
of a mercury continuous emission monitoring system for use in coal-
fired power plants in North America. CEM Equipment may be used in
conjunction with, or independent of, the TOXECON Demonstration
Technology. CEM Equipment is identified in Exhibit A.
"Cooperative Agreement" means the financial assistance award made by
the United States Department of Energy (DOE) to We Energies, Instrument
Number DE-FC26-03NT41766 and subsequent amendments
"Cooperative Agreement Recipient" means the organization that received
the award of the Cooperative Agreement.
"DOE Share" means the portion of the Total Project Costs paid by DOE
under the Cooperative Agreement.
"Novel Sorbent" means Sorbent material not in commercial use for
pollution control by duct injection in a power system at the time of
the award of the Cooperative Agreement and is tested in the CCPI
Project.
"Obligor" means the organization, ADA-ES Inc., which is responsible for
repayment under this Repayment Agreement. Obligor includes the
organization's successors and assigns.
"Repayment Period" means the period of time during which the Obligor is
required to make payments under this Repayment Agreement.
"SIS Equipment" means a subset of the TOXECON Equipment used to store
and inject Sorbent into a coal-fired flue gas stream for use in
conjunction with the Demonstration Technology in North America. SIS
Equipment is identified in Exhibit B.
"SIS Equipment Costs" means the total uninstalled cost of SIS
Equipment.
"Sorbent" means material that is used to capture mercury vapor, sulfur
dioxide, nitrogen oxides, or other toxic gases from a coal-fired gas
stream and is tested in the CCPI Project.
"Total Project Cost" means the amount of allowable direct and indirect
costs incurred and paid, in part, by DOE under the cooperative
agreement.
TOXECON Equipment means the equipment set forth in Exhibit C.
ARTICLE III. TERM OF THIS REPAYMENT AGREEMENT
This Repayment Agreement shall be effective upon signature by Obligor
and DOE. The Repayment Period shall begin on the first day of Budget
Period 2 of the Cooperative Agreement. This Repayment Agreement shall
expire 20 years after the date the Repayment Period begins, or on the
date the entire DOE Share has been repaid, whichever occurs first.
However, if the Cooperative Agreement Recipient withdraws or terminates
its participation under the Cooperative Agreement, or the project is
terminated in accordance with Paragraph 2.35 (Termination) of the
Cooperative Agreement, or terminated due to DOE's disapproval of a
continuation application in accordance with Paragraph 2.9 (Continuation
Application) of the Cooperative Agreement, this Repayment Period shall
begin on the date the Cooperative Agreement is terminated or on the
first day of Budget Period 2 of the Cooperative Agreement, whichever is
earlier. This Repayment Agreement may be terminated upon a
determination by the Secretary of Energy or his/her designee that
repayment places the Obligor at a competitive disadvantage in domestic
or international markets.
ARTICLE IV. DEMONSTRATION TECHNOLOGY
For purposes of this Repayment Agreement:
(1) "TOXECON Demonstration Technology" shall consist of EPRI's
proprietary TOXECON (U.S. Patent No. 5,505,766) technology and any
modifications and/or improvements to the TOXECON technology for use in
coal-fired gas streams; and,
(2) "CEM Demonstration Technology" shall consist of continuous emission
monitors for measuring mercury concentrations in coal-fired gas
streams.
ARTICLE V. BASIS FOR REPAYMENT
(A) Subject to the ceilings set forth below, Obligor and EPRI have
agreed to repay DOE based on revenue derived from the sources listed
below
Ceiling (% of DOE Share)
TOXECON and SIS Equipment - 60 (EPRI)
AC and Novel Xxxxxxx- 00 (XXX-XX)
XXX Xxxxxxxxx - 00 (XXX-XX)
SIS Equipment - 60 (ADA-ES)
Obligor shall not be required to make repayment from revenue sources
listed above once DOE has been paid the ceiling amount for that revenue
source.
(B) DOE has entered into separate repayment agreements with Obligor and
EPRI. Repayment under either agreement shall accumulate for the
purpose of satisfying the total repayment obligation. Repayment from
EPRI based on SIS Equipment revenues shall be credited toward
satisfaction of Obligor's repayment obligation from SIS Equipment
revenue sources.
(C) In the Cooperative Agreement, DOE and We Energies have agreed that
Sorbent suppliers, other than Obligor, who demonstrate AC and Novel
Sorbents under the Cooperative Agreement, will be required to enter
into a repayment agreement with DOE to pay at least a 1.5% fee on AC
and Novel Sorbent sales made in conjunction with commercial use of the
TOXECON Demonstration Technology. Any repayment made under such
agreements shall be credited toward satisfaction of the repayment
obligation from AC and Novel Sorbent revenue sources and the total
repayment obligation under this Repayment Agreement.
(D) The Obligor's repayment obligation shall be based only on the
receipt by Obligor of revenues derived from (1) sales/lease of CEM
Equipment and SIS Equipment, and (2) sale of AC and Novel Sorbent, for
use at coal-fired power generation facilities located in North America
as further described below.
(E) The Obligor shall pay DOE as follows:
CEM Equipment 5% of revenues from CEM Equipment.
SIS Equipment 5% of revenues from SIS Equipment used in
conjunction with the TOXECON Demonstration
Technology.
AC and Novel Sorbent:
(1) 15% of commissions received by Obligor from the sale
of AC and Novel Sorbent used in conjunction with the
TOXECON Demonstration Technology, plus
(2) 100% of amounts received by Obligor from Norit
Americas, Inc., for AC and Novel Sorbent sales used in
conjunction with the TOXECON Demonstration Technology
pursuant to the TOXEXON Sorbent Sale Repayment Agreement
between Obligor and Norit Americas, Inc., attached
hereto as Exhibit D.
This Repayment Agreement is entered into based on Obligor's expectation
to market CEM Equipment and SIS Equipment through direct sales and/or
leases to end users. In the event Obligor markets CEM Equipment
and/or SIS Equipment through approaches not contemplated herein,
Obligor shall submit a request to DOE to modify the repayment agreement
to account for the approach. The parties agree that any revised
repayment agreement shall provide repayment to DOE, on an installation
by installation basis, in an amount equal to the amount DOE would have
received if the CEM Equipment and/or SIS Equipment were sold directly
by Obligor.
ARTICLE VI. SCHEDULE OF REPAYMENTS
Payments to DOE shall be due within 60 days after each one-year period
following the first day of the Repayment Period.
Sales/leases shall be considered transactions subject to this Repayment
Agreement if contracts or purchase orders are placed prior to the
expiration date of the Repayment Agreement. Payments shall be due in
the year Obligor receives revenue from each transaction.
ARTICLE VII. OBLIGOR REPORTING AND RECORD RETENTION REQUIREMENTS
(A) Annual Report to DOE
Within 60 days after the end of each one-year period, the Obligor shall
submit a written report to DOE which, for the one-year period just
elapsed, provides the applicable data described below:
(1) The total dollar amount of repayment from Obligor accruing
to DOE;
(2) A description of each transaction from which the repayment
obligation accrued, including the date of such transaction.
(3) The total amount paid to DOE for all years, the amount
remaining to be repaid, and the amounts to be repaid based on
revenues derived from each of the CEM Equipment, SIS
Equipment, AC and Novel Sorbent sales in succeeding years
under this Repayment Agreement.
(B) Period of Retention
With respect to each annual report to DOE, the Obligor shall retain,
for the period of time prescribed in this paragraph, all related
financial records, supporting documents, statistical records, and any
other records the Obligor reasonably considers to be pertinent to this
Repayment Agreement. The period of required retention shall be from
the date each such record is created or received by the Obligor until
three years after one of the following dates, whichever is earlier: the
date the related annual report is received by DOE; or the date this
Repayment Agreement expires, or the final payment to DOE is received.
If any claim, litigation, negotiation, investigation, audit, or other
action involving the records starts before the expiration of the three-
year retention period, the Obligor shall retain the records until such
action is completed and all related issues are resolved, or until the
end of the three-year retention period, whichever is later. The
Obligor shall not be required to retain any records which have been
transmitted to DOE by the Obligor.
(C) Authorized Copies
Copies made by microfilm, photocopying, or similar methods may be
substituted for original records. Records originally created by
computer may be retained on an electronic medium, provided such medium
is "read only" or is protected in such a manner that the electronic
record can be authenticated as an original record.
(D) Access to Records
DOE and the Comptroller General of the United States, or any of their
authorized representatives, shall have the right of access to any
books, documents, papers, or other records (including those on
electronic media) which are pertinent to this Repayment Agreement. The
purpose of such access is limited to the making of audits,
examinations, excerpts, and transcripts. The right of access described
in this paragraph shall last as long as the Obligor retains records
which are pertinent to this Repayment Agreement.
(E) Restrictions on Public Disclosure
The Federal Freedom of Information Act (5 U.S.C. Section 552) does not
apply to records the Obligor is required to retain by the terms of this
Repayment Agreement. Unless otherwise required by law or a court of
competent jurisdiction, the Obligor shall not be required to disclose
such records to the public.
(F) Flow Down of Records, Retention, and Access Requirements
Obligor shall include clauses substantially similar to the records
retention and access requirements set forth in sections (B) and (D) of
this Article in all agreements when necessary to fulfill the Obligor
obligations under this Repayment Agreement.
ARTICLE VIII. DEFAULT
If the Obligor fails to make payment within the time specified in
Article VI or submit the annual report within the time specified in
Article VII, Obligor shall be in default of this Repayment Agreement.
If Obligor fails to cure the default within sixty (60) days after
receipt of notice of the default from DOE, notwithstanding any
provision of the Cooperative Agreement or Repayment Agreement to the
contrary, the total unpaid amount shall be immediately payable to DOE.
ARTICLE IX. COMMERCIALIZATION
The Obligor agrees to exercise its best efforts to commercialize, or to
assist others to commercialize, domestically and worldwide the TOXECON
and CEM Demonstration Technology.
ARTICLE X. COMMERCIALIZATION REPORT
For three (3) years after completion of the demonstration project, the
Obligor shall submit a report (the "Commercialization Report")
describing the Obligor's progress and success in commercializing the
TOXECON and CEM Demonstration Technology used during the project as
well as technology derived from the TOXECON and CEM Demonstration
Technology. The purpose of the report is to assist DOE in determining
the benefits obtained from DOE support of technology development. The
Commercialization Report is independent from the annual report required
in Article VII above and is not limited to the sale or licensing of the
TOXECON and CEM Demonstration Technology. The Commercialization Report
shall include a discussion of the Obligor's efforts to commercialize
the technology. The Commercialization Report shall also include
descriptions and locations of all significant technology, embodied in
the CCPI Project or derived from technology embodied in the CCPI
Project, that was successfully implemented during the preceding year.
The Commercialization Report shall also include a discussion of any
impediments to the commercialization of the TOXECON and CEM
Demonstration Technology. The Commercialization Report shall be due on
June 30 of each year.
ARTICLE XI. DOE REPORTING AND RECORD RETENTION REQUIREMENTS
Annual Report to Obligor
Within 90 days after the end of each one-year period, DOE shall submit
a written report to Obligor which, for the one-year period just
elapsed, provides the total dollar amount of repayment received by DOE
from all sources related to the DOE Share broken down by each revenue
source. Obligor agrees that DOE may release such information,
including data from Obligor, to other parties that are subject to
repayment obligations related to the Cooperative Agreement.
ARTICLE XII. OPTION TO SEPARATE INDIVIDUAL COMPONENTS OR BUSINESS
DOE and Obligor acknowledge that in an effort to commercialize the
business of each component of this Repayment Agreement (the CEM, SIS,
AC and Novel Sorbent) Obligor may elect and has the right to sell,
transfer, assign or otherwise divest itself of the business related to
any component to a financially responsible new entity or recipient.
Notwithstanding Obligor's divestiture, transfer or assignment of the
repayment obligation under this Repayment Agreement is subject to prior
approval of DOE and execution of a novation agreement among DOE,
Obligor and the new entity. DOE agrees that such approval shall not be
unreasonably withheld.
ARTICLE XIII. DISPUTES
Disputes arising under this Repayment Agreement shall be subject to the
procedures set forth in 10 CFR 600.22 Disputes and Appeals.
ARTICLE XIV. NOTICES
All payments, notices and other communications to a party hereunder
shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of
electronic message transmission with delivery confirmed (by voice or
otherwise) to such party (and will be deemed given on the date on which
the notice is received by such party) at the address for such party set
forth below (or at such other address for the party as the party shall,
from time to time, specify by like notice to the other parties):
If to DOE, at: U.S. Department of Energy
National Energy Technology Laboratory
X.X. Xxx 00000
Xxxxxxxxxx XX 00000
Attention: Chief Counsel
If to ADA-ES, at: 0000 XxxxxXxxx Xxx, X-0
Xxxxxxxxx, XX 00000
Fax 000-000-0000
Attention: President
UNITED STATES DEPARTMENT OF ENERGY
Signature: /s/ Xxxxxxx Xxxxx 4/6/04
-------------------------------- ----------------
Name: Xxxxxxx Xxxxx Date
Title: Contracting Officer
OBLIGOR (ADA-ES, Inc.)
Signature: /s/ Xxxxxxx X. Xxxxxx March 15, 2004
----------------------------------- ----------------
Name: Xxxxxxx X. Xxxxxx, Ph.D., M.B.A. Date
Title: President, ADA-ES, Inc.
