DEVELOPMENTAL AGREEMENT
THIS
DEVELOPMENTAL
AGREEMENT
is made and entered into as of this
30th day of July, 2007, by and between
FUEL FRONTIERS, INC., a Subsidiary Nuclear Solutions,
Inc.
(“FFI”) with a place of business at 0000 Xxxxxxxxxxx Xxxxxx XX, Xxxxx 0000,
Xxxxxxxxxx, XX 00000 and KENTUCKY FUEL ASSOCIATES INC.
(“KFA”), with a place of business at 00000
Xxxxxxxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxx X, Xxxxxxxxxx, Xxxxxxxx 00000 (together
known as the “Parties”).
WHEREAS,
FFI is in the business of
researching, developing and implementing technologies for the conversion of
gas
to liquid fuels and proposes to construct production facilities for the
production of synthetic fuels;
WHEREAS,
KFA possesses certain contacts
and knowledge that may be beneficial to FFI for the development of a coal to
gas
to liquid (CTL) fuels production facility in the State of Kentucky,
WHEREAS,
the parties are desirous of
combining their respective skills and expertise and desire to enter this
Agreement for the development of gas to liquid fuel production facilities in
the
State of Kentucky and throughout the United States,
NOW,
THEREFORE, in consideration of the
mutual agreements contained herein, the parties desire to enter into this
Developmental Agreement as follows:
1. Covenants
of KFA. KFA hereby agrees as follows:
A. KFA
shall
utilize their knowledge, experience and contacts to locate and obtain one or
more sites, located in the State of Kentucky and throughout the United States,
within FFI’s specifications, suitable for the development of CTL fuel production
facilities with annual production volumes to be determined. The duties of KFA
shall include identifying and negotiating the acquisition of suitable land,
feedstock and offtake agreements and other necessary instruments to reasonably
develop CTL production facilities.
B. KFA
shall
utilize their knowledge, experience and contacts to consult with and assist
FFI
in obtaining permitting, funding, and approval for the development and operation
of CTL fuel production facilities. Notwithstanding anything herein to the
contrary, KFA will not, in any event, be deemed as obligated or required to
provide any form of guarantee or bond which may be required to obtain or secure
the referenced permitting, funding, approval, or operation of the production
facility.
C. KFA
hereby
agrees to work exclusively with FFI in locating, developing, and consulting
on
coal, gas, and waste to liquid fuel/alternative fuel projects and/or ventures;
and further agrees to otherwise refrain from engaging in any activities or
actions that either directly or indirectly competes with the
CTL businesses of FFI.
D. KFA
shall
provide FFI with an initial funding of two million dollars ($2,000,000.00)
which
said payment shall be tendered within 21 days of the execution of this
Agreement. If said funding is not completed within the allotted time, KFA will
provide evidence that complete funding is reasonably expected and will indicate
the date whereupon funding shall be completed. Said funds shall be applied
by
FFI towards any and all costs and expenses incurred in the ordinary course
of
business for the development, construction and arranging of financing to closure
of the first KFA/FFI production facility developed, including without limitation
the following costs: engineering, procurement, administrative, development
management, financing, legal, operations and maintenance costs for each said
fuel production facility. For each site located thereafter by KFA and accepted
by FFI for development of a fuel production facility, KFA shall provide, FFI
with initial minimum project funding of two million dollars ($2,000,000.00)
for
any and all costs and expenses incurred in the ordinary course of business
for
the development, construction and arranging of financing to closure of the
production facility, including without limitation the following costs:
engineering, procurement, administrative, development management, financing,
legal, operations and maintenance costs for each said fuel production
facility.
E.
In
consideration for FFI granting KFA the exclusive right to locate and develop
CTL
fuel production facilities within the State of Kentucky, KFA hereby agrees
to
utilize their knowledge and experience in the development of energy production
projects to consult with FFI on existing fuel production facility projects.
2. Covenants
of FFI. FFI hereby agrees as follows:
A. FFI
hereby grants KFA the exclusive right to locate and develop CTL fuel production
projects within the State of Kentucky; and grants KFA the non-exclusive right
to
locate and develop CTL fuel production projects throughout the remaining states.
KFA will also receive the right of first refusal to match any third party’s
proposed terms for any CTL facility in the remaining states, subject to FFI
approval, in conjunction with a review of KFA resources and
performance.
B. FFI
hereby grants KFA the right to negotiate a feedstock and land acquisition
agreement as part of an overall site development package in coordination with
and subject to the review and approval of FFI.
C. In
consideration for each site located by KFA pursuant to the terms of this
Agreement, and accepted by FFI for development, FFI agrees to pay KFA (7%)
of
the net pre-tax income of each CTL fuel production facility identified by KFA
and developed by FFI for the entire lifetime of each production facility, to
be
distributed on a quarterly basis, within 15 days of FFI and/or its parent
company Nuclear Solutions, Inc.’s quarterly SEC filing. The computation of the
quarterly net income shall be in accordance with GAAP accounting standards.
FFI
would have the right to retain up to 20% of the quarterly net pre-tax income
for
extraordinary expenses; of each production facility; and distributions to KFA
would be reduced on a pro rata basis of any such retention of funds.
D. In
consideration for KFA’s initial minimum funding contribution in section 1 (D.)
above, FFI hereby grants KFA a two and one half percent (2.5%) equity interest
in the first CTL facility developed by KFA.
E. FFI
is fully responsible for leading on all project financing initiatives for the
facility including but not limited to bridge financing, senior debt finance,
equity, leasing and mezzanine finance.
F. In
the event that intellectual property developed by FFI, within the scope of
this
agreement, specific to CTL/GTL production facilities, is sold or transferred
to
a third party, FFI warrants that no intellectual property or technology license
fees and/or royalties shall be payable by KFA and/or any CTL production
facilities, established in accordance with this agreement, to said third
party(s).
3. Term
and Termination. This Agreement shall be effective and binding upon
execution by the parties and continue for a period of 10 years; and shall be
renewable at the election of the parties for an additional 5 year
period.
Either
party shall have the right to
terminate this Agreement in the event that:
A. Either
Party
fails to perform or comply with any material provision of this Agreement or
breaches any material representation or warranty, and such failure continues
for
a period of ninety (90) days following written notice from one Party to the
other Party of such failure;
B. Either
Party
becomes insolvent, is declared bankrupt, voluntarily files or permits the filing
of a petition in bankruptcy, makes an assignment for the benefit of creditors
other than a routine assignment of profits as security for financing, or seeks
any other similar relief under any bankruptcy laws or related
statutes;
C. Either
Party
engages in conduct which is deceptive, misleading or unethical, and such conduct
continues for a period of ninety (90) days following written notice from one
Party to the other Party regarding such conduct.
Termination
of this Agreement will not
relieve KFA of its obligations under Section 4 of this Agreement nor will
termination relieve FFI of the compensation due KFA pursuant to Section 2(C)
and
Section 2(D) of this Agreement.
4. Confidential
Information. KFA agrees that any information received by KFA during any
furtherance of KFA's obligations in accordance with this contract, which
concerns the business, financial or other affairs of FFI will be treated by
KFA
in full confidence and will not be revealed to any other persons, firms or
organizations.
A
confidentiality/non-disclosure agreement governing the terms and conditions
for
the protection and disclosure of FFI’s Confidential Information shall be
executed between Future Fuels, Inc. and KFA and is attached hereto as Appendix
A. To the extent necessary, KFA shall enter into confidentiality/non-disclosure
agreements with such other Entities that require KFA to disclose the
Confidential Information of FFI in order to perform the Services required by
KFA
under this Agreement.
5. Assignments.
This Agreement is personal between the parties and will not be assigned
by either party without the prior written consent of the other party (such
consent is not to be unreasonably withheld), except that it may be assigned
without prior written consent to the successor of either party, to a person,
firm or corporation acquiring all, or substantially all, of the business and
assets of either party, to the parent company of FFI, or to a wholly or
partially owned subsidiary of FFI.
6. Miscellaneous
Provisions. KFA agrees that in the performance of its duties, it will,
to the best of its knowledge, comply with all laws of the United States of
America and of the various states of the United States, and of any country
in
which KFA performs Services, and of the rules and regulations issued by any
governmental entity of such other country, except to the extent that such
compliance is prohibited by or penalized under the laws of the United States
of
America, including but not limited to the Internal Revenue Code of 1986, as
amended, and the Export Administration Act of 1969, as amended.
KFA
understands that this Agreement may be publicly disclosed and agrees that FFI
shall be entitled to publicly disclose any or all of this Agreement under such
circumstances and in such manner as FFI shall, in its sole discretion,
decide.
7. Indemnity.
KFA must indemnify and save FFI harmless from and against any and all claims
for
injury or death to third parties, KFA’s employees or agents and/or damage to
property of third parties, KFA and/or its employees or agents (including costs
of litigation and attorneys' fees) in any manner caused by, arising from,
incident to, or growing out of the Services performed under this Agreement,
except any such claims which may be caused by the willful misconduct or gross
negligence of FFI. FFI will notify KFA in writing of any such claims setting
forth all known details.
8. Notices.
All notices provided for in this Agreement shall be given in writing, either
by
personal delivery of the notice or by the mailing postpaid to the parties
respectively at the following addresses:
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If
to Future Fuels:
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Fuel
Frontiers, Inc.
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0000
Xxxxxxxxxxx Xxx XX
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#000
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Xxxxxxxxxx,
XX 00000
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Attention:
Xxxx Xxxxx, President
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If
to KFA:
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X.X.
Xxx 00000
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Xxxxxxxxxx,
Xxxxxxxx 00000
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Attention:
Xxxxx Xxxxxx, President
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9. Severability.
In the event that any term or provision of this Agreement is determined to
be
unlawful or unenforceable, such term or provision shall be deemed severed from
this Agreement and all remaining terms and provisions of this Agreement shall
remain in full force and effect.
10. Disclosure.
Both parties acknowledge and agree that it may be necessary for one party to
disclose the retention of KFA, the duties performed and the compensation paid,
should there be proper inquiry from such a source as an authorized U.S. or
state
government agency or should either party believe it has a legal obligation
to
disclose such information and each party hereby authorizes any such
disclosures.
11. Entire
Agreement. This Agreement (including all schedules and exhibits
thereto), constitute the entire agreement and understanding of the Parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersedes all prior written and oral agreements and understandings with respect
to such subject matter between the Parties.
12. Amendments.
This Agreement may not be and shall not be deemed or construed to have been
modified, amended, rescinded, canceled or waived in whole or in part, except
by
written instrument signed by the parties hereto.
13. Applicable
Law. This Agreement shall be deemed to be a contract made under the
laws of State of New York and for all purposes it, plus any related or
supplemental documents and notices, shall be construed in accordance with and
governed by the laws of the State of New York exclusive of its choice of law
rules. The parties expressly agree that any and all disputes arising out of
or
concerning this Agreement shall be arbitrated in accordance with the rules
and
procedures of the American Arbitration Association.
14. Relationship
of the Parties. The rights, duties, obligations and liabilities of the
Parties under this Agreement will be individual and not joint or collective.
It
is not the intention of the Parties to create, nor will this Agreement be deemed
to create, any partnership, agency, joint venture or trust, or to authorize
any
Party to act as an agent, servant or employee for any other Party. Each Party
shall remain solely responsible for the actions of its own
employees.
15. Waiver.
No right under this Agreement may be waived by a Party, except pursuant to
a
writing signed by the Party against which enforcement of the waiver is sought.
Without limitation, no failure or delay on the part of any Party in exercising
any of its rights under this Agreement, no partial exercise by any Party of
any
of its rights under this Agreement, and no course of dealing among the Parties,
will constitute a waiver of the rights of a Party.
16. Right
to Enter. KFA shall be permitted to enter any production facility
developed under this agreement with the prior written consent of FFI, not to
be
unreasonably withheld.
17. Authority
to Execute. Each party represents and warrants that it has the legal
power and authority to enter into this Agreement and that it has not made and
will not make any commitments to the other inconsistent with such.
18. Counterparts.
This Agreement may be executed by the Parties in separate counterparts, and
by
facsimile, each of which when so executed and delivered will be an original,
but
all such counterparts shall together constitute but one and the same
instrument.
Fuel
Frontiers, Inc.
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Xxxxxxx
Xxxxx /s/
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7-30-07
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Name:
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Date
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Title:
CEO
Kentucky
Fuel Associates, Inc.
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Xxxx
Xxxxxx /s/
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7-30-07
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Name:
|
Date
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Title:
President
