DELTA-T LICENSE AGREEMENT LICENSE OF TECHNOLOGY BETWEEN DELTA-T CORPORATION AND BUFFALO LAKE ENERGY, LLC
Exhibit 10.28
Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.
Omissions are designated as [*]. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.
DELTA-T
LICENSE AGREEMENT
LICENSE
OF
TECHNOLOGY
BETWEEN
DELTA-T
CORPORATION
AND
BUFFALO
LAKE
ENERGY,
LLC
THIS
AGREEMENT, made
this 9th day of June, 2006 by and between Delta-T Corporation, a Virginia
corporation, with its principal place of business at 000 Xxxxxxxxx Xxx Xxxxxxx,
Xxxxxxxxxxxx, Xxxxxxxx 00000 (hereinafter “Delta-T”), and Buffalo
Lake Energy, LLC, a Delaware limited liability company, with its principal
place of business at 000
XxXxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxxxx,
Xxxxxxxx 00000 (hereinafter “Owner”), each of which may be referred
to individually as a “Party,” or jointly as the
“Parties.”
WITNESSETH:
WHEREAS,
Owner is
building an ethanol plant near Fairmont, Minnesota, (the “Plant”),
and
WHEREAS,
Owner
has contracted with TIC - The Industrial Company (“TIC” or “EPC
Contractor”) to design-build the Plant pursuant to an EPC Contract dated
June 9, 2006 (“EPC Contract”), and
WHEREAS,
Delta-T
has agreed to provide engineering and related services related to construction
of the Plant based on Delta-T’s proprietary technology, but only on the
condition that Owner enter into this license agreement with Delta-T for the use
of such proprietary technology embodied therein, on the terms and conditions
set forth herein,
NOW,
THEREFORE,
in
consideration of the mutual covenants and conditions contained herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties, intending to be legally bound, do hereby
agree as follows:
ARTICLE
I
DELTA-T
TECHNOLOGY
As used
in this Agreement, unless otherwise defined, the term “DELTA-T
TECHNOLOGY” shall mean all information embodied in the Plant, or in any
drawings or other documents in each such case as have been delivered by Delta-T
to Owner, under this Agreement or the EPC Contract. DELTA-T TECHNOLOGY shall
not, however,
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include
information that Owner can demonstrate falls under one of the following
exceptions:
| A. |
Was
known to it or in its possession prior to its receipt from Delta-T, except as a
result of a breach of an obligation of confidentiality; |
| B. |
Is, or
after the date of this Agreement becomes, through no fault of its own, part of
the public domain or generally available to the public by publication, issuance
of a patent or otherwise; or |
| C. |
Is
disclosed to Owner by someone other than Delta-T who is under no obligation not
to disclose it; or |
| D. |
Is
independently developed by or on behalf of Owner without reference to the
Delta-T Technology. |
ARTICLE
II
GRANT
OF
LICENSE
Owner
acknowledges that Delta-T is and shall remain the sole owner of the DELTA-T
TECHNOLOGY, and of the copyrights in all the drawings, manuals and other
documents provided by Delta-T under this Agreement. In consideration of
Owner’s payment of a license fee of [ * ]
($[ * ]) (“License Fee”), which shall be paid
by Owner to EPC Contractor pursuant to the EPC Contract, or as provided at
Article III below, Delta-T grants to Owner, subject to the conditions of this
Agreement, a non-exclusive, paid-up, non-transferable right to use in
perpetuity the DELTA-T TECHNOLOGY, without right to grant such rights to
others, solely for the purposes of:
A. operation
of the Plant, and
B. maintenance,
optimization, enhancement and expansion of the Plant.
Optimization
and enhancement, for this purpose, shall include de-bottlenecking, but shall
not include expanding the physical dimensions of the distillation columns or
molsieve vessels included in the DELTA-T TECHNOLOGY, or adding to the original
number of distillation columns or molsieve vessels specified in such design.
This license shall not be assignable or otherwise transferrable in any way
except that Owner may (i) assign it to a purchaser of substantially all of the
assets of the Plant in connection with the sale of such Plant as a going
business, provided that Owner gives Delta-T written notice of such transfer at
least thirty (30) days prior to the date on which it becomes effective, and
(ii) Owner may pledge its interest in this License to its lender or lenders
provided that no lender shall have a right to sell or otherwise use or transfer
any such rights except in connection with the sale of the Plant as a going
business, and provided further that any such lender must give Delta-T prior
notice of the effectiveness of such sale or transfer.
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* Certain
confidential information on this page has been omitted and filed separately
with the Securities and Exchange Commission. |
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ARTICLE
III
COMPENSATION
3.1
Payment
of Fee: The
License Fee shall be paid by EPC Contractor to Delta-T according to the
schedule described below. Provided, however, that in the event EPC Contractor
shall fail to timely pay such License Fee or any portion thereof, Delta-T shall
give prompt, written notice of such failure to Owner, and Owner shall have the
right, but not the obligation, to cure such failure by paying such License Fee
or corresponding portion to Delta-T within thirty (30) days from the date of
such notice, and in such case this Agreement shall remain in
effect
3.2
Amount
and Payment Dates for License Fee: EPC
Contractor is scheduled to pay the License Fee to DELTA-T at Final Completion
as defined in the EPC Contract.
ARTICLE
IV
RESTRICTIONS
ON
ACCESS
AND
CONFIDENTIALITY
4.1 Restrictions
on Access: Until
such time, if ever, that the DELTA-T TECHNOLOGY falls under one or more of the
exceptions described at Article I above, and except as provided under Section
4.2 below, Owner shall not permit any third party listed on Exhibit A or,
without the consent of Delta-T, whose business is designing or constructing
ethanol plants or who is an ethanol process technology provider, to have access
to the DELTA-T TECHNOLOGY, either by means of documents embodying any such
technology or by Inspection. Owner acknowledges that as of the date hereof
third parties whose business is designing or constructing ethanol plants
include those listed on Exhibit A. “Inspection” for the purposes of
this Article IV shall mean any visual or other inspection of any portion of the
Plant containing DELTA-T TECHNOLOGY in sufficient detail to reveal measurements
of the components, configuration of piping and components, operating
parameters, or access to software used to control such components.
4.2 Confidentiality:
4.2.1
Disclosure: Owner
shall not disclose any DELTA-T TECHNOLOGY, by Inspection or otherwise, to any
person or entity other than (i) its employees, investors, officers, agents,
advisors, contractors and subcontractors to the extent that they have a need to
have access to such information to perform their obligations, and only if they
have first been advised of the confidentiality of the information and agree to
keep it confidential (in the case of contractors, subcontractors and
third-party advisors, through a separately executed agreement in the form
attached hereto as Exhibit B), and agree not to use or disclose it for any
purpose other than fulfilling their obligations to Owner, and (ii) third
parties, other than those identified on Exhibit A, as needed to maintain or
operate the Plant as permitted under Article II above. Owner shall not disclose
any DELTA-
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TECHNOLOGY for the purpose of maintenance or repair of the Plant to anyone
other than its employees and routine maintenance providers who need to have
access for those purposes unless it has first given Delta-T written notice of
the specific maintenance or repair work that it wishes to accomplish and at
least ten (10) business days to respond, or if the equipment is inoperable or
the operation thereof is substantially impaired, at least 24 hours to respond.
In no case shall Owner retain anyone other than Delta-T to do any such work
that would involve disclosure of any DELTA-T TECHNOLOGY for an amount greater
than, or within a time period longer than, the amount or time period within
which Delta-T last offered to do such work. Furthermore, in no case shall Owner
permit any employee or third party to view the internal portion of a molsieve
installed at the Plant and based on the DELTA-T TECHNOLOGY unless it needs to
do so due to malfunction of the molsieve, and Delta-T either fails to arrive at
the Plant within thirty-six (36) hours after receipt of Owner’s request
for repair of the molsieve or fails to repair the molsieve within three (3)
days thereafter, or such longer period of time as is reasonably necessary to
make the repair. Owner shall be allowed to contract with routine maintenance
providers so long as the contractors comply with the confidentiality
obligations specified herein.
4.2.2
Protection;
Copies: Owner
shall take all reasonable means to protect the confidentiality of the DELTA-T
TECHNOLOGY. In particular, but without limitation, Owner shall not (i) make
copies of any document containing any of the DELTA-T TECHNOLOGY except to the
extent reasonably necessary to use such technology as permitted under this
Agreement, (ii) deliver any such documents to any government agency for any
purpose without complying with any applicable law or regulation necessary to
protect the confidentiality of the same, or (iii) remove, obliterate or fail to
reproduce on any copy of any such document any and all copyright and
confidentiality notices printed thereon. Except as described herein, Owner
shall not be required to take any affirmative action to protect DELTA-T
TECHNOLOGY from inspection by any governmental agencies, but it shall notify
Delta-T of any such demand as soon as reasonably practical. In the event that
Owner receives more than forty-eight (48) hours advance notice of any
inspection by a governmental agency, Owner will immediately inform Delta-T of
such notice, will inform such governmental agency of the confidential nature of
the DELTA-T TECHNOLOGY and will request that such governmental agency agree to
protect the confidential nature of the same (provided that Owner shall have no
responsibility or liability for the failure of any such governmental agency to
comply with such request).
4.2.3
Use: Owner
shall not use DELTA-T TECHNOLOGY except as permitted herein.
4.2.4
Court
Order or Other Legal Process: In the
event that any subpoena, request or demand (“Demand”) shall be served
upon Owner under any court action, administrative or dispute resolution
proceeding, for delivery or disclosure of any of the DELTA-T TECHNOLOGY, then
Owner will promptly advise
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Delta-T
of such Demand and deliver to Delta-T a copy of such Demand and all
documentation relating to such Demand and the proceeding in which it is made
which is in the possession of Owner and is reasonably requested by Delta-T. The
Parties shall consult with each other concerning any such Demand and Owner
shall cooperate with Delta-T, as is reasonably necessary and practical, to
minimize the disclosure of such technology by agreed protective order prepared
and negotiated by Delta-T and the party making the Demand, or by other means
not requiring Owner to contest or oppose the Demand. If Delta-T is not a party
to the action or proceeding in which the Demand is served, and wishes to have
the Demand opposed, then Owner will not object to Delta-T intervening in such
action or proceeding for the purpose of opposing the Demand or minimizing the
disclosure of the DELTA-T TECHNOLOGY. If Owner makes a disclosure of DELTA-T
TECHNOLOGY pursuant to a Demand after complying in all material respects with
the provisions of this Section 4.2.4, then such disclosure shall not be deemed
a breach of this Agreement.
4.2.3
Injunctive
Relief:
Owner
agrees that any breach of this Agreement shall cause Delta-T irreparable harm.
Accordingly, and in addition to any other remedies that Delta-T may have at law
or in equity, Delta-T shall be entitled to obtain injunctive relief against
Owner to prevent any continuing breach, and without posting or filing any bond
or other security. All costs, expenses and attorney’s fees resulting from
the litigation or arbitration of any claim under this Agreement shall be paid
by the losing party to the prevailing party.
ARTICLE V
Reserved
ARTICLE VI
INDEMNITY
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Delta-T
shall, or (2) if Delta-T should otherwise deem it advisable because of
such suit or proceeding or threat thereof, Delta-T may, in either such case at
Delta-T’s cost and expense (i) procure for Owner the right to continue
operation of the Plant, or (ii) revise the DELTA-T TECHNOLOGY and modify the
Plant so as to avoid infringement (the election between alternatives (i) and
(ii) shall be at the discretion of Delta-T); provided, that
in the event that Delta-T takes any such action pursuant to clause (2) of this
sentence, Delta-T’s actions shall not interfere with the operation of the
Plant. OWNER AGREES THAT DELTA-T SHALL NOT BE RESPONSIBLE FOR ANY
CONSEQUENTIAL, EXEMPLARY, INCIDENTAL, PUNITIVE OR OTHER SPECIAL DAMAGES THAT
ARISE AS A RESULT OF DEFENDING ANY SUCH SUIT OR THAT ARISE AS A RESULT OF ANY
COURT ORDER OR SETTLEMENT ENTERED INTO RESOLVING SUCH SUIT.
ARTICLE VII
LIMITATION
OF
LIABILITY
In no
case shall Delta-T have any responsibility for the acts or omission of any
contractor, subcontractor, vendor or material suppliers of Owner, or any
employee, agent or contractor of any of them, other than its own
subcontractors, vendors, contractors, materials suppliers, employees, agents
and contractors of any of them. In no event shall Delta-T have any liability to
the Owner for any incidental, special, punitive or consequential loss or
damage, including without limitation, damage resulting from claims, loss of
use, loss of revenue, loss of profit, loss of contracts, loss of product or
production, loss of business opportunity suffered or incurred by another party
or any of their affiliates or co-venturers, howsoever arising out of or in
connection with this agreement, or from the termination or breach hereof or any
warranty made hereunder, other than for breaches of Article IV. In no case
shall Delta-T’s or Owner’s cumulative liability under this Agreement,
whether under Article VI or otherwise, including without limitation the cost of
defense of any claim indemnifiable under Article VI, exceed $1
million.
ARTICLE VIII
TERMINATION
This
License Agreement shall automatically terminate upon termination of the EPC
Contract for convenience of Owner or for material breach by Owner. This License
Agreement shall also terminate upon termination of the EPC Contract for breach
for any reason other than the fault of Delta-T if (and only if) the License Fee
has not been paid to Delta-T; provided, that Delta-T gives Owner written notice
of such non-payment and affords Owner a period of at least three (3) business
days to pay the unpaid amount of the License Fee and, if such payment is made,
this License Agreement shall continue in full force and effect. Upon
termination of this License Agreement, Owner shall immediately return to
Delta-T all documents embodying any DELTA-T TECHNOLOGY and shall cease all use
of the DELTA-T TECHNOLOGY. To the extent DELTA-T TECHNOLOGY is embodied in
equipment delivered to Owner prior to termination, Owner may sell the same, and
display the same for sale, to persons other than those listed
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on
Exhibit A and those who are ethanol process technology providers and
provided that any such purchaser agrees to be bound by the confidentiality
provisions of this License Agreement; provided, that
if any such proposed purchaser is an entity whose business is designing or
constructing ethanol plants, such sale shall be subject to the consent of
Delta-T (which consent shall be deemed given if Delta-T does not object within
five (5) days of receipt of notice thereof by Delta-T).
ARTICLE IX
GENERAL
PROVISIONS
9.3 Governing
Law; Venue: The
validity, performance, construction and effect of this Agreement shall be
governed by the laws of the
Commonwealth of Virginia, without regard to the choice of laws provisions
thereof.
9.4 Notice: All
notices provided for herein will be considered as properly given if in writing
and delivered personally or by courier properly addressed:
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If to
Owner, to: |
Bio Fuel
Energy, LLC |
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000
XxXxxx Xxxxxx, Xxxxx Xxx |
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Xxxxxxxxxxxx,
XX 00000 |
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Attention:
Xxx Xxxxx |
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With a
copy to: |
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Xxxxxxxxxx
and Xxxxx LLP |
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0000
Xxxxxxxxx Xxxxxx, Xxxxx 0000 |
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Xxxxxxx,
XX 00000 |
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Attention:
Xxxx X. Xxxxxxxxx |
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If to
Delta-T, to: |
Delta-T
Corporation |
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000
Xxxxxxxxx Xxx Xxxxxxx |
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Xxxxxxxxxxxx,
XX 00000 |
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Attn:
Xx. Xxxxxx X. Xxxxx, Vice President |
9.5 Survival: The Parties’ obligations under the provisions of Articles IV, VI, VII and VIII shall survive the termination or expiration of this Agreement.
9.6 Severability: In the
event any section, or any part or portion of any section of this Agreement
shall be held to be invalid, void or otherwise unenforceable, such holding
shall not affect the remaining part or portions of that section, or any other
section hereof.
IN
WITNESS
WHEREOF,
the
Parties have executed this Agreement to be effective on this 9th day of June,
2006 (the “Effective Date”).
| DELTA-T CORPORATION | BUFFALO LAKE ENERGY, LLC | |||
| By: |
/s/ X. X. Xxxx Xxxxx |
By: |
/s/ Xxxxxx X. Xxxxx |
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| Printed Name: |
X. X. Xxxx Xxxxx |
Printed Name: |
Xxxxxx X. Xxxxx |
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| Title: |
President |
Title: |
Executive Vice President and Chief Operating Officer |
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| Date: |
June 9, 2006 |
Date: |
June 9, 2006 |
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