AMENDED AND RESTATED SERVICES AGREEMENT
This Amended and Restated Services Agreement (this "Agreement") is entered into
effective this 14th day of January, 1999 (the "Effective Date"), between LFC
Technologies, LLC, a Delaware limited liability company ("LFC Co.") and SGI
International, a Utah corporation ("Developer").
RECITALS
The parties hereto, together with MLFC Corporation, a California corporation
("MLFC"), have entered into that certain Services Agreement dated as of the
date hereof, as amended by that certain Amendment to Services Agreement dated
as of the date hereof (together, the "Original Agreement") and,
The parties hereto desire to amend and restate the terms and conditions
of the Original Agreement as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants set forth herein the
parties agree as follows:
1. Services
1.1. Engagement LFC Co. hereby retains Developer to provide it with the
Services and the Developer agrees to provide the Services to LFC Co. upon the
terms and conditions set forth in this Agreement.
1.2 Scope of Services The Services shall include all the professional
services as well as any and all support services necessary to fulfill the tasks
described on Exhibit A. Developer's obligations and responsibilities under this
Agreement shall include each act and thing needed to provide the Services
described in Exhibit A. The services to be provided in accordance with this
Agreement include all labor, engineering, analysis, materials, tools, computer
and computer programs and all equipment and materials required to complete the
Services, except as indicated otherwise in this Agreement. The costs and
expenses incurred by Developer in connection with performing the Services shall
be borne exclusively by Developer.
1.3 Operations and Termination. In the event that either of Developer or LFC
Co. is reorganized or (b) personnel from Developer are transferred to LFC Co.
then this Agreement shall terminate and the Services provided hereunder shall
cease. Absent termination as described herein LFC Co. will employ Developer for
a period of two years or until the parties agree the Services provided
hereunder are completed (the "Time of Completion").
2. Term. This Agreement shall become effective on the Effective Date and shall
continue in effect initially only for a term of two years, unless the parties
hereto specifically agree to extend the Time of Completion.
3. Data and Basic Information. LFC Co. shall furnish the Developer with
any data or basic information required for it to perform the Services. However,
Developer shall verify the accuracy of all such information and shall not rely
on it without making a reasonable review of it to ascertain that such
information is correct.
4. Compensation and Payment. For a period of two (2) years commencing on the
date hereof, LFC Co. shall pay Developer a fixed fee for the Services at
the rate of One Million Dollars ($1,000,000) per year (the "Annual Payment"),
Two Hundred Fifty Thousand Dollars ($250,000) of which shall be payable
initially on the date of execution of this Agreement, and Two Hundred Fifty
Thousand Dollars ($250,000) of which shall be payable every three (3) calendar
months thereafter. LFC Co.'s aggregate payment obligations under this Section
during such two-year period shall not exceed Two Million Dollars ($2,000,000).
Developer shall perform all of the Services described in Exhibit A for such sum.
After every three calendar months Developer shall provide LFC Co. with a report
describing the Services provided during the quarter, the matters accomplished,
and any recommendations as to further activities that should, according to
Developer, be undertaken.
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5. Changes. LFC Co. may require or approve changes or modifications within the
general scope of the Services, including those changes required by federal,
state or local regulatory authorities ("Changes"). If LFC Co. issues any request
for a change in the scope or timing of the Services beyond those Services
described in Exhibit A and not identified as a Change Order but which the
Developer considers to be a Change Order, then the Developer shall notify LFC
Co. in writing of such contention and the parties shall mutually decide
whether such change in the scope or timing of the Services constitutes a Change
Order, which increases or decreases the scope of the Services and increases or
decreases the cost to the Developer of providing the Services. In the event LFC
Co. issues a Change Order that results in an increase or decrease in the cost of
the Services, then an adjustment shall be made to the Annual Payment and the
Time of Completion. However, no adjustment to the Annual Payment shall occur
unless both the LFC Co. and Developer agree to such a change in writing.
6. Accounting. The Developer and LFC Co. shall maintain customary fiscal
records and books of accounts of costs and revenues according to generally
accepted accounting principles and practices consistently applied. Such fiscal
records and books of accounts shall remain in the possession and custody
respectively of the Developer or LFC Co. as applicable.
7. Developer Insurance Coverage. During the term of this Agreement the
Developer shall obtain at its own expense and maintain in full force and effect
comprehensive general liability insurance for personal injury and property
damage and shall add LFC Co. as an additional insured to such insurance policy.
8. Indemnity. The Developer shall defend, indemnify and hold the LFC
Co. harmless against any claim, loss or liability, including reasonable
attorney's fees, for personal injury or bodily injury or damage to property of
any third party arising out of any negligent act on its part, as well as on the
part of its employees, subcontractors, and agents in and during the performance
of the Services. Developer's sole and only other liability to LFC Co. shall be
at its sole cost and expense reperform any defective work or Services discovered
by it or of which it is notified in writing. Developer shall not be liable to
LFC Co. for any consequential, indirect, economic or any other damages not
covered by its insurance.
9. Confidential Information. During the term of this Agreement, LFC Co.
may have access to, and become acquainted with, confidential information and
trade and business secrets of Developer. LFC Co. and its members, subsidiaries,
affiliates, employees, agents and subcontractors shall not disclose any such
confidential information or trade or business secrets of Developer during the
term of this Agreement or for five (5) years thereafter, directly or indirectly,
or use the same in any manner whatsoever, except as required in connection with
the Developer's providing the Services.
10. Contract Documents. The Developer and LFC Co. shall each keep in
good condition at its office a complete copy of this Agreement, the License and
Operating Agreement to be executed concurrently and each shall appoint a
representative in writing to coordinate their activities. Any documents relating
to the Services shall be available for inspection by the LFC Co. at the offices
of Developer during normal business hours.
11. Supervision and Coordination. During the term of this Agreement,
the Developer and LFC Co. will each appoint a representative who will be
authorized, empowered and available to act for and on behalf of each to
implement the terms and conditions of this Agreement, the License, and Operating
Agreement. The Developer's representative shall be designated in writing to
represent the Developer and shall not be replaced, except with the prior written
consent of the LFC Co., which consent shall not be unreasonably withheld. All
directions given to the Developer's representative shall be as binding as if
given directly to the Developer, and all decisions made by the Developer's
representative shall bind the Developer. All information given to LFC Co.'s
representative shall be as binding as if given directly to LFC Co. Any and all
decisions made or directions given, by LFC Co.'s representative to the Developer
shall be made only with the consent of SGI, provided that in the event of such
consent such decisions shall be binding on LFC Co.
12. Inspection. LFC Co. shall have the right at all reasonable times to
inspect any of the Services, wherever situated to determine the progress and
conformance of the Services to this Agreement.
13. Labor Disputes. The Developer shall advise LFC Co. promptly of any
labor dispute or anticipated labor dispute, which may be reasonably expected to
affect the performance of the Services by the Developer or any of its
subcontractors, which may relate to the final cost of the Services or the
completion of the Services.
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14. Conformity with Laws and Safety. The Developer shall perform the Services
in a professional manner and according to generally accepted practices or
standards. The Services shall be rendered in accordance with all federal,
state and local laws, regulations and codes in effect, as of the Effective Date,
which are applicable to the Services. All engineering drawings, calculations and
designs shall bear the stamp of a licensed professional engineer or professional
in the discipline appropriate to the drawing, calculation or design or other
work product.
15. Compliance. The Developer shall be responsible for compliance with
all laws or regulations applicable to the Services. The Developer shall directly
receive, respond to, defend and be responsible for any citation, assessment,
fine or penalty because of its failure to comply with such laws or regulations.
16. Termination upon Default. Should Developer at any time during the
term of this Agreement make an assignment for the benefit of creditors, declare
bankruptcy, or should any similar proceeding be initiated against or by the
Developer or LFC Co., or should any other legal proceeding be taken against or
by the Developer, which interferes with the proper and expeditious completion of
the Services, or should the Developer, after demand or notice in writing by LFC
Co. refuse or neglect for more than ninety-six hours to perform the Services in
an efficient manner or to diligently prosecute the Services, or fail or refuse
to comply with any of the terms or provisions of this Agreement, or fail to
complete any of the Services, LFC Co. shall have the right to terminate this
Agreement.
17. Force Majeure. If either party fails to perform or is delayed in
performing any obligations imposed upon it pursuant to this Agreement and such
failure is caused, or materially contributed to, by an act of God, strikes or
other industrial disturbances, embargoes, curtailments, sabotage, earthquakes,
floods, storms, fires, act of governmental or other proper authority, arrests
and restraints, civil disturbances, explosions or any occurrence beyond the
control of such party, whether similar or dissimilar to the foregoing, such
failure shall be deemed not to be a breach of contract or a default of the
obligations of either party under this Agreement; provided, however, that
nothing herein shall be construed to excuse the payment of any money due from
one party to the other under this Agreement.
18. Independent Contractor. The Developer is an independent contractor
and any provisions in this Agreement, which appear to give LFC Co. the right to
direct the Developer as to the details of the performance of any of the Services
to be performed by the Developer, or to exercise a measure of control over such
Services, shall be deemed to mean, and shall mean, that the Developer shall
follow the desires of LFC Co. in the results to be achieved by the Services and
not in the means whereby such Services are to be accomplished. The Developer
shall use its own discretion and shall have complete and authoritative control
over the Services and the details of performing the Services.
19. Notices. Any and all notices and other communications required
under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered personally or ninety-six (96) hours after being mailed, via
first-class courier service, return receipt requested, postage prepaid, to the
following addresses:
To LFC Co.: LFC Technologies, LLC
0000 Xxxxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxx. 00000
Attention: Xxxx X. Xxxxxx
To Developer: SGI International
0000 Xxxxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxx. 00000
Attention: Xxxxxx X. Xxxxxx
Either party may change its address for receipt of notices required under this
Agreement by notice given in the manner provided herein.
20. Applicable Law. The provisions of this Agreement shall be construed
and enforced in accordance with the laws of the State of California.
21. Assignment. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto. Neither LFC Co. nor
Developer may assign all or any part of this Agreement, or the proceeds hereof,
or delegate any duties thereunder or any portion hereof, without first obtaining
written consent of the other party, except to the extent that the effect of this
limitation may be restricted by law. Except Developer may assign to a wholly
owned subsidiary without prior consent. No assignment by the Developer to its
wholly owned subsidiary hereunder shall release the Developer from performing
any of its obligations hereunder.
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22. Integration. This Agreement constitutes the entire understanding
and agreement between the parties relating to the subject matter hereof and
supersedes and cancels any prior written or oral understanding or agreement
between the parties relating to the subject matter hereof. This Agreement shall
not be amended, altered or supplemented in any way except by an instrument in
writing, signed by duly authorized representatives of Developer and LFC Co.,
that expressly references this Agreement.
23. Provision Against Waiver. No waiver of any term or provision of
this Agreement, or of any breach thereof, shall be construed as a waiver of any
other term or provision, or of any other breach of the same term or provision.
No waiver of any term or provision of this Agreement shall be effective unless
made in writing signed by the party against whom such waiver is sought to be
enforced.
24. Severability. If any provision of this Agreement is finally
determined to be contrary to, prohibited by, or invalid under applicable laws
and regulations, such provisions shall become inapplicable and shall be deemed
omitted from this Agreement. Any such determination shall not, however, in any
way invalidate the remaining provisions of this Agreement.
25. Consequential Damages. In no event shall either party or
Developer's subcontractors of any tier be liable in contract, tort, strict
liability, warranty, or otherwise, for any special, indirect, incidental or
consequential damages, such as, but not limited to, delay, disruption, or loss
of product, loss of anticipated profits or revenue, loss of use of equipment or
systems, non-operation or increased expense of operation of other equipment or
systems, cost of capital, or cost of purchased or replacement equipment, systems
or power.
26. Use of Other Party's Name; Confidentiality of Agreement and Terms.
Neither party shall have the right to publicize this Agreement, or the
relationship between the parties and/or between the Developer and Mitsubishi
Corporation, without the other party's prior written approval, except as
provided in this Section and as may be required to comply with applicable laws
and regulations. Developer agrees that LFC Co. may make known in promotional and
technical literature that the LFC Process was developed by Developer and that
Products are offered under license from Developer. In addition to the foregoing,
each party agrees to keep this Agreement and its terms and conditions
confidential and to not disclose the foregoing to any person other than its
accountants, lawyers, financial advisers, lenders, investors, shareholders and
appropriate government agencies, to whom disclosure is required; provided, that
any disclosure to the foregoing persons shall be limited to what is necessary
and shall be accompanied with instructions to such persons that they keep this
Agreement and its terms and conditions confidential.
27. Arbitration.
a. If a dispute arises between the parties relating to the
interpretation or performance of or non-performance under this Agreement or the
grounds for the termination thereof, the parties agree to hold a meeting
promptly following the request of a party, attended by individuals with
decision-making authority regarding the dispute, to attempt in good faith to
negotiate a resolution of the dispute prior to pursuing other available
remedies. If, within thirty (30) days after such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, such dispute shall be
submitted to final and binding arbitration in Los Angeles, California in
accordance with the rules of the American Arbitration Association as in effect
as of the Effective Date of this Agreement. To the extent not provided under the
rules of the American Arbitration Association, the parties shall have the right
of discovery as accorded to parties in civil litigation under the U.S. Federal
Rules of Civil Procedure. The parties shall bear the cost of arbitration equally
unless the arbitrators require the non-prevailing party to bear all or any
unequal portion of the prevailing party's costs (including, without limitation,
the prevailing party's reasonable attorneys fees). The arbitrators will be
instructed to prepare and deliver a written, reasoned opinion conferring their
decision. Decisions of the arbitrators shall be made by a majority vote. The
award rendered in an arbitration commenced hereunder shall be final and
conclusive and judgment thereon may be rendered in any court having jurisdiction
for its enforcement.
b. The rights and obligations of the parties to arbitrate any
dispute relating to the interpretation or performance of or non-performance
under this Agreement or the grounds for the termination thereof shall survive
the expiration or termination of this Agreement for any reason and shall apply
notwithstanding compliance or non-use of the good faith resolution procedures of
this Section.
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c. Notwithstanding the foregoing, in the event of any breach
or threatened or imminent breach of the provisions of this Agreement intended to
protect proprietary information or designed to restrict the use of intellectual
or industrial property rights, the parties hereto may seek temporary or
intermediate injunctive relief (and similar remedies) from a court of competent
jurisdiction and without having to pursue the good faith resolution efforts of
this Section. For purposes of any litigation pursuant to the foregoing sentence
or for purposes of enforcing the decision of the arbitrator pursuant to this
Section, the parties hereby (i) consent to the exclusive jurisdiction of Federal
and state courts located in Los Angeles, California, (ii) agree to not contest
venue before such courts on grounds of forum non conveniens or otherwise, and
(iii) agree that service of process may be had by mail or by any other method
permitted by applicable laws and rules.
d. Upon written request by either party, the arbitration shall
be consolidated with any other arbitration involving any dispute, claim or
controversy arising out of or in relation to any of the Operating Agreement by
and between MLFC and Developer ("Operating Agreement"), License Agreement by and
between LFC Co. and Developer ("License Agreement"), Joint Venture Formation
Agreement by and between MLFC and Developer ("Formation Agreement"), Security
Agreement by and between MLFC and Developer ("Security Agreement") or any other
document with respect to LFC Co., or the breach, termination or invalidity
thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and in the year first written above.
LFC Technologies, LLC
/S/ XXXXX XXXXXXX
----------------------------------
By: Xxxxx Xxxxxxx
Title: Chief Executive Officer
SGI International, a Utah corporation
/S/ XXXXXX X. XXXXXX
------------------------------------
By: Xxxxxx X. Xxxxxx
Title: Chairman/CEO
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Exhibit A
SERVICES
Developer shall provide the following Services:
1. Solicit potential customers in the United States who are potentially
interested in purchasing LFC products or developing commercial LFC Projects.
(Product and Technology marketing in U.S.)
2. Enter into letters of intent to sell products of LFC Projects, at the point
that LFC Co. determines is appropriate.
3. Develop LFC projects in the United States.
4. Study, negotiate and attempt to acquire the LFC assets of AEI (previously
Xxxxxxx Coal Holding Company), including the ENCOAL demonstration plant and
permits to build an LFC plant at the North Xxxxxxxx Mine in Wyoming.
5. Perform engineering work and analysis to reduce the capital costs associated
with the LFC Process and plants, enhance revenue, and work to simplify the
deactivation process.
6. Perform analysis of markets and components of Coal Liquids ("CDL") and work
to refine CDL in conjunction with MLFC, which will perform similar work.
7. Coordinate the activities of LFC Co. with MLFC.
8. Provide personnel to provide engineering for LFC project optimization and
CDL upgrading in coordination with MLFC.
9. Provide such other services to be mutually agreed to by Developer and LFC Co.
10.Provide personnel in support of and for coordination in International LFC
project and product marketing as requested by MLFC.
11.Provide the LFC Sample Production Unit for contract use by LFC Co. for US
and International project feasibility studies.
12.Establish and pursue Intellectual Proprietary Protection Program for LFC
and LFC related patents and patent applications on behalf of LFC Co.
13.Developer will coordinate with SGI Development Center to perform various
work on upgrading CDL, removing fines from CDL and such other work as LFC
Co. recommends.
14.Provide for LFC Co. all accounting, tax preparation, corporate compliance,
and filings required by state and federal laws.
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