Exhibit 10.15
STRATEGIC ALLIANCE AGREEMENT
This Agreement is entered into this 26th day of June, 2008, between Mr Xxxx
Xxxxxx, Sustainable Power Corporation, a Nevada corporation, and Pemco
BioSynergy AS, a Norwegian corporation (under incorporation).
PURPOSE
The purpose of this Strategic Alliance is to confirm the parties'
commitment to enter into a final agreement forming a partnership, to be called
"SSTP Europe", between Sustainable Power Corporation ("SSTP") and Pemco
BioSynergy ("BioSynergy") whereas SSTP Europe will be the exclusive
representative for SSTP in Europe ("Europe"- see definition below).
This joint venture will be specifically designed to install, own and
operate plants, produce and market green biofuels based on SSTP technology,
including the use of biofuel for own power generation as well as obtaining green
certificates/grants/biosubsidies.
This joint venture starts with the tree, i.e., the core technology, and this
joint venture will reap the benefits of all fruits of the tree, in perpetuity.
BACKGROUND
Sustainable Power Corporation ("SSTP"):
- Has developed its own unique breakthrough technology for production of
biocrude from sustainable biomass sources; besides the biocrude, i.e., liquid
biofuel, the output will be biogas as well as ash-fertilizer (the "Technology").
- The biofuel and biogas will in its initial phase be used as biofuel in
power generation of green electricity. In the future, the biocrude may be
developed as a "green gasoline", a liquid identical to standard gasoline.
- As part of the Technology, SSTP controls an undisclosed catalytic, process
which yields efficient production with higher output, reduced time, continuous
process, etc.
- Proved very promising test results in its industrial demo plant in
Baytown.
- Has now decided to commercialize its breakthrough technology for setup of
several hundred reactors within three key markets as a first step: U.S.
(Baytown, TX), Latin America, and Europe.
- Has entered into a strategic alliance agreement with L.Sol S.A., a
Spanish corporation, dated May 28, 2008, that will deliver at least 400
bio-reactors to SSTP and its partners.
- Has been breaking ground in Baytown. TX, for setup of immediate
construction of multiple reactors (i.e., 400 reactors within next 12 months;
possibly 1200 reactors in 3 years).
- Has entered into a Memorandum of Understanding with regional authorities
and representatives for commercial businesses of its technology in Latin
America.
BioSynergy has been:
- Presented to the technology, including site visit at the company
facilities in Baytown, TX.
- Given access to financial project analysis in an Excel model, showing very
attractive returns.
- Discussed and mutually agreed to partnership structure for Europe with
SSTP management group.
- Entered into (on the date hereof) a Stock Purchase Agreement for the
purchase of 50,000,000 Shares in SSTP for a total consideration of Two Million
U.S. Dollars ($2 million), which was set as a condition by SSTP for the entry
into of this Agreement and emphasises the commitment of the SSTP and Mr Xxxx
Xxxxxx to enter into a final agreement regarding the Strategic Alliance in line
with this Agreement.
PARTNERSHIP & RESPONSIBILITIES
The partnership structure for Europe will include the establishment of SSTP
Europe, a joint venture to be owned seventy percent (70%) by SSTP and thirty
percent (30%) by Pemco BioSynergy.
SSTP is to:
- Give to SSTP Europe full access to ail necessary related technology and
supplies, including supplies for the catalytic process for the European market.
- Give to SSTP Europe full access to its new funding agreement offering 90%
project financing at marketable terms (USD or EUR LIBOR +1%).
- Guaranteed to deliver plants with four (4) reactors (i.e., four reactors -
one unit) at a cost of Twenty Million U.S. Dollars ($20 million) per unit.
Pemco BioSynergy will be responsible to form the SSTP Europe entity, which will:
- Be granted an exclusive license from SSTP for Europe to produce and market
biocrude using the technology owned and developed by SSTP.
- Within a short term, receive a first mini-reactor for final testing.
- Plan for the installment, of the first four (4) reactors, to be received
in the near term future.
- Prepare a business plan which will include delivery of the first four
hundred (400) reactors for installation in Europe.
- Be responsible for the setup of necessary organization and perform
operations of the plants in Europe, including setup of long-term contracts with
power companies.
- Set up a tax-efficient holding structure for the new SSTP Europe entity.
- In close cooperation with SSTP, identify and secure long-term agreements
of low-cost, sustainable feedstock (already in contact with close partner who
controls feedstock (rapseed, soya) from major land areas in Eastern. Europe, as
well as network to South America, Australia and Africa.
SSTP and Xxxx Xxxxxx will xxxxx an exclusive (limited to the geographical scope
of this Agreement), royalty/license-fee free and non-revocable license to SSTP
Europe for use of the Technology (as defined above), sufficient to fully comply
with the SSTP's obligations under this Agreement and under the contemplated
final partnership agreement. The catalyst formula shall remain a trade secret
exclusive to Xxxx Xxxxxx and SSTP, and shall not be revealed to SSTP Europe or
Pemco BioSynergy AS, except that it shall be revealed to SSTP Europe if required
to continue SSTP Europe's business in line with this Agreement. Pemco BioSynergy
AS and SSTP Europe, on a continuing basis, shall take reasonable and appropriate
measures to preserve and protect the Technology, in a continuing effort to
preserve trade secrets and to prevent loss or misappropriation of trade secrets;
this obligation specifically extends to precluding any reverse-engineering by
anyone in an effort to misappropriate the catalyst formula.
OWNERSHIP AND FINANCIAL TERMS
The SSTP Europe entity will be owned:
Seventy percent (70%) by SSTP
and
Thirty percent (30%) by Pemco BioSynergy
The parties' shall enter into a shareholders agreement regarding SSTP Europe,
which shall reflect that SSTP Europe shall be jointly controlled by Pemco
BioSynergy and SSTP.
The parties' key financial responsibilities will be:
- SSTP will deliver complete setup of plants of unlimited number. Total
investment cost, including land, etc., for each plant of four (4) reactors will
be Twenty Million U.S. Dollars ($20 million).
- SSTP will as set out above secure ninety percent (90%) of the financing of
SSTP Europe through its project loan financing from its partners.
- Pemco BioSynergy will contribute Six Million U.S. Dollars ($6 million) in
cash to SSTP Europe. Four Million U.S. Dollars ($4 million) of these funds will
be earmarked for equity for the first two plants, and the remaining Two Million
U.S. Dollars ($2 million) will be earmarked to buildup of the organization of
SSTP Europe and related agreements.
- The parties shall commit themselves to make the funds available when
needed in accordance with the above. Should there be a need to commit further
equity to SSTP the intention of the parties is to provide this on a pro rata
basis based on their ownership ratio.
The distribution from SSTP Europe to its owners will be made with a priority
distribution right as follows:
(i) First, a pro rata repayment of the parties' cash equity contribution.
(ii) Thereafter, dividend will be paid according to ownership ratio.
DEFINITIONS/CLARIFICATIONS
Geographical - "Europe"
-----------------------
Even though Europe includes multiple countries, it is a fairly condensed
marketplace (ref. EU, etc.) with similar framework, common power transmission
network and power exchange, as well as very pan-European contractors,
pan-European power companies, cross-border feedstock, etc. Against this
background, SSTP Europe will have the exclusive rights and responsibilities for
the whole of Europe, including the Russia and Turkey market, both in their
entirety, including those parts that lie in Asia, including setup of a
pan-European organization which will include local partners/players when
necessary.
SSTP hereby grants right of first refusal to SSTP Europe for the balance of
the Asian market, excluding The People's Republic of China, The Democratic
People's Republic of Korea (a/k/a North Korea), and The Union of Myanmar (a/k/a
Burma).
The parties recognize that SSTP has granted to L. Sol S.A. a limited
worldwide license and a 10% joint venture position when replacing L, Sol S.A.'s
approximately four thousand five hundred (4,500) existing biomass boiler
systems, some of which are operated by L, Sol S.A in Europe. To the extent such
is done, it shall be accomplished through SSTP Europe.
We do realize that key assumptions may vary between regions: i.e., installation
cost, infrastructure, market prices, subsidies, green/emission certificates,
tariffs, investment grants, tax
credits, political framework, etc., and will over the next weeks evaluate best
locations for setup of clusters of plants in the European marketplace.
Pemco BioSynergy
----------------
Pemco BioSynergy will initially be controlled by the Pemco AS, by its
majority shareholder Xx. Xxxxx Xxxxxxxxx. The Pemco Group is a Norwegian-based
industrial group with oil-related and chemical-related products, including
bioethanol, and is represented in 18 countries; some key independent partners
with relevant competence; regional, business relations; and strong commitment
for renewable, here biocrude/biofuel, which will be invited into the Pemco
Bionergy/Newco structure to secure a successful roll-out of plants in the
European market.
Contribution on Buildup of the SSTP "Global Group Structure"
------------------------------------------------------------
Key members of the Pemco BioSynergy organization have long international
experience, including setup of new businesses in several countries/continents,
including the U.S., cross-border transactions, management of industrial groups,
financial manager role as well as performing international IPO, etc.
The parties will discuss potential Pemco BioSynergy involvement for
assistance in setting up the group structure, participation in the group
management, advising in funding etc., coordinating the international setup of
structure also for Africa, Asia, and Australia.
Power Plants - Project Investment Cost Including Financing of Power Plants
--------------------------------------------------------------------------
The investment amount for power plant has not been included in the $20
million quote above. SSTP assumes that the investment cost will be financed by A
power company or related bank at a "leasing rate" of $0.025 per kWh.
Disclosure/Confidentiality
--------------------------
This Agreement and any subsequent discussions or contact between us should
be kept confidential. The parties' agree, however, that SSTP may disclose a
press release regarding the planned Strategic Alliance through public news
channels (such press release to be consented to / by Pemco Biosynergy, such
consent not to be unreasonably withheld).
Governing Law
-------------
This Agreement, and all transactions contemplated hereby, shall be governed
by. construed and enforced in accordance with the laws of the State of Nevada.
The parties herein waive trial by jury and agree to submit to the personal
jurisdiction and venue of a federal or state court of subject matter
jurisdiction located in State of Nevada. In the event that litigation results
from or arises out of this Agreement or the performance thereof, the parties
agree to reimburse the prevailing party's reasonable attorney's fees, court
costs, and all other expenses, whether or not taxable by the court as costs, in
addition to any other relief to which the prevailing party may be entitled.
Executed this 26th day of June, 2008, at Baytown, Xxxxxx County, Texas
PEMCO BIOSYNERGY: SUSTAINABLE POWER CORPORATION
By: \s\ Xxxxx Xxxxxxxxx By: \s\ Xxxx Xxxxxx
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Xxxxx Xxxxxxxxx, Owner, President Xxxx Xxxxxx, CEO
and Chairman of the Board
Date: 26/6/2008 Date: 26/6/2008
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WITNESS: WITNESS:
By: \s\ Arne Xxxxx Xxxxxxxxxxx By: \s\ Xxxxxx Xxxxxx Xxxxxxx
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Xxxx Xxxxx Xxxxxxxxxxx Xxxxxx Xxxxxx Xxxxxxx
Date: 26/6/2008 Date: 26/6/2008
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