Stakeholders Letter of Agreement
Exhibit
4.16
Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
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25th
day of June 2007
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GLOBAL
GREEN SOLUTIONS INC.
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Suite
1010 -000 Xxxx Xxxxxx Xxxxxx
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Vancouver,
BC V6C 1H27
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(Hereafter
known as "GGRN")
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AND
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Suite
1010 - 000 Xxxx Xxxxxx Xxxxxx
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Vancouver,
BC V6C 1H2
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(Hereafter
known as "VPI")
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AND
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PAGIC
LP
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(Formerly
MK Enterprises LLC)
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0000
Xxxxxxxx Xxxx Xxxxxx
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Suite
H El Paso Texas 79922
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(Hereafter
known as "PG")
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AND
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WEST
PEAK VENTURES OF CANADA LTD.
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Suite
1010 - 000 Xxxx Xxxxxx Xxxxxx
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Vancouver,
BC V6C 1112
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(Hereafter
known as "WPV")
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STAKEHOLDERS
LETTER of AGREEMENT
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DEVELOPMENT
and COMMERCIAL EXPLOITATION
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ALGAE
BIOMASS PRODUCTION TECHNOLOGIES
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Whereas
the respective parties have agreed to jointly participate in the
development of the intellectual property. know-how, confidential
processes, modifications and derivative works and commercialization
thereof arising out of patents pending for the development of an Algae
Biomass Production Technologies known as "Vertigro";
and
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Therefore,
this "Letter of Agreement" will be the basis for a "License Agreement"
between Pagic LP (Licensor) and a Joint Venture (Licensee) comprising
Global Green Solutions Inc. and Valcent Products inc. (Venture Parties)
which shall be the governing documents for their participation in the
Venture; and
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The
Parties agree the definitive Venture Agreement which shall include an
Operating Agreement and the License Agreement will be signed on or before
the last day of July 2007 which shall include amongst other things. the
basic terms of this Letter of Agreement as follows;
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Note:
Where further work is required on a subject the (TBA) nomenclature
means "To Be Advised
and/ or Agreed"
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1
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Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
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1)
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Venture
Name:
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Vertigro
Algae Technologies, [Venture].
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2)
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Form
of Venture
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a)
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Legal
Joint Venture [JV]
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b)
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Country
of domicile (TBA)
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3)
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Venture
Stakeholders
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a)
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Global
Green Solutions lnc [GGRN].
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b)
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Valcent
Products Inc. [VPI].
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c)
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Pagic
LP [PG].
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d)
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West
Peak Ventures of Canada LTD. [WPV].
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4)
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Venture
Stakeholders Interests
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a)
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Venture
Equity Interest and Net Profit Distribution:
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i)
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GGRN
50%.
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ii)
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VPI
50%.
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b)
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Venture
License Royalty Interest and Distribution
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i)
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PG
67%.
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ii)
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WPV
33%.
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5)
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Technology
Intellectual Property and License Royalty Owners
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a)
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Intellectual
Property (IP) is owned by PG.
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b)
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License
Royalties are owned 67% by PG and 33% by WPV.
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6)
Venture Technology
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The
Venture Technology shall comprise a high yield technology and any
subsequently related technologies for the commercial scale production of
Algae Based Biomass for all industrial commercial and retail applications
including but not limited to bio-fuel food and health pharmaceutical,
animal and agricultural feeds.
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2
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Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
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7)
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Venture
Management Committee
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The
Venture Management Committee (acting as a Board of Directors) shall be
composed of four (4) Committee Members, two (2) of whom shall be nominated
by GGRN and one (1) of whom shall be nominated by VPI and one (I) of whom
will be nominated by PG.
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a)
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The
Venture Management Committee shall meet quarterly during the first
operational year of the Venture and thereafter a minimum of twice per
year.
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b)
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Venture
shall appoint the Chairman of the Management Committee to serve on an
annual basis. The Chairman shall chair Committee meetings but will not
have any casting vote rights in the case of an impasse.
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c)
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The
quorum at a meeting of the Management Committee shall be three (3)
Members.
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d)
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Each
Member will have one (1) vote.
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e)
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In
the event of an impasse which cannot be resolved by the Management
Committee, GGRN shall have the deciding vote on operational matters and PG
the deciding vote on Venture Licensed Technology
matters.
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f)
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The
following matters shall require the affirmative vote of all members of the
Management Committee;
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i)
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any
amendment of the Ventures Head Agreement.
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ii)
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the
Venture ' s
dissolution, liquidation or winding up.
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iii)
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any
acquisition, merger, consolidation, share exchange, reorganization,
recapitalization or other similar extraordinary transaction involving the
Venture; or the sale or other disposition of all or substantially all of
the property or assets of the Venture or Licensed
Technology.
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g)
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In
the event of an impasse regarding the affirmative vote of all members of
the Management Committee they shall consult to resolve the matter in good
faith with a final arbitration pursued in Vancouver. British Columbia.
Canada pursuant to existing arbitration rules.
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8)
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Venture
Stakeholder Initial and Subsequent Capital Investments
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a)
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GGRN:
US$3,000,000 initial startup loan capital to the Venture and, Venture
operational management, sales, marketing, program and contract management,
commercialization know-how and expertise.
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b)
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VPI:
Vertigro commercialization rights as granted by PG and assigned to the
Venture as well as its share in ongoing Venture
expenditures.
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c)
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Subsequent
Capital Investment in the Venture after expenditure of GGRN initial
startup loan capital as per Stakeholder Equity Interests of $3,000, 000
which includes the Venture loan to PG for the Research Facility shall be
funded equally by GGRN and VPI.
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d)
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On
the basis of cost and deemed contribution of up to $3,000,000 if either
party fails to meet the subsequent investment approved by the Management
Committee, their equity percentage (%) will be diluted pro-rata in
accordance with a (TBA)
formula.
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e)
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In
the event that either party's interest in the Venture falls below ten
percent (10%) a buy out will be automatically triggered in accordance with
a (TBA)
formula.
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3
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Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
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9)
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Venture
Managing and Operator Partner
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a)
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GGRN
shall operate the Venture on behalf of the Venture including but not
limited to:
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i)
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Venture
management, legal and contract management, financial management and
reporting, technology budget and schedule, program and project management,
technology.
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ii)
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commercialization,
business development, joint ventures, partnerships and all sales and
marketing channels to the market, technology manufacturing and project
delivery operations, customer support operations and after sales
services.
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b)
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Venture
management and operator fees and expenses to GGRN shall be approved by the
Management Committee before July 31. 2007. The Management Committee shall
approve an Operating Agreement which shall also address accounting and tax
matters.
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10) Venture
Technology Commercialization
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PG
and VPI shall provide to GGRN the exclusive world rights (excluding
Nevada, Ghana and Malawi) to the sales and marketing and commercialization
of the Venture Technology for all industrial, commercial, retail and
consumer applications, solutions and products.
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11)
Venture Technology Package
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a)
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The
Venture Technology Package mandatory to customers, is planned to include
the project technology license, algae. bioreactors, harvesting, oil
extraction, algae health analysis and monitoring and control systems, all
other proprietary custom designed systems as may be required, design,
engineering, operating and maintenance documentation, warranty and
installation, commissioning, start-up support services.
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b)
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The
Venture Operational Support Package mandatory to customers, is planned to
include an annual operating license, replacement bioreactors, extended
warranty, remote monitoring and operational support
services.
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12)
Venture Sales Model
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a)
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On
receipt of sufficient analytical data from the pilot plant as well as
analysis of the customer requirements and general market data, the
Management Committee shall review the Operator's recommendations as to how
to commercialize the technology.
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b)
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On
receipt of the data from the pilot plant, the Operator shall propose a
program to the Management Committee to enable a commercial exploitation of
the Venture Technology by December 31, 2007.
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13) Commercialization
Trademark
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a)
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GGRN
shall market the Vertigro Technologies using the Venture trademark name of
"Vertigro".
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b)
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Other
derivations of the trademark may be developed by the Venture in the
future. The Venture shall trademark the name
"Vertigro".
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4
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Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
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14)
Venture Partner
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a)
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VPI
currently has an exclusive world wide rights (excluding Nevada. Ghana and
Malawi) to the manufacture, market, promote, develop, sell and distribute
the PG Technology. (Known as the Pagic/WPV License
Agreement).
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b)
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PG.
WPV and VPI undertake that the agreement dated (TBA) shall be in good
standing prior to July 31. 2007 and have also agreed to fully assign to
the Venture the rights to the "Vertigro" Algae Biomass
Technology.
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c)
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The
Venture Operator shall manage the "Vertigro" Algae Biomass Technology
License and License Royalties Contract directly with
PG/WPV.
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d)
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Other
"non - Vertigro" Technology Royalties and other financial payments due
under the existing agreement between PG, WPV and VPI shall be at the sole
liability of VP1.
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e)
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The
terms of the existing agreement between PG, WPV and VPI shall be modified
to conform to the "Venture Stakeholder" Agreement and "License Agreement"
prior to July 31. 2007.
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f)
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VPI
will become a 50% Venture Partner subject to the above being fulfilled
before July 3lst, 2007.
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15)
Venture Research and Technology Provider
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a)
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PG
is the Research and Technology Provider for all "Vertigro" algae-biomass
based applications. (known as the Venture Technology).
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b)
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PG
shall insure its Intellectual Property (IP) protection of the Venture
Technology remains in good standing and any potential infringement is
dealt with.
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c)
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The
Venture operator shall have the right to put PG or its assigns on "Notice
of Default" if any of the following events occur.
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i)
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cost
over runs not prior approved by the Venture.
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ii)
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delays
in completing research and development tasks against delivery schedules
agreed with the Venture.
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iii)
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delays
in delivering the Venture technology or technical know-how and support in
a timely manner during the commercialization stages of the
technology.
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d)
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If
PG has failed to rectify within 30 days the Default notified in writing by
the Venture under a "Notice of Default'", then the Venture shall have the
right of access to the Technology, Engineering Data, Raw Data, and any
other information it may require to cure the "Default".
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e)
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The
Venture Operator shall have the right to put PG or its assigns on "Notice
of Terminal Default" if any of the following events
occur.
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i)
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fails
to keep the IP free and clear of liens or encumbrances.
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ii)
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becomes
insolvent or a bankrupt entity.
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iii)
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protection
of IP is not kept in good standing.
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f)
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In
the case of a "Terminal Default" by PG, the Venture shall have the right
to assume title to the "Venture Technologies" if PG does not propose an
acceptable remedy to the default notice within 14 days of receipt of
"Terminal Default" notice.
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5
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Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
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15)
Venture Research and Technology Provider (continued)
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g)
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In
the case a disputed "Default" or Terminal Default event both parties have
the right to "Resolution through Arbitration" .
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h)
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PG
and VPI shall deliver the Commercialization Rights to the Venture before
July 31st, 2007.
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i)
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PG
shall use best efforts in the research and development of the Venture
Technology' in order to complete a working development prototype (farming,
harvesting and extraction) on or before October 30.
2007.
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j)
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PG
shall provide the non-exclusive services of Xxxxxxx Xxxx Xxxxx (the
Venture Technology Inventor) to the Venture to provide research services,
technology support and know-how on a need to basis during the research,
development and initial commercialization phase.
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k)
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In
the event of the inability of PG to carry out further work on the
"Vertigro Technology", full and unencumbered access to the following is
required to enable the Venture operations to proceed without delay
including;
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i)
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notes,
data. sketches, drawings. research, formulas. trade secrets, processes,
laboratory notebooks, research memoranda, reference materials, prototypes,
know-how and any other item of whatever form that in any way embodies the
research program and technology contemplated hereby
and:
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ii)
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all
ongoing process and research and development programs and
experiments.
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16) Venture
Term and Termination
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The
Venture shall extend automatically until one or more of the following
termination events are invoked;
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a)
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the
insolvency or bankruptcy of either of the Venture
partners.
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b)
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failure
of the Venture to distribute License Royalty payments to
PG.
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c)
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voluntary
winding up of the Venture under the direction of the Management
Committee.
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d)
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GGRN
fails to fund the Venture initial capital loan in an amount of up to
$3,000,000.
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e)
|
a
Terminal Default by PG.
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f)
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the
Venture fails to meet the Commercialization Revenue targets
(TBA).
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g)
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any
venture partners interest falls below a 10% venture
interest.
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17)
Venture Financial Reporting
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a)
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The
Venture Operator is required to provide audited financial reports and
statements to the Venture to its reasonable
satisfaction.
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b)
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The
Venture financial reporting shall be in accordance with US GAAP standard
accounting practices.
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6
|
Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
|
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18)
Venture Facility Location
|
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a)
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The
Venture Facility will be initially located at 000 X. Xxxxxx Xxxx, Xxxxxxx,
XX 00000 [the "Facility''].
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b)
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The
Venture Facility ground is owned by the Venture
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c)
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PG
shall be a tenant at the Venture facility location at a nominal cost of
$100 per annum with the terms and conditions to be
agreed.
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19)
Venture Business Plan
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The
Management Committee needs to unanimously approve the Research.
Development and Commercialization Business Plan.
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20) Development
Plant Facility
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a)
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The
Venture will invest in. own and operate the Development Plant
Facility.
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b)
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The
Development Plant Facility is to be built at the Venture Facility
location.
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c)
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The
Development Plant Facility will include the Development Plant greenhouses,
related utility buildings, and storage areas.
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d)
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The
Venture shall be responsible for the upkeep and maintenance of the
Development Plant Facility.
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21)
Commercial Pilot Plant Facility
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a)
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The
Venture will invest in, own and operate a Commercial Scale Pilot Plant
Facility.
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b)
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The
Pilot Plant Facility (not exceeding two (2) acres) is to be built at the
Venture Facility location.
|
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c)
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The
Commercial Pilot Plant Facility is planned to include, production plant
greenhouses, utility buildings, office and storage
areas.
|
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d)
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The
Venture shall be responsible for the upkeep and maintenance of the
Commercial Pilot Plant Facility.
|
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e)
|
Pagic
shall have a first right of refusal if the Venture elects to sell part or
all of its development or commercial pilot plant facility unless the
Venture is selling the same to an associated entity which will be defined
as common interest of more than 20%.
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22)
Option top Sell the Research Facility and all lands
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a)
|
The
Research Facility is located within the Venture
Facility.
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b)
|
The
Venture agrees to sell the Research Facility comprising laboratory,
offices, accommodation. non-Vertigro Development greenhouses, plant and
machinery, perimeter fence. access control and security system as well as
all the lands to PG and its partners for an amount equal to the total
capital investment cost including Venture and third party services costs
invested by the Venture in the Research Facility by granting PG an option
to purchase at the same cost plus a simple annual interest rate of 6% per
annum for a term of four (4) years from the date of signing the Venture
Agreement.
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7
|
Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
|
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|
22)
Option top Sell the Research Facility and all Lands (continued)
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c)
|
The
Venture Development Plant and Commercial Pilot Plant facilities purchased
by the Venture shall not form part of the Research Facility option
agreement.
|
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d)
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On
exercising the option both parties agree that a long term lease will then
be in effect whereby the Venture shall lease land from PG for the
Development Plant and Commercial Pilot Plant
facilities.
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e)
|
PG
including their assigns or successors, will grant the Venture, a right of
first offer to acquire all or part of the Research Facility and or the
lands.
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f)
|
The
Venture will grant the PG, a right of first offer to acquire all or part
of the Development Plant and Commercial Pilot Plant
Facilities.
|
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g)
|
PG,
including their assigns or successors and the Venture has the right of
assignment to an associated entity or company where common ownership is
greater than or equal to twenty percent (20%)
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23)
Research Laboratory Services
|
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|
a)
|
PG
shall provide to the Venture on a need-to basis all Research and
Laboratory work in support of the Venture Technology Package as determined
by the Venture.
|
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|
b)
|
The
Venture shall authorize all work to be carried out by PG on behalf of the
Venture
|
|
|
c)
|
Venture
Technology research and development fees, costs and expenses of PG shall
be approved by the Venture before July 31, 2007. The Management Committee
shall approve a research and development plan and budget for the
commercialization phase.
|
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|
24)
Technology License Royalty - Vertigro Biofuel
Applications
|
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|
a)
|
A
Royalty of 4.5% of the Venture Customers Gross Revenue for the use of the
Venture Technology in the production of Algae Based Biomass for bio-fuel
feedstock applications is due and payable on a project by project basis by
the Venture to the Royalty Interest Owners.
|
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|
b)
|
The
Royalty will be calculated on a basis of (TBA) US cents per US
gallon per year production volumes which is intended to equate to a 4.5%
royalty as defined (Clause 24.a) and to be paid subsequent to a
satisfactory operating period.
|
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|
c)
|
The
4.5% Royalty is based on the `'Venture Technology" delivering the
projected high commercial production volumes (yields) of high quality
biomass product per acre per year and the Royalty Interest Owners
acknowledge that if the 4.5% royalty causes the project opportunity with
the customer to be un-economic or non-competitive or non-commercial, then,
in good faith, they as well as the Venture will negotiate other reasonable
terms in an attempt to rectify the same.
|
|
|
25) Technology
License Royalty -- Other Vertigro Applications
|
||
|
a)
|
A
Royalty of 4.5% of the Venture Customers Gross Revenue for the use of the
Venture Technology for the production of Algae Based Biomass for other
applications is due and payable on a project by project basis by the
Venture to the Royalty Interest owners.
|
|
|
b)
|
The
Royalty will be calculated on a basis of (TBA) US cents per US
gallon per year production volumes intended to equal 4.5% as defined
(Clause 24.a) and following satisfactory operation (TBA) of the Venture
Technology in the previous (TBA) operating
period.
|
|
8
Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
|
25)
Technology License Royalty - Other Vertigro Applications (continued)
|
||
|
c)
|
The
4.5% Royalty is based on the "Venture Technology" delivering the projected
high commercial production volumes (yields) of high quality biomass
product per acre per year and the Royalty Interest Owners acknowledge that
if the 4.5% royalty causes the project opportunity with the customer to be
un-economic or non-competitive or non-commercial, then, in good faith,
they as well as the Venture will negotiate other reasonable terms in an
attempt to rectify the same.
|
|
|
26) Technology
License Royalty - Non-Vertigo Technology
|
||
|
a)
|
Other
non-Vertigro Technology developed by PG or VPI during the initial two year
operating period of the Venture is to be offered to the Venture on a right
of first offer basis
|
|
|
b)
|
After
the initial two (2) year operating period of the Venture, PG or VPI is
free to offer non-Vertigro Technologies to the Venture and any other third
party.
|
|
|
27) Voluntary
Sale of Venture Technology License Royalty Interest
|
||
|
a)
|
PG
including their assigns or successors, will grant the Venture, a right of
first offer basis to acquire part or all of the License
Royalty.
|
|
|
b)
|
The
License Royalty defined in this agreement is not transferable by PG/WPV to
a third party during the term of the Venture without the consent of the
Venture which will not be unreasonably withheld except in the case of a
proposed sale to a current competitor or existing
customer.
|
|
|
28)
Voluntary Sale of Venture Technology Intellectual
Property
|
||
|
a)
|
PG
including their assigns or successors, will grant the Venture, a right of
first offer to acquire part or all of the "Vertigro Technology"
Intellectual Property.
|
|
|
b)
|
The
"Vertigro Technology" Intellectual Property defined in this agreement is
not transferable by PG to a third party during the term of the Venture
without the consent of the Venture which will not unreasonably be withheld
except in the case of a proposed sale to an existing competitor or
existing customer.
|
|
|
29)
Arbitration
|
||
|
In
the event of an impasse on any matter which cannot be resolved by the
parties, final arbitration shall be pursued in Vancouver, British
Columbia, Canada pursuant to the laws of the Province of British
Columbia.
|
||
9
Vertigro
Algae Technologies
Stakeholders
Letter of Agreement
In
Witness whereof this Letter of Agreement has been entered into this 25th day of
June in the Year 2007.
|
GLOBAL
GREEN SOLUTIONS INC.
|
||||
|
Signed:
|
/s/ XXXX XXXXXX
|
Signed:
|
/s/ XXXXXX XXX
|
|
|
Name:
|
Xxxx
Xxxxxx
|
Name:
|
Xxxxxx
Xxx
|
|
|
Title:
|
President
and CEO
|
Title:
|
Director
|
|
|
WEST
PEAK VENTURES OF CANADA LTD.
|
||||
|
Signed:
|
/s/ M. XXXX XXXXX
|
Signed:
|
/s/ X XXXXX
|
|
|
Name:
|
X.
Xxxx Xxxxx
|
Name:
|
X.
Xxxxx
|
|
|
Title:
|
President
and CEO
|
Title:
|
Director
|
|
LAST
PAGE
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