Environmental Products Agreement
This
Environmental Products Agreement (this “Agreement”)
is
dated as of April 18, 2008 by and between Grey K Fund, LP, a Delaware limited
partnership (“Grey
K
LP”),
Grey
K Offshore Fund, Ltd., a Cayman Island exempt company (“Grey
K
Offshore”),
and
Grey K Offshore Leveraged Fund, Ltd., a Cayman Island exempt company
(“Grey
K
Leveraged”,
and
together with Grey K LP and Grey K Offshore, “Grey
K”),
Stratos Renewables Corporation, a Nevada corporation (the “Company”)
and
Stratos del Peru S.A.C., a Peru corporation (“Stratos
SAC”).
WHEREAS,
the
Company Group is engaged in the business of (i) manufacturing ethanol and sugar
products through the cultivation, harvesting and processing of sugarcane and
(ii) producing electricity from the byproduct of sugarcane manufacturing
(collectively, the “Business”);
WHEREAS,
the
conduct of the Business may generate transferable environmental attributes
and
other certificates including RECs, CERs and VERs (collectively, the
“Environmental
Products”);
WHEREAS,
Grey K
has experience and expertise in
marketing, selling and trading
Environmental Products;
WHEREAS,
Grey K
and the Company Group desire to work together to explore opportunities available
to the Company Group to create, generate, produce or otherwise realize the
Environmental Products originating, directly or indirectly, from the conduct
and
operations of the Business;
WHEREAS,
the
parties acknowledge that the Company’s commitments in this Agreement are a
material inducement to Grey K entering into that certain Series A Preferred
Stock and Warrant Purchase Agreement (the “Purchase
Agreement”)
and
the Transaction Agreements (as defined in the Purchase Agreement), by and
between the Company and Grey K pursuant to which Grey K will become a
stockholder of the Company; and
WHEREAS,
the
Company Group desires to transfer and assign to Grey K, and Grey K desires
to
receive from the Company Group all of the Company Group’s right, title and
interest in, to and under all of the Environmental Products generated by the
Business in accordance with the terms and conditions set forth in this
Agreement.
NOW
THEREFORE,
in
consideration of the foregoing and the representations, warranties, covenants
and agreements herein contained, and intending to be legally bound hereby,
the
parties hereto agree as follows:
Article
1
DEFINITIONS
AND INTERPRETATION
1.1 Capitalized
Terms. Capitalized
terms used herein without definition have the respective meanings assigned
thereto in Schedule
I
attached
hereto and incorporated herein for all purposes of this Agreement (such
definitions to be equally applicable to both the singular and plural forms
of
the terms defined). When a reference is made in this Agreement to Sections,
subsections, Schedules or Exhibits, such reference is to a Section, subsection,
Schedule or Exhibit to this Agreement unless otherwise indicated. The words
“include,” “includes” and “including” when used herein are deemed in each case
to be followed by the words “without limitation.” The word “herein” and similar
references mean, except where a specific Section or Article reference is
expressly indicated, the entire Agreement rather than any specific Section
or
Article. The word “or” has, except as otherwise indicated, the inclusive meaning
represented by the phrase “and/or.”
1
1.2 Effective
Date.
This
Agreement shall be effective on the date hereof (the “Effective
Date”).
Article
2
TRANSFER
OF ENVIRONMENTAL PRODUCTS
2.1 Transfer
of Environmental Products.
2.1.1 Subject
to the terms and conditions set forth in this Agreement, Grey K shall
automatically receive all right, title and interest in, to and under all
Environmental Products generated by, or capable of generation from, the Business
directly from the Company Group when issued. In furtherance of the foregoing,
Grey K (or Grey K’s designee) shall be named as a Project Participant in any
Project Design Document and all relevant CDM project documents, as applicable
in
respect of the Business, Purchaser shall serve as the Focal Point for all
communications with the Executive Board and the UNFCC Secretariat regarding
allocation of CERs that are generated in respect of the Business.
2.1.2 In
addition, the Company Group hereby agrees to transfer and assign (“Transfer”),
free and clear of all Liens, to Grey K and Grey K hereby agrees to acquire
and
receive from the Company Group, all of the Company Group’s right, title and
interest in, to and under all of the Environmental Products generated by the
Business, in consideration of a portion of Net Proceeds as set forth in Section
2.2 below. Within two (2) Business Days of receipt of notice from Grey K, the
Company Group shall execute any documents requested by Grey K for the Transfer
of the Environmental Products to Grey K (including the execution and delivery
of
an Assignment and Assumption Agreement, substantially in the form attached
hereto as Exhibit
A
(each
such agreement, an “Assignment
Agreement”)).
2.1.3 No
member
of the Company Group shall Transfer any Environmental Products to any Person
other than Grey K or a designated affiliate of Grey K.
2.2 Payment
of Net Proceeds
2.2.1
As
consideration for the Transfer of the Environmental Products to Grey K,
commencing with the year beginning January 1, 2013, the Company shall be
entitled to receive 61.12% of the annual Net Proceeds actually received by
Grey
K in excess of $1,500,000 per year for each year occurring after December 31,
2012 from the sale of such Environmental Products by Grey K.
2.2.2 For
purposes of this Agreement, “Net
Proceeds”
shall
mean the gross proceeds from any sale of any Environmental Products by Grey
K
Transferred to Grey K under the terms and conditions of this Agreement
(“Sale
Proceeds”)
less
any
out-of-pocket costs or expenses incurred by Grey K in connection with such
sales
or incurred in connection with the performance of any of its obligations under
the terms of this Agreement, including any external brokerage or external
trading fees, legal fees, amounts payable to third parties for engineering
and/or consulting services associated with the implementation or development
of
Emissions Reductions Methodologies and Processes at the Company Group, Grey
K’s
portion of any Transfer Taxes and any Taxes imposed on the ownership, receipt
or
transfer of Environmental Products to third parties. For the avoidance of doubt,
Grey K shall be entitled to deduct and retain the amounts specified in the
foregoing sentence from the Sale Proceeds.
2.2.3 Within
5
Business Days of the receipt of any Sale Proceeds payable to the Company
pursuant to Section 2.2.1, Grey K shall remit the applicable portion of the
Net
Proceeds to the Company by wire transfer in immediately available funds to
an
account designated by the Company in writing.
2
Article
3
DEVELOPMENT
AND SALE OF ENVIRONMENTAL PRODUCTS
3.1.1 The
Company Group and Grey K shall work together to explore all opportunities
available to the Company Group to create, generate, produce or otherwise realize
Environmental Products originating, directly or indirectly, from the conduct
and
operations of the Business.
3.1.2 Grey
K
shall have the exclusive right and authority, in Grey K’s sole discretion, to
develop and implement emissions reductions methodologies, verification,
certification and/or other monitoring processes at the Company Group necessary
to realize the creation, generation and production of Environmental Products
from the conduct and operations of the Business, including the right to engage
third party engineering and consulting firms as Grey K deems necessary and
advisable in Grey K’s sole discretion (collectively “Emissions
Reductions Methodologies and Processes”).
The
Company Group shall cooperate with Grey K in connection with the implementation
and development of Emissions Reductions Methodologies and
Processes.
3.1.3 Grey
K
shall have the exclusive right and authority, in Grey K’s sole discretion, over
all aspects related to the marketing, selling or trading of Environmental
Products Transferred to or acquired by Grey K under this Agreement.
Article
4
TERMINATION
4.1 Termination.
4.1.1 This
Agreement may not be terminated by either party except as follows:
(a) At
any
time by mutual written consent of the Company and Grey K;
(b) At
any
time by Grey K upon ninety 90 days prior written notice to the Company;
and
(c) By
Grey
K, in the event any member of the Company Group Breaches this Agreement and
such
Breach is not cured within 45 days or, if such Breach is curable, such longer
period as Grey K may agree (provided the Company Group is diligently pursuing
such cure to the sole satisfaction of Grey K), after Grey K delivers written
notice to the Company notifying the Company of such Breach and its intention
to
terminate this Agreement, and, upon such termination, the Company Group shall
pay Grey K an amount equal to all unreimbursed costs and expenses incurred
by
Grey K in connection with the development and implementation of the Emissions
Reductions Methodologies and Process plus $5,000,000.
4.2 Effect
of Termination.
In
the
event this Agreement is terminated as provided in this Article
4,
this
Agreement shall forthwith become wholly void and of no effect, and the parties
shall be released from all future obligations hereunder; provided,
however,
that
nothing in this Article
4
shall
relieve any party of Liability for any Breach and that the provisions of this
Article
4,
Article
8,
and
Article
9
shall
survive such termination.
3
Article
5
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Grey K as of the date hereof and upon the
date of each Transfer of Environmental Products as follows:
5.1 Organization
and Good Standing.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, with full corporate power and authority
to conduct the Business as it is now being conducted, to own, lease and operate
the properties and Assets that it purports to own, lease and operate, and to
perform all of its obligations under its Contracts. The Company is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership,
lease or use of the properties owned, leased or used by it, or the nature of
the
activities conducted by it, requires such qualification.
5.2 Enforceability;
Authority; No Conflict.
5.2.1 This
Agreement constitutes, and when executed each Assignment Agreement shall
constitute, the legal, valid and binding obligation of the Company Group,
enforceable against each member of the Company Group in accordance with their
terms. Each member of the Company Group has the absolute and unrestricted right,
power and authority to execute and deliver this Agreement and each Assignment
Agreement and to perform all of its obligations under this Agreement and each
Assignment Agreement, and such action has been duly authorized by all necessary
action by each member of the Company Group’s board of directors.
5.2.2 Neither
the execution and delivery of this Agreement or any Assignment Agreement by
any
member of the Company Group, as applicable, nor the consummation or performance
of any of the transactions contemplated hereby or thereby by any member of
the
Company Group will, directly or indirectly (with or without notice or lapse
of
time): (i) Breach (A) any provision of any of the Governing Documents of
such member of the Company Group or (B) any resolution adopted by the board
of
directors of such member of the Company Group; (ii) Breach or give any
Governmental Entity or other Person the right to challenge this Agreement or
any
of the transactions contemplated hereby or to exercise any remedy or obtain
any
relief under any Legal Requirement or any Order to which the Company Group,
or
any of the Assets, including the Environmental Products, may be subject;
(iii) contravene, conflict with or result in a violation or Breach of any
of the terms or requirements of, or give any Governmental Entity the right
to
revoke, withdraw, suspend, cancel, terminate or modify, any permit that is
held
by the Company Group or that otherwise relates to the Assets or to the Business;
(iv) cause Grey K to become subject to, or to become liable for the payment
of, any Tax; or (v) Breach any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or payment under, or to cancel, terminate or modify, any
Contract of the Company Group.
5.2.3 No
member
of the Company Group is required to give any notice to or obtain any Consent
from any Person in connection with the execution and delivery of this Agreement
or, when executed, any Assignment Agreement or the consummation or performance
of any of the transactions contemplated hereby or thereby including the Transfer
of the Environmental Products to Grey K.
5.3 Title
to Environmental Products.
The
Company Group has (or will have at the time of Transfer to Grey K) good and
marketable title to the Environmental Products, and will transfer such good
and
marketable title, free and clear of any and all Liens, to Grey K in accordance
with the terms and conditions of this Agreement.
4
5.4 Subsidiaries.
The
Company Group has no Subsidiaries other than Stratos SAC.
Article
6
REPRESENTATIONS
AND WARRANTIES OF GREY
K
Each
of
Grey K LP and Grey K Offshore, severally and not jointly, represents and
warrants to the Company and upon the date of each Transfer of Environmental
Products as follows:
6.1 Organization
and Good Standing.
Each
of
Grey K LP and Grey K Offshore is a company duly organized, validly existing
and
in good standing under the laws of the jurisdiction of its formation, with
all
necessary power and authority to conduct its business as it is now
conducted.
6.2 Enforceability;
Authority; No Conflict.
6.2.1 This
Agreement constitutes, and when executed each Assignment Agreement shall
constitute, the legal, valid and binding obligation of Grey K, enforceable
against Grey K in accordance with their terms. Grey K has the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
and each Assignment Agreement and to perform its obligations under this
Agreement and each Assignment Agreement, and such action has been duly
authorized by all necessary company action on the part of Grey K.
6.2.2 The
execution and delivery of this Agreement and, when executed, each Assignment
Agreement by Grey K and the consummation or performance of any of
the
transactions contemplated hereby
or
thereby by Grey K will not give any Person the right to prevent, delay or
otherwise interfere with any of the transactions contemplated hereby pursuant
to: (a) any provision of Grey K’s Governing Documents; (b) any
resolution adopted by the board of directors of Grey K; (c) any Legal
Requirement or Order applicable to Grey K; or (d) any Contract to which
Grey K is a party or by which Grey K may be bound.
Article
7
COVENANTS
7.1 Conduct
of Business.
Except
(a) as expressly permitted by this Agreement or (b) with the prior
written consent of Grey K, the Company Group shall (i) conduct the Business
in the ordinary course, (ii) conduct the Business consistent with the
generation, certification and/or verification of Environmental Products and
the
Emissions Reductions Methodologies and Processes, (iii) use commercially
reasonable efforts to cause the appropriate Governmental Entity or other
accredited entity to verify, certify or otherwise make the Environmental
Products available for Transfer and (iv)
use
commercially reasonable efforts to maintain
and preserve intact its business organization and the goodwill of those having
business relationships with it (including by using commercially reasonable
efforts to preserve its assets and technology and relationships with customers,
suppliers, distributors, licensors and licensees) and retain the services of
its
present officers and key employees.
5
7.2 Access
and Investigation.
Upon
reasonable advance notice received from Grey K, the Company Group shall (a)
afford Grey K and its respective Representatives reasonable access, during
regular business hours, to the books and records of the Company Group (such
rights of access to be exercised in a manner that does not unreasonably
interfere with the operations of the Company Group and the Business) and (b)
otherwise cooperate and assist, to the extent reasonably requested by Grey
K,
with Grey K’s investigation and audit of the Environmental Product Statements,
including its verification of the production of ethanol and electricity and
generation of Environmental Products by the Business.
7.3 Information
Rights; Books and Records.
7.3.1 The
Company Group shall provide, or cause to be provided, to Grey K,
as soon
as available
but
no
less
frequently than once per calendar quarter, a written report detailing the
production of ethanol and electricity and the
generation of
Environmental Products (“Environmental
Product Statements”)
and
such other information related to the Business as may be reasonably requested
by
Grey K.
7.3.2 The
Company Group will maintain true and complete books and records of account
in
which full and correct entries will be made of all of its business transactions,
including the production of ethanol and electricity and the generation of
Environmental Products, pursuant to a system of accounting established and
administered in accordance with GAAP.
7.3.3 After
January 1, 2013 Grey K will (i) maintain true and complete books and records
of
account in which full and correct entries will be made relating to the sale
of
Environmental Products Transferred
to it
under
the terms of this Agreement and (ii) prior to the twentieth day of the end
of
each calendar month, provide to the Company a written report detailing any
sales
or trades of Environmental Products which occurred in the preceding month,
the
gross proceeds from any such sales and the amount of any out-of-pocket costs
or
expenses incurred by Grey K in connection with such sales or incurred in
connection with the performance of any of its obligations under the terms of
this Agreement during the preceding month.
7.4 Implementation
of Emissions Reductions Methodologies and Processes
The
Company Group agrees to use reasonable efforts to cooperate fully with Grey
K
and its Representatives, including third party engineering and consulting firms,
in connection with the development and implementation of Emissions Reductions
Methodologies and Processes at the Company Group in order to maximize the
realization, creation, generation and production of Environmental Products
from
the Business.
7.5 Notification.
The
Company Group and Grey K shall promptly notify the other party hereto of the
occurrence of any Breach of any covenant of such party under this Agreement
or
of the occurrence of any event that may make the performance by such party
of
its obligations hereunder impossible or unlikely.
7.6 No
Liens; No Transfer.
Without
the prior written consent of Grey K, the Company Group shall not Transfer,
assign, sell, dispose of, place or allow to be placed a Lien on, pledge or
otherwise encumber any Environmental Products or any Assets of the Company
Group
which are involved in the development or creation of any Environmental
Products.
6
7.7 Grant
of Security Interest.
To
secure
the payment and performance of the obligations hereunder, the Company Group
hereby grants to Grey K a first priority Lien on, security interest in and
right
of set-off against any and all right, title and interest of the Company Group
in
and to any and Environmental Products (the “Collateral”),
whether now owned or existing or hereafter created, acquired or arising. The
Company Group authorizes Grey K at any time and from time to time to file
financing statements, continuation statements and amendments thereto, relating
to the Collateral.
7.8 Subsidiaries;
Further Assurances.
7.8.1 Promptly
upon the creation or acquisition of any Subsidiary, the Company shall cause
such
Subsidiary to execute a counterpart to this Agreement acknowledging the
agreement of such Subsidiary to be bound to this Agreement as a member of the
“Company Group,” and making the representations, warranties covenants and
transfers set forth herein, on behalf of such Subsidiary; provided,
however,
that
any Subsidiary which has assigned its rights to any Environmental Products
to an
unaffiliated third party prior to the time of the Company’s acquisition of such
Subsidiary shall not be required to assign such Environmental Products to Grey
K
until such time as such assignment terminates or otherwise expires (without
giving effect to any extensions, amendments, restatements, supplements or
modifications thereof).
7.8.2 The
parties hereto shall cooperate reasonably with each other and with their
respective Representatives in connection with any actions required to be taken
as part of their respective obligations under this Agreement, and shall execute
and deliver such documents and other papers and take such further actions as
may
be reasonably required to carry out the provisions of this Agreement and to
give
effect to the transactions contemplated hereby, including the taking of all
actions necessary to certify the generation of the Environmental Products and
the execution and delivery of such assignments and other documents as may be
reasonably necessary to Transfer the Environmental Products to Grey K in
accordance with applicable Legal Requirements.
Article
8
INDEMNIFICATION
8.1 Indemnification;
Limitation on Liability
8.1.1 Indemnification.
Each
party agrees to indemnify, defend and hold harmless the other party from and
against any and all Losses arising out of, based upon or resulting from such
party’s (i) Breach of any representation or warranty contained in or referred to
in this Agreement and any Assignment Agreement and (ii) Breach of, or any
failure to perform, any of the covenants, agreements or obligations contained
in
or made pursuant to this Agreement and any Assignment Agreement; provided,
that
Grey K’s obligation to indemnify the Company Group will be limited to the amount
of Net Proceeds actually received by Grey K pursuant to this
Agreement.
8.1.2 Limitation
of Warranties.
EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT,
GREY K MAKES NO REPRESENTATION
OR WARRANTY
WHATSOEVER,
WHETHER
WRITTEN
OR ORAL, EXPRESS OR IMPLIED,
AT
EQUITY, COMMON LAW, BY STATUTE OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT
OR
THE TRANSACTIONS CONTEMPLATED HEREBY
INCLUDING ANY REPRESENTATION OR WARRANTY AS TO THE PRICE OR DEMAND FOR THE
ENVIRONMENTAL PRODUCTS OR TO THE EXISTENCE OR DEVELOPMENT OF AN ACTIVE AND
SUSTAINABLE TRADING MARKET FOR THE ENVIRONMENTAL PRODUCTS, ALL OF WHICH ARE
DISCLAIMED.
7
Article
9
MISCELLANEOUS
9.1 Notices.
All
notices which any party hereto may give to any other party hereto under or
in
connection with this Agreement or any Assignment Agreement shall be in writing
and shall be sent by any of the following methods: hand delivery; reputable
overnight courier guaranteeing overnight delivery; certified mail, return
receipt requested; or facsimile transmission. An electronic copy of any such
notice shall also be sent on the same day by email (provided,
however,
that
failure to send an electronic copy shall not invalidate any such notice). The
communications shall be sent to the following addresses, and shall be effective
on the Business Day (i) in the case of hand delivery, when delivered, (ii)
in
the case of overnight courier, on the next Business Day after such notice was
sent, (iii) in the case of certified mail, on the fifth (5th)
Business Day after being deposited in the mail, and (iv) in the case of
facsimile, upon receipt of confirmation of transmission; provided, that any
communication received after the close of business on a Business Day shall
be
deemed to have been received on the next following Business Day:
|
if
to Grey K, to:
|
c/o
RNK Capital LLC
000
Xxxxxxx Xxxxxx, 0xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxx Xxxxxx
Facsimile:
(000) 000-0000
E-mail:
xxx.xxxxxx@xxxxxxxxxx.xxx
|
|
if
to the Company Group, to:
|
Stratos
Renewables Corporation
0000
Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
Attention:
Xxxxxxxxx Xxxxx
Facsimile:
(000) 000-0000
E-mail:
___________
|
9.2 Amendments;
No Waivers. Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment,
by
the Company and Grey K or in the case of a waiver, by the party or parties
against whom the waiver is to be effective. No failure or delay by any party
in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other
or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive
of
any rights or remedies provided by law.
9.3 Expenses.
Unless
otherwise contemplated by this Agreement or any Assignment Agreement, all costs
and expenses incurred in connection with this Agreement shall be paid by the
Company Group.
9.4 Successors
and Assigns; Benefit. The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns. The Company
Group may not assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the prior written consent of Grey
K. In
connection with a Change of Control Transaction, the Company Group agrees to
cause the acquiring or surviving Person, as the case may be, to assume all
of
its obligations in writing under this Agreement. Nothing in this Agreement,
expressed or implied, shall confer on any Person other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations,
or liabilities under or by reason of this Agreement.
8
9.5 Governing
Law; Jurisdiction. All
matters arising out of or relating to this Agreement and each Assignment
Agreement shall be construed in accordance with and governed by the internal
laws of the State of New York without regard to any conflicts of law principles
that would result in the application of the laws of another jurisdiction. In
any
action between the parties arising out of or relating to this Agreement or
any
of the transactions contemplated hereby (including any Assignment Agreement):
(a) each of the parties hereto irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state and Federal courts
located in New York; (b) if any such action is commenced in a state court,
then,
subject to applicable law, no party shall object to the removal of such action
to any Federal court located in the State of New York; and (c) each of the
parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid.
9.6 Changes
in Law.
In the
event of any changes in Legal Requirements (including the creation of any new
Legal Requirements) applicable to or otherwise concerning the creation or
characteristics of the Environmental Products covered by this Agreement,
this Agreement will be construed in such manner as shall, and each of the
Company Group and Grey K shall take such action as may be
reasonably required to, maintain, to the extent possible, the same
responsibilities and economic benefits contemplated hereunder. Notwithstanding
the fact that such a change in Legal Requirements may result in
the increase or decrease of the value of the Environmental
Products, the parties will nevertheless remain obligated
to perform in accordance with the terms of this Agreement.
9.7 WAIVER
OF JURY TRIAL. EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE
TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING ANY ASSIGNMENT
AGREEMENT).
9.8 Severability.
If
any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
9.9 Headings;
Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
The
parties intend that each representation and each warranty contained in this
Agreement shall have independent significance. Accordingly, except as otherwise
expressly provided in this Agreement, nothing contained in any representation
or
warranty, or the fact that any representation or warranty may be more specific
or less specific than any other representation or warranty, shall in any way
limit, restrict or otherwise affect the scope, applicability or meaning of
any
other representation or warranty contained in this Agreement.
9
9.10 Counterparts;
Effectiveness. This
Agreement may be signed in any number of counterparts and by facsimile
signatures, each of which shall be deemed an original, with the same effect
as
if the signatures hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received counterparts hereof
signed by all of the other parties hereto.
9.11 Entire
Agreement. This
Agreement constitutes the entire agreement between the parties with respect
to
the subject matter hereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to
the
subject matter hereof.
9.12 Relationship
of the Parties.
(a) The
obligations of the Company Group and Grey K under this Agreement shall be in
every case separate and shall not be or be construed to be joint and several.
No
party hereto shall have the authority to act for or to assume any obligations
or
responsibilities on behalf of the other party hereto. The relationship of the
Company Group to Grey K and Grey K to the Company Group is one of independent
contractors, and is not one of partners or joint venturers. It is not the
purpose or intention of this Agreement to create, and this Agreement shall
never
be construed as creating, a common law or statutory partnership, association
or
alliance, agency or any other relationship that is not expressly authorized
by
this Agreement whereby either party hereto shall be held liable for the acts,
either by omission or commission, of the other party hereto. (b) All rights
and
obligations of Grey K LP, Grey K Offshore and Grey K Leveraged hereunder shall
be several and not joint, based on their respective Allocation Amount. The
“Allocation Amount” shall be determined by Grey K LP from time to time upon
written notice to the Company.
9.13 Specific
Performance.
In
addition to any other remedies which any party hereto may have at law or in
equity, either party shall have the right to equitable relief, including,
without limitation, an injunction for specific performance of any obligation
arising under this Agreement and any Assignment Agreement. The parties further
acknowledge and agree that damages would not be an adequate remedy for any
Breach by it of the provisions of this Agreement and any Assignment Agreement
and that the parties shall be entitled, without proof of special damages, to
the
remedies of injunctive and other equitable relief for any threatened or actual
Breach by either party of this Agreement and any Assignment Agreement.
9.14 Confidentiality.
Without
the prior written consent of the other party to this Agreement, neither
the Company Group or any of its Representatives nor Grey K or any of its
Representative, shall disclose, and each party shall use reasonable
efforts to cause each of their respective Representatives
not
to
disclose,
to any
other Person the fact that this Agreement exists or the terms hereof, the
discussions or negotiations that took place (or may take place) regarding the
potential Transfers and other transactions between Grey K and the Company Group
contemplated hereunder, or any of the terms, conditions or other facts with
respect to any such possible Transfers or other transactions, including the
status thereof, except (i) as required by applicable Legal Requirements, in
which case the party that is required to disclose such information shall consult
and work in good faith with the other party hereto in order to reach a mutual
agreement with respect to the content of such disclosure and (ii) for any
disclosure by Grey K in connection with the potential sale of Environmental
Products.
9.15 Additional
Documents and Agreements;
Cooperation.
The
parties agree to execute, with acknowledgment and affidavit if required, such
additional documents and agreements, and to take such further actions, as may
reasonably be required to carry out the provisions and intent of this Agreement
and every agreement or document relating hereto, or entered into in connection
herewith. The
Company Group will exercise good-faith efforts to assist Grey K to fulfill
any
requests made by Grey K in respect of any audit requirements of Grey K or its
Affiliates. Without limiting the generality of the foregoing, the Company Group
will provide, upon request by Grey K, Grey K’s auditor or an auditor of a Grey K
Affiliate, a written statement to Grey K and/or any auditor of Grey K or its
Affiliates confirming that it is a party to this Agreement and to the relative
terms and provisions of this Agreement, including without limitation cash
amounts paid or received, unpaid liabilities and contingent liabilities and
assets owned.
10
[The
remainder of the page is intentionally left blank.]
11
IN
WITNESS WHEREOF,
the
parties hereto have executed this Environmental Products Agreement as of the
date first written above.
|
GREY
K FUND, LP
|
|
|
By:
|
Grey
K GP, LLC
|
|
By:
|
/s/
XXXXXX XXXXXX
|
|
Xxxxxx
Xxxxxx
|
|
|
Managing
Member
|
|
|
GREY
K OFFSHORE FUND, LTD.
|
|
|
By:
|
RNK
Capital LLC
|
|
By:
|
/s/
XXXXXX XXXXXX
|
|
Xxxxxx
Xxxxxx
|
|
|
Managing
Member
|
|
|
GREY
K OFFSHORE LEVERAGED FUND, LTD.
|
|
|
By:
|
RNK
Capital LLC
|
|
By:
|
/s/
XXXXXX XXXXXX
|
|
Xxxxxx
Xxxxxx
|
|
|
Managing
Member
|
|
|
STRATOS
RENEWABLES CORPORATION
|
|
|
By:
|
/s/
XXXXXX XXXXXX
|
|
Xxxxxx
Xxxxxx
|
|
|
President
|
|
|
STRATOS
DEL PERU S.A.C.
|
|
|
By:
|
/s/
XXXXXX XXXXXXX XXXXX
|
|
Xxxxxx
Xxxxxxx Xxxxx
|
|
|
Chief
Executive Officer
|
|
12
Schedule
I
Definitions
“Affiliate”
means,
with respect to any Person, any other Person which directly or indirectly
controls, is controlled by or is under common control with such
Person.
“Assets”
means
the assets of the Company Group used or held for use in connection with the
Business.
“Breach”
means
any breach of, or any inaccuracy in, any representation or warranty or any
breach of, or failure to perform or comply with, any covenant, obligation,
or
agreement in or of this Agreement or any other Contract, or any event which
with
the passing of time or the giving of notice, or both, would constitute such
a
breach, inaccuracy or failure.
“Business
Day”
means
any day other than (a) Saturday or Sunday or (b) a day on which banks in New
York are
permitted or required to be closed.
“CDM”
has
the
meaning ascribed to such term by Article 12 of the Kyoto Protocol.
“CERs”
means
certified emission reductions.
“Change
of Control Transaction”
means,
with respect to the Company Group, any of the following (i) an initial public
offering of common stock of any member of the Company Group or securities
convertible into or exchangeable for common stock of any member of the Company
Group, (ii) a merger or consolidation of any member of the Company Group with
or
into any other Person, (iii) an acquisition by any Person or group of Persons
of
effective control (whether through legal or beneficial ownership of equity
interests, by contract or otherwise) of the Company Group or (iv) a sale of
all
or substantially all of the assets of any member of the Company Group in one
or
a series of related transactions.
“Company
Group”
means
the Company and Stratos SAC together with their Subsidiaries, whether such
Subsidiaries are acquired or created on or after the Effective
Date.
“Consent”
means
any written approval, consent, ratification, waiver or other
authorization.
“Contract”
means
any agreement, contract, lease, license, consensual obligation, promise or
undertaking (whether written or oral and whether express or implied), whether
or
not legally binding.
“COP/MOP”
means
Conference of the Parties to the UNFCCC serving as the “meeting of the Parties”
to the Kyoto Protocol.
“Executive
Board”
has
the
meaning ascribed to such term by Decision 3/CMP.1 of the COP/MOP, as the same
may be amended, supplemented or otherwise modified.
“Focal
Point”
means
the Project Participant who will be responsible for all contacts and
communications with the Executive Board and the UNFCC Secretariat.
“GAAP”
means
generally accepted accounting principles for financial reporting in the United
States.
13
“Governing
Documents”
means
with respect to any particular entity, (a) if a corporation, the articles or
certificate of incorporation, memorandum or articles of association and the
bylaws, if applicable; (b) if a general partnership, the partnership agreement
and any statement of partnership; (c) if a limited partnership, the limited
partnership agreement and the certificate of limited partnership; (d) if a
limited liability company, the articles of organization and operating agreement;
(e) if another type of Person, any other charter or similar document adopted
or
filed in connection with the creation, formation or organization of the Person;
(f) all equityholders’ agreements, voting agreements, voting trust agreements,
joint venture agreements, registration rights agreements or other agreements
or
documents relating to the organization, management or operation of any Person
or
relating to the rights, duties and obligations of the equityholders of any
Person; and (g) any amendment or supplement to any of the
foregoing.
“Governmental
Entity”
means
any federal, state, municipal, local or foreign government or supranational
authority and any court, tribunal, arbitral body, administrative agency,
department, subdivision, entity, commission or other governmental, government
appointed, quasi-governmental or regulatory authority, reporting entity or
agency, domestic, foreign or supranational.
“Kyoto
Protocol”
means
the Kyoto Protocol to the UNFCCC or any successor regime.
“Legal
Requirement”
means
any federal, state, local, municipal, foreign, international, multinational
or
other constitution, law, ordinance, principle of common law, code, regulation,
statute or treaty.
“Liabilities”
means
liabilities, obligations or responsibilities of any nature whatsoever, whether
direct or indirect, matured or unmatured, fixed or unfixed, known or unknown,
asserted or unasserted, xxxxxx or inchoate, liquidated or unliquidated, secured
or unsecured, absolute, contingent or otherwise, including any direct or
indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost or expense.
“Lien”
means,
with respect to any property or asset, any lien, security interest, mortgage,
pledge, charge, claim, lease, agreement, right of first refusal, option,
limitation on transfer or use or assignment or licensing, restrictive easement,
charge or any other restriction of any kind, including any restriction on the
ownership, use, voting, transfer, possession, receipt of income or other
exercise of any attributes of ownership, in respect of such property or
asset.
“Losses”
means
any losses, damages, deficiencies, Liabilities, assessments, fines, penalties,
judgments, actions, claims, costs, disbursements, fees, expenses or settlements
of any kind or nature, including legal, accounting and other professional fees
and expenses.
“Order”
means
any order, injunction, judgment, decree, ruling, assessment or arbitration
award
of any Governmental Entity or arbitrator.
“Person”
means
an individual, partnership, corporation, business trust, limited liability
company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Governmental
Entity.
“Project
Design Document”
has
the
meaning ascribed to such term by Decision 3/CMP.1 of the COP/MOP, supplemented
or otherwise modified.
“Project
Participant”
has
the
meaning ascribed Decision 3/CMP.1 of the COP/MOP.
14
“RECs”
means
renewable energy certificates.
“Representatives”
means,
with respect to Grey K or the Company Group, as the case may be, the
shareholders, members (and any advisors to such shareholders or members),
directors, officers, managers, employees, Affiliates, representatives
(including, without limitation, financial advisors, attorneys and accountants)
or agents of Grey K or the Company Group, as the case may be.
“Subsidiary”
means,
when used with respect to any specified Person, any other Person (i) of which
the specified Person or any Subsidiary thereof is a general partner or managing
member, (ii) of which the specified Person or an Subsidiary thereof own 50%
or
more of the securities or other interests having by their terms ordinary voting
power to elect a majority of the board of directors or others performing similar
functions for such other Person, or (iii) that is directly or indirectly
controlled by the specified Person or any Subsidiary thereof.
“Tax”
means
any income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental, windfall profit, customs,
vehicle, airplane, boat, vessel or other title or registration, capital stock,
franchise, employees’ income withholding, foreign or domestic withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, value added, alternative, add-on minimum and other tax,
fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any
interest, penalty, addition or additional amount thereon imposed, assessed
or
collected by or under the authority of any Governmental Entity or payable under
any tax-sharing agreement or any other Contract.
“UNFCCC”
means
the United Nations Framework Convention on Climate Change or any successor
regime.
“VERs”
means
verified emission reductions.
15
EXHIBIT
A
ASSIGNMENT
AND ASSUMPTION AGREEMENT
THIS
ASSIGNMENT AND ASSUMPTION AGREEMENT
(this
“Assignment”),
dated
as of ________, 20__, is entered into by and between Grey K Fund, LP, a Delaware
limited partnership (“Grey
K
LP”),
Grey
K Offshore Fund, Ltd., a Cayman Island exempt company (“Grey
K
Offshore”)
and
Grey K Offshore Leveraged Fund, LP, a Cayman Island exempt company
(“Grey
K
Leveraged”,
and
together with Grey K LP and Grey K Offshore, “Assignee”),
and
[ ] (“Assignor”).
RECITALS
WHEREAS,
Assignor and Assignee are parties to that certain Environmental Products Resale
Agreement dated as of April __, 2008 (the “Agreement”).
Capitalized terms used but not defined herein have the meaning ascribed to
such
terms in the Agreement;
WHEREAS,
pursuant to the Agreement, Assignor agreed to transfer and assign, free and
clear of all Liens, to the Assignee all of Assignor’s right, title and interest
in the Environmental Products listed on Schedule A attached hereto (the
“Transferred
Environmental Products”);
WHEREAS,
pursuant to the Agreement, Assignee agreed to acquire and receive from Assignor,
all of Assignee’s right, title and interest in, to and under the Transferred
Environmental Products; and
WHEREAS,
Assignor and Assignee desire to enter into this Assignment to effect such
assignment and assumption.
NOW
THEREFORE, based on the premises and covenants contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Assignor
hereby assigns, grants, conveys, transfers and delivers to Assignee all of
Assignor’s right, title and interest, free and clear of all Liens, in and to the
Transferred Environmental Products. Assignee hereby accepts and assumes the
Transferred Environmental Products.
2. The
terms
of the Agreement, including but not limited to the parties’ respective
representations, warranties, covenants, agreements and indemnities relating
to
the Transferred Environmental Products, are incorporated into this Assignment
herein by reference. The parties acknowledges and agrees that the
representations, warranties, covenants, agreements and indemnities contained
in
the Agreement shall not be superseded hereby but shall remain in full force
and
effect to the full extent provided therein. In the event of any conflict of
inconsistency between the terms of the Agreement and the terms hereof, the
terms
of the Agreement shall govern.
3. Assignor
does hereby agree, from time to time as and when reasonably requested by
Assignee, to execute and deliver all such other assignments, instruments or
other documents, and to take such further or other actions, all in accordance
with applicable Legal Requirements, as may be reasonably necessary in order
to
assign, grant, convey, transfer and deliver to Assignee all of Assignor’s right,
title and interest, free an clear of all Liens, in and to the Transferred
Environmental Products in accordance with the Agreement and terms hereof and
consummate more effectively the transactions contemplated to occur hereunder
and
thereunder. If requested by Assignee, Assignor shall present or otherwise
enforce in its own name for the benefit of the Assignee any claims, rights
or
benefits that are transferred to Assignee by this Agreement and that require
prosecution or enforcement in Assignor’s name.
4. All
matters arising out of or relating to this Assignment
shall
be
construed in accordance with and governed by the internal laws of the State
of
New York without regard to any conflicts of law principles that would result
in
the application of the laws of another jurisdiction.
6. This
Assignment may be executed and delivered (including by facsimile transmission)
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of Assignee and Assignor and delivered to the other party, it
being understood that Assignee and Assignor need not sign the same
counterpart.
8. This
Assignment
shall
be
binding upon and inure to the benefit of each party and its successors and
permitted assigns.
9. This
Assignment
may
be
amended from time to time only by the written agreement of Assignee and
Assignor.
[Signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have duly executed this Assignment and
Assumption Agreement as of the date first above written.
| GREY K FUND, LP | |
|
By:
|
Grey
K GP, LLC
|
|
By:
|
|
|
Xxxxxx
Xxxxxx
|
|
|
Managing
Member
|
|
| GREY K OFFSHORE FUND, LTD. | |
|
By:
|
RNK
Capital LLC
|
|
By:
|
|
|
Xxxxxx
Xxxxxx
|
|
|
Managing
Member
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
| GREY K OFFSHORE LEVERAGED FUND, LTD. | |
|
By:
|
RNK
Capital LLC
|
|
By:
|
|
|
Managing
Member
|
|
Schedule
A
List
of
Transferred Environmental Products
|
Type
of
Environmental
Product (e.g. RECs, CERs,
VERs,
etc.)
|
Date
of Generation;
Certification;
Verification,
etc.
|
Quantity
|
Vintage
|
|||
