Vertigro Algae Technologies Stakeholders Letter of Agreement
Exhibit
10.1
Vertigro
Algae Technologies
| GLOBAL GREEN SOLUTIONS INC. | (Hereafter known as “GGRN”) | |
| Suite 1010 -▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Vancouver, BC V6C 11127 | ||
| AND | ||
| VALCENT PRODUCTS INC. | (Hereafter known as “VPI”) | |
| Suite ▇▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Vancouver, BC V6C 1112 | ||
| AND | ||
| PAGIC LP | (Hereafter known as “PG”) | |
| (Formerly MK Enterprises LLC) | ||
| ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ | ||
| Suite H El Paso Texas 79922 | ||
| AND | ||
| WEST PEAK VENTURES OF CANADA LTD. | (Hereafter known as “WPV”) | |
| Suite 1010 -▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Vancouver, BC V6C 11127 | ||
DEVELOPMENT
and COMMERCIAL EXPLOITATION
ALGAE
BIOMASS PRODUCTION TECHNOLOGIES
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
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
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;
Note:
Where further work is required on a subject the (TBA) nomenclature
means “To Be Advisedand/or Agreed”.
1
Vertigro
Algae Technologies
I)
Venture Name:
Vertigro
Algae Technologies. [Venture].
2)
Form of Venture
|
a)
|
Legal
Joint Venture [JV]
|
|
b)
|
Country
of domicile (TBA)
|
3)
Venture Stakeholders
|
a)
|
Global
Green Solutions Inc [GGRN].
|
|
b)
|
Valcent
Products Inc. [VP1].
|
|
c)
|
Pagic
LP [PG].
|
|
d)
|
West
Peak Ventures of Canada LTD. [WPV].
|
4)
Venture Stakeholders Interests
|
a)
|
Venture
Equity Interest and Net Profit
Distribution:
|
|
i)
|
GGRN
50%.
|
|
ii)
|
VPI
50%.
|
|
b)
|
Venture
License Royalty Interest and
Distribution
|
|
i)
|
PG
67%.
|
|
ii)
|
WPV
33%.
|
5)
Technology Intellectual Property and License Royalty
Owners
|
a)
|
Intellectual
Property (IP) is owned by PG.
|
|
b)
|
License
Royalties are owned 67% by PG and 33% by
WPV.
|
6)
Venture Technology
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.
7)Venture
Management Committee
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 (1) of whom will be nominated
by PG.
|
a)
|
The
Venture Management Committee shall meet quarterly during the first
operational year of the Venture and thereafter a minimum of twice
per
year.
|
|
b)
|
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.
|
|
c)
|
The
quorum at a meeting of the Management Committee shall be three (3)
Members.
|
|
d)
|
Each
Member will have one (1) vote.
|
|
e)
|
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.
|
The
following matters shall require the affirmative vote of all members of the
Management Committee;
|
i)
|
any
amendment of the Ventures Head
Agreement.
|
|
ii)
|
the
Venture's dissolution, liquidation or winding
up.
|
|
iii)
|
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.
|
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.
8)
Venture Stakeholder-Initial and Subsequent Capital
Investments
|
a)
|
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.
|
8) Venture Stakeholder-Initial and Subsequent
Capital
Investments (continued)
|
b)
|
VPI:
Vertigro commercialization rights as granted by PG and assigned to
the
Venture as well as its share in ongoing Venture
expenditures.
|
|
c)
|
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.
|
|
d)
|
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 (I'M) formula.
|
|
e)
|
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.
|
9)
Venture Managing and Operator Partner
|
a)
|
GGRN
shalt operate the Venture on behalf of the Venture including but
not
limited to;
|
|
i)
|
Venture
management legal and contract management, financial management and
reporting, technology budget and schedule, program and project management,
technology.
|
|
ii)
|
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.
|
|
b)
|
Venture
management and operator fees and expenses to GGRN shall be approved
by the
Management Committee before July 3l, 2007. The Management Committee
shall
approve an Operating Agreement which shall also address accounting
and tax
matters.
|
10)
Venture Technology Commercialization
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.
11)
Venture Technology Package
|
a)
|
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.
|
|
b)
|
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.
|
12)
Venture Sales Model
|
a)
|
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.
|
|
b)
|
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.
|
13)
Commercialization Trademark
|
a)
|
GGRN
shall market the Vertigro Technologies using the Venture trademark
name of
"Vertigro".
|
|
b)
|
Other
derivations of the trademark may be developed by the Venture in the
future. The Venture shall trademark the name
"Vertigro
|
14)
Venture Partner
|
a)
|
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).
|
|
b)
|
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.
|
|
c)
|
The
Venture Operator shall manage the "Vertigro" Algae Biomass Technology
License and License Royalties Contract directly
with PG/WPV.
|
|
d)
|
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 VPL.
|
|
e)
|
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.
|
|
f)
|
VPI
will become a 50% Venture Partner subject to the above being fulfilled
before July 31st",
2007.
|
15)
Venture Research and Technology Provider
|
a)
|
PG
is the Research and Technology Provider for all "Vertigro" algae-biomass
based applications. (known as the Venture
Technology).
|
|
b)
|
PG
shall insure its Intellectual Property (IP) protection of the Venture
Technology remains in good standing and any potential infringement
is
dealt with.
|
|
c)
|
The
Venture operator shall have the right to put PG or its assigns on
"Notice
of Default" if any of the following events
occur.
|
|
i)
|
cost
over runs not prior approved by the
Venture.
|
|
ii)
|
delays
in completing research and development tasks against delivery
schedules agreed with the
venture.
|
|
iii)
|
delays
in delivering the Venture technology or technical know-how and support
in
a timely manner during the commercialization stages of the
technology.
|
|
d)
|
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".
|
15) Venture Research and Technology
Provider(continued)
|
|
e)
|
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.
|
|
i)
|
fails
to keep the IP free and clear of liens or
encumbrances.
|
|
ii)
|
becomes
insolvent or a bankrupt entity.
|
|
iii)
|
protection
of IP is not kept in good standing.
|
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f)
|
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.
|
|
g)
|
In
the case a disputed "Default" or Terminal Default event both parties
have
the right to "Resolution through
Arbitration".
|
|
h)
|
PG
and VPI shall deliver the Commercialization Rights to the Venture
before
July 31st, 2007.
|
|
i)
|
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)
|
PG
shall provide the non-exclusive services of ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
Venture Technology Inventor) to the Venture to provide research services,
technology support and know-how on a needto basis during the
research, development and initial commercialization
phase.
|
|
k)
|
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;
|
|
i)
|
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;
|
|
ii)
|
all
ongoing process and research and development programs and
experiments.
|
16)
Venture Term and Termination
The
Venture shall extend automatically until one or more of the following
termination events are invoked;
|
a)
|
the
insolvency or bankruptcy of either of the Venture
partners.
|
|
b)
|
failure
of the Venture to distribute License Royalty payments to
PG.
|
|
c)
|
voluntary
winding up of the Venture under the direction of the Management
Committee.
|
|
d)
|
GGRN
fails to fund the Venture initial capital loan in an amount of up
to
$3,000,000.
|
|
e)
|
a
Terminal Default by PG.
|
|
f)
|
the
Venture fails to meet the Commercialization Revenue targets
(THA).
|
|
g)
|
any
venture partners interest falls below a 10% venture
interest.
|
17)
Venture Financial Reporting
|
a)
|
The
Venture Operator is required to provide audited financial reports
and
statements to the Venture to its reasonable
satisfaction.
|
|
b)
|
The
Venture financial reporting shall be in accordance with US GAAP standard
accounting practices.
|
18)
Venture Facility Location
|
a)
|
The
Venture Facility will be initially located at ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ [the "Facility"].
|
|
b)
|
The
Venture Facility ground is owned by the
Venture
|
|
c)
|
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.
|
19)
Venture Business Plan
The
Management Committee needs to unanimously approve the Research, Development
and
Commercialization Business Plan.
20)
Development Plant Facility
|
a)
|
The
Venture will invest in, own and operate the Development Plant
Facility.
|
|
b)
|
The
Development Plant Facility is to be built at the Venture Facility
location.
|
|
c)
|
The
Development Plant Facility will include the Development Plant greenhouses,
related utility buildings, and storage
areas,
|
|
d)
|
The
Venture shall be responsible for the upkeep and maintenance of the
Development Plant Facility.
|
21)
Commercial Pilot Plant Facility
|
a)
|
The
Venture will invest in, own and operate a Commercial Scale Pilot
Plant
Facility.
|
|
b)
|
The
Pilot Plant Facility (not exceeding two (2) acres) is to be built
at the
Venture Facility location.
|
|
c)
|
The
Commercial Pilot Plant Facility is planned to include, production
plant
greenhouses, utility buildings, office and storage
areas.
|
|
d)
|
The
Venture shall be responsible for the upkeep and maintenance of the
Commercial Pilot Plant Facility.
|
|
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%.
|
22) Option top Sell the Research Facility and
all
lands
|
a)
|
The
Research Facility is located within the Venture
Facility,
|
|
|
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.
|
|
|
c)
|
The
Venture Development Plant and Commercial Pilot Plant facilities purchased
by the Venture shall not form part of the Research Facility option
agreement.
|
|
|
d)
|
On
exercising the option both parties agree that a long term tease will
then
be in effect whereby the Venture shall lease land from PG for the
Development Plant and Commercial Pilot Plant
facilities.
|
|
|
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.
|
|
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.
|
|
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%)
|
23)
Research Laboratory Services
|
|
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.
|
|
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.
|
24)
Technology
License Royalty -
Vertigro Biofuel
Applications
|
|
a)
|
A
Royalty (31 '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.
|
|
|
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.
|
|
|
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.
|
|
c)
|
The
45% 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 | VALCENT PRODUCTS INC | |||
|
/s/
▇▇▇▇ ▇▇▇▇▇▇
|
/s/
|
|||
|
Name:
▇▇▇▇ ▇▇▇▇▇▇
|
Name
|
|||
|
Title:
President and CEO
|
Title:
Director
|
| PAGIC LP | WEST PEAK VENTURES OF CANADA LTD. | |||
|
/s/
▇. ▇▇▇▇
▇▇▇▇▇
|
/s/
|
|||
|
Name:
▇. ▇▇▇▇
▇▇▇▇▇
|
Name
|
|||
|
Title:
Director
|
Title:
Director
|
10