EXHIBIT 10.49
ALLIANCE TERMINATION AND AMENDMENT AGREEMENT
This Agreement is entered into effective as of July 19, 2002 by and between
XXXXXXX CORPORATION ("Bechtel") and PROBEX CORP. ("Probex") (together the
"Parties" and each individually a "Party").
RECITALS:
A. The Parties entered into an Alliance Agreement dated as of January 31,
2001 (the "Alliance Agreement") for the purpose of collaborating in the
development and construction of used oil refining projects using the
Probex proprietary Pro Terra(R) Process, which includes Xxxxxxx'x
proprietary MP Refining(SM) Process.
B. The Parties have also entered into the following other agreements
(collectively, the "Other Joint Agreements"):
(1) Master Agreement for Licensing of Xxxxxxx XX Refining(SM) Process
and Process Engineering for Multiple Plants, dated February 28,
2000 (the "Master License Agreement");
(2) License Agreement for Use of Xxxxxxx XX Refining(SM) Process,
dated February 28, 2000 (the "Wellsville License Agreement");
(3) Solvent Finishing Unit Technical Services Agreement, dated
February 28, 2000 (the "Wellsville Finishing Unit TSA"); and
(4) Wellsville Plant Process Engineering and Technical Services
Agreement, dated February 28, 2000 (the "Wellsville TSA") (the
Wellsville Finishing Unit TSA and the Wellsville TSA together the
"TSAs" and each individually a "TSA").
C. Despite considerable efforts, the Parties failed to reach final
agreement on a contract for Bechtel to provide EPC services to Probex
and were, therefore, unable to successfully implement the Alliance
Agreement to meet each Party's reasonable commercial expectations. It
is, therefore, the intent of the Parties to terminate the Alliance
Agreement, except as specifically provided for herein.
D. Although the Parties intend to terminate the Alliance Agreement, they
intend to continue to work together under the terms and conditions of
the Other Joint Agreements. The Parties are amending each of the Other
Joint Agreements to reflect the terms of this Agreement.
E. Notwithstanding the termination of the Alliance Agreement, the Parties
have entered into this Agreement in order to proceed to work in a
cooperative manner under the Other Joint Agreements, to facilitate the
completion of Probex's used
oil refining facility in Wellsville Ohio (the "Wellsville Project")
with Petrofac LLC as EPC contractor for the Wellsville Project and to
settle all outstanding payments due under the TSAs.
NOW THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained, the Parties, intending to be legally
bound, hereby agree as follows:
1. Definitions. Any capitalized term used in this Agreement and not
defined herein shall have the meaning defined in the Alliance Agreement
or in the Other Joint Agreement(s) referenced. In addition, the
following terms are defined as follows:
"AAA" means the American Arbitration Association.
"Developed Data" means the Pretreatment Stage Developed Data and IP
Rights, the Distillation Stage Developed Data and IP Rights, and the
Balance of Plant Developed Data and IP Rights, individually or
collectively, as the context may require.
"Financial Closing on the Wellsville Project" means satisfaction of all
conditions precedent and initial disbursement under the loan agreements
entered into by Probex Wellsville, L.P. for the construction financing
of the Wellsville Project.
"Probex's EPC Contractor" means the contractor chosen by Probex to
engineer, design, and build the Wellsville Project.
"Protected Technology" means the Bechtel Background Data and IP Rights
(as provided for in Section 1.2(a) of Exhibit 1 to the Alliance
Agreement), the Probex Background Data and IP Rights (as provided for
in Section 1.2(b) of Exhibit 1) and Finishing Stage Developed Data and
IP Rights, individually or collectively, as the context may require.
"Settlement Amount" means the amount set forth in Section 10 of this
Agreement, plus interest thereon as provided in that Section.
2. Alliance Agreement and Surviving IP Rights. The Alliance Agreement is
hereby terminated by mutual consent. The Alliance Agreement is not
being terminated for cause, default, or for the convenience of any
specific Party. All rights, obligations, and restrictions of the
Parties under the Alliance Agreement shall be considered extinguished
without further liability of either Party to the other. Notwithstanding
the foregoing, however, Section 11.3 (regarding press announcements) of
the Alliance Agreement shall survive and continue in effect in
accordance with its terms until Financial Closing on the Wellsville
Project and the provisions of Section 8.1 (limiting liability to
exclude incidental, consequential, and punitive damages), Article 9 and
Exhibit 1 ("Ownership of Data and Intellectual Property Rights"),
Article 10 ("Confidential Information") and
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Sections 11.1 (regarding Probex SEC filings) and 11.2 (regarding
Bechtel SEC filings) shall survive and continue in effect in accordance
with their terms, except as expressly amended as follows:
(a) Probex and Probex's EPC Contractor shall have the right to use
Bechtel Background Data and IP Rights, Developed Data, and
Finishing Stage Developed Data and IP Rights in connection
with the construction and operation of the Wellsville Project
only until the earlier to occur of (i) Financial Closing on
the Wellsville Project, or (ii) February 28, 2003, unless
extended by mutual agreement of the Parties. Notwithstanding
the foregoing, if and when Probex pays the Settlement Amount
to Bechtel, the rights of Probex and Probex's EPC Contractor
to use such Bechtel Background Data and IP Rights, Developed
Data, and Finishing Stage Developed Data and IP Rights shall
become perpetual and irrevocable, except as otherwise limited
in this Agreement or the Other Joint Agreements.
(b) Except as provided in the next sentence, Sections 1.3(b),
1.4(b), and 1.6(b) of Exhibit 1 are amended to provide that
Probex hereby grants Bechtel a nonexclusive, irrevocable,
royalty-free license to use Developed Data, without
restriction, effective as of the date of this Agreement.
Notwithstanding the foregoing, Bechtel shall not have the
right to use such Developed Data with regard to plants that
re-refine or re-process Used Oil or that manufacture or refine
oil products from Used Oil until that date which is twenty
(20) years after the date of this Agreement.
(c) Section 1.5(b)(ii) of Exhibit 1 is amended to provide that
Probex has a nonexclusive, irrevocable, royalty-free right to
use Finishing Stage Developed Data and IP Rights for any
project that involves or relates to the re-refining or
re-processing of Used Oil, or the manufacturing or refining of
oil products from Used Oil, without restriction, effective as
of the date of this Agreement; provided that Probex shall
notify Bechtel if and when Probex or an Affiliate uses any
Finishing Stage Developed Data other than in the following
four areas:
(i) concept of operating without an absorber tower to recover
traces of MP solvent from the overhead vapors of the solvent
drying tower;
(ii) concept of operating with only one solvent surge tank;
(iii) design of the oil skimming system in the solvent surge
tank;
(iv) use of unit feed as the recirculating liquid in the
liquid ring vacuum pumps.
Section 1.5(b)(iii) of Exhibit 1 is amended to provide that
Bechtel has a nonexclusive, irrevocable, royalty-free right to
use Finishing Stage
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Developed Data and IP Rights, without restriction, effective
as of the date of this Agreement; provided that, for any
project that involves or relates to the re-refining or
re-processing of Used Oil, or the manufacturing or refining of
oil products from Used Oil, Bechtel shall only have the right
to use the areas of Finishing Stage Developed Data set forth
in (i) through (iv) above in this paragraph.
(d) Section 1.8 of Exhibit 1 is superseded in its entirety by
Section 6 of this Agreement.
(e) Probex shall obtain from Probex's EPC Contractor, and from any
other engineering firms and contractors that Probex provides
with the Bechtel Background Data and IP Rights or Finishing
Stage Developed Data and IP Rights and that now or hereafter
are used by Probex or its Affiliates, and deliver to Bechtel
(i) a written confidentiality agreement prohibiting such
entity from disclosing such Bechtel Background Data or
Finishing Stage Developed Data to any entity that has not
previously executed and delivered to Bechtel such a
confidentiality agreement, except with Xxxxxxx'x prior
consent, and (ii) a restrictive covenant precluding the use of
any such Bechtel Background Data and IP Rights or Finishing
Stage Developed Data and IP Rights for any purpose other than
for a Probex project.
Bechtel shall obtain from any Bechtel subcontractors and from
any other engineering firms and contractors that Bechtel
provides with the Probex Background Data and IP Rights or
Finishing Stage Developed Data and IP Rights and that now or
hereafter are used by Bechtel or its Affiliates, and deliver
to Probex (i) a written confidentiality agreement prohibiting
such entity from disclosing such Probex Background Data or
Finishing Stage Developed Data to any entity that has not
previously executed and delivered to Probex such a
confidentiality agreement, except with Probex's prior consent,
and (ii) a restrictive covenant precluding the use of any such
Probex Background Data and IP Rights or Finishing Stage
Developed Data and IP Rights for any purpose other than for a
Bechtel project.
(f) The surviving provisions of the Alliance Agreement shall be
amended as follows:
(i) The third paragraph of Article 9 is hereby amended to
delete the words "and EPC Contracts" from the second and third
lines thereof.
(ii) Section 1.2, Sub-section (b) of Exhibit 1 is hereby
amended to delete the words "or Services under any EPC
Contract" from the last line thereof.
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(iii) Section 1.3, Sub-section (b) of Exhibit 1 is hereby
amended to delete the words "under any EPC Contract" from the
second and third lines thereof.
3. Other Joint Agreements Generally. Contemporaneously with the execution
of this Agreement, the Parties have executed amendments to the Other
Joint Agreements to further effectuate the purposes of this Agreement
and implement the intent of the Parties. The Other Joint Agreements
shall remain in full force and effect in accordance with their terms
except as expressly amended by this Agreement or by duly executed
written amendments thereto.
4. Assignment of Wellsville License Agreement. Bechtel hereby consents to
Probex assigning its licensee interest in the Wellsville License
Agreement to Probex Wellsville L.P., in whole and not in part,
effective upon payment to Bechtel of $273,300.00, representing the
portion of the royalty due under the Wellsville License Agreement that
was previously deferred, not later than Financial Closing on the
Wellsville Project. It is understood and agreed that subsequent to
Financial Closing on the Wellsville Project, the rights granted under
the Wellsville License Agreement are conditioned on the licensee
complying with all the obligations therein, including the making of
royalty payments as and when due and the establishment of a standby
letter of credit as provided therein.
5. Continuing Services and Process Guarantee Agreements. The Parties agree
to enter into a Continuing Services Agreement and a Process Guarantee
Agreement for the Wellsville Project as contemplated in Subsections
2(c)(3) and 2(c)(4) of the Master License Agreement. The commercial
terms and rates in the Continuing Services Agreement shall be similar
to those that Bechtel offers to other licensees of the MP Refining(SM)
Process.
6. FEL Delivery. Bechtel shall promptly deliver to Probex all volumes of
the FEL books prepared by Bechtel under the TSAs and not yet delivered
to Probex, in both hard copy and electronic form to the extent readily
available without significant additional effort. The Parties
acknowledge that Bechtel may have been unable to fully complete certain
portions of the FEL books.
7. Professional Liability Under TSAs. Section 8.3 of each of the TSAs
shall continue to apply to the FEL work, except that each Party hereby
releases the other Party from liability arising from errors or
omissions in FEL work to the extent that such work is deemed to be
incomplete through no fault of the party alleged to have committed the
errors or omissions.
8. Process License Package. Bechtel shall perform technical services
necessary to update the Wellsville Project process license package for
increased capacity based on the so-called "Dallas Heavy" feedstock.
Such services shall be deemed to be performed under the Wellsville
Finishing Unit TSA, and shall be performed at no additional charge to
Probex on a reasonably prompt basis, but in no event later
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than that date which is ninety (90) days after the date of execution of
this Agreement.
9. Future Bechtel Services. Probex may request services under either TSA
in accordance with their respective terms, but, except as set forth in
this section and Section 8 (above), it is agreed that Bechtel shall not
be obligated to perform any services under either TSA, unless and until
the Settlement Amount has been paid. All services to be performed by
Xxxxxxx'x Lube Oil Technology Group following delivery of the updated
process license package referred to in Section 8 of this Agreement
shall be performed under the Process Guaranty Agreement and Continuing
Services Agreement referred to in Subsections 2(c)(3) and 2(c)(4) of
the Master License Agreement.
10. Settlement Amount. Probex agrees to pay, and Bechtel agrees to accept,
a total amount of $5,233,932.77, plus interest which shall accrue from
May 1, 2002 until Financial Closing on the Wellsville Project at a rate
of LIBOR plus four percent (LIBOR+4%), in full and final settlement and
satisfaction of all invoices, monies and claims that Bechtel asserts
are due and owing by Probex, in cash, not later than Financial Closing
on the Wellsville Project. The Parties and the lenders shall agree on
mutually satisfactory payment mechanisms prior to Financial Closing on
the Wellsville Project.
11. Warrant Extension. Probex shall cause the expiration date for that
certain warrant issued to Bechtel on July 27, 2000, for 200,000 shares
of Probex stock to be extended from July 27, 2002, to December 31,
2004, and shall furnish Bechtel with appropriate documentation thereof.
12. Representatives. The designated representatives of the Parties for
purposes of carrying out this Agreement shall be Xxxx XxXxxx for Probex
and Xxxx Xxxxxx for Xxxxxxx, unless a Party designates a substitute
representative.
13. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the Parties shall be governed by,
the laws of the State of Texas without regard to principles of conflict
of laws.
14. Successors and Assigns. This Agreement shall (a) be binding on each of
the Parties hereto and their respective successor and assigns, and (b)
inure to the benefit of the Parties and their respective successors and
assigns.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which together shall constitute one and the same instrument
notwithstanding that all parties are not signatories to each
counterpart.
16. Dispute Resolution. To the extent that any dispute or claim arising out
of or relating to this Agreement or the interpretation or application
hereof or any arrangements relating hereto or contemplated herein or
the breach, termination or
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invalidity of this Agreement cannot be settled after good faith
attempts at negotiation or invocation of an appropriate alternative
dispute resolution mechanism, such dispute or claim shall be settled
exclusively and finally by arbitration in accordance with the
Commercial Arbitration Rules of the AAA. Each Party's obligations and
rights under this Agreement shall be continuing and in full force
during the term of the arbitration proceedings until an award stating
the occurrence and timing of termination of this Agreement has been
rendered.
The arbitral tribunal shall consist of three (3) arbitrators. Each
Party shall nominate, respectively, one arbitrator and such arbitrators
shall nominate a third arbitrator who shall act as chairman. If the two
Party appointed arbitrators fail to agree on a third arbitrator within
fifteen (15) calendar days from the date a demand for arbitration is
made hereunder, the AAA shall appoint the arbitrator. Should any of the
arbitrators so appointed die, resign, or refuse or become unable to act
before a decision is given, the vacancy shall be filled by the method
set forth in this Section 16 for the original appointment. The
arbitrators shall be required to give a written decision including the
reasons therefor.
Each Party shall bear its own costs and share equally third party costs
associated with any arbitration; provided, however, that the
arbitrators may in their discretion require that the losing Party shall
reimburse the winning Party for such expenses and costs, and for
reasonable attorneys' fees.
EXECUTED as of the date set forth above.
PROBEX CORP. XXXXXXX CORPORATION
By: /s/ Xxxxx XxXxxx By: /s/ Xxxx Xxxxxx
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Name: Xxxxx XxXxxx Name: Xxxx Xxxxxx
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Title: Sr. Vice President Title: PVP, Manager of Technology
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