EXHIBIT 10.5

 

CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

 

This Confidentiality and Non-Competition Agreement is entered into on this 17th
day of February, 2006 (“Effective Date”), by and between BioSource America,
Inc., a Texas corporation (hereinafter “Buyer”) and Resodyn Corporation, a
Delaware corporation (hereinafter “Resodyn”)

 

WHEREAS, Buyer on even date of this Confidentiality and Non-Competition
Agreement, is entering into Asset Purchase Agreement with BIOsource Fuels, LLC,
a Wisconsin limited liability company (hereafter “Seller”) to purchase and
acquire all of the assets of Seller related to and used in connection with the
synthesis of biodiesel and other bio-fuels from animal and vegetable based fats,
oils and greases (“the Business”); and

 

NOW, THEREFORE, for and in consideration of ten dollars paid in hand by Buyer to
Resodyn, and other good and valuable consideration paid by Buyer, the receipt
and sufficiency of which is hereby acknowledged, Resodyn and its principals
enter into this Confidentiality and Non-Competition Agreement and agree to the
covenants and agreements set forth herein as follows:

 

I.                              Covenant Not to Compete.

 

Neither Resodyn, nor any principal of Resodyn, at any time from and after the
Effective Date of Asset Purchase Agreement and through the fifth anniversary of
such Effective Date, without the prior written consent of Buyer, will (i)
directly or indirectly engage in, manage, operate, control or participate in or
be connected in any manner with the ownership, management, operation or control
of any person or entity which is or proposes to be, directly or indirectly,
engaged or involved in Business; or (ii) acquire control of or assist or render
services (whether or not for compensation, or as an agent, advisor, consultant
or lender) to or for, any entity or individual involved in Business.

 

Nothing in this Agreement shall prohibit Resodyn from working directly or
indirectly with, assisting, or providing services or products to any person or
entity in the Business that synthesizes or markets bio-fuel or biodiesel from
animal and vegetable based fats, oils, and greases as long as Resodyn’s work,
assistance, or services are not involved in the synthesis of biodiesel and other
bio-fuels as an end product from animal and vegetable based fats, oils, and
greases.

 

Nothing in this Agreement shall prohibit Resodyn from researching, developing,
marketing, selling, and engaging in the business of biochemical and chemical
processes involving chemistries, products or processes that use non-petroleum
feedstock, biodiesel or other bio-fuels from animal and vegetable based fats,
oils and greases in order to synthesize products, provided only that the end
product of Resodyn’s activities cannot be biodiesel or bio-fuel from animal and
vegetable based fats, oils, and greases.

 

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Resodyn agrees that at any time from the Effective Date and through the fifth
anniversary thereof, it will not directly or indirectly through its actions or
through the actions of a third party, whether for its own benefit or for that of
the third parry, take any action, or advise or assist in taking any action, that
impairs the goodwill of Buyer, including but not limited to, actions that
interfere with or damage the relationships between Buyer and employees,
customers, contractors, licensees and suppliers of Buyer.

 

The foregoing paragraphs:

 

shall not prohibit Resodyn from owning in the aggregate less than two percent
(2%) of an entity which is engaged in the Business provided such entity is
subject to the reporting obligations of the Securities Exchange Act of 1934, as
amended, and provided any such investment has a value no greater than One
Hundred Thousand Dollars ($100,000.00).

 

None of the foregoing paragraphs of this Section I shall prohibit Resodyn from:

 

(a.)          selling animal and vegetable based fats, oil and greases for
synthesis of bio-fuel or biodiesel;

 

(b.)          engaging in the design and construction of a plant or plants for
the synthesis of bio-fuel or biodiesel pursuant to a license granted by Buyer;

 

(c.)          owning or operating a plant for the synthesis of bio-fuel or
biodiesel which has been designed and constructed by Buyer;

 

(d.)          any activity that constitutes the Business when such activity has
been specifically authorized in a written agreement with Buyer or performed at
the written request of and on behalf of Buyer; nor

 

(e.)          marketing or selling Biodiesel, glycerin or any other product or
by-product used in or resulting from the synthesis of bio-fuel or biodiesel.

 

(f.)           using enzymes as catalysts for esterification, using solid acid
catalysts for esterification, or using solid acid catalysts to dry methanol.

 

(g.)          working on and completing any government funded research and
development contracts dealing with new methods for biodiesel synthesis that do
not include glycerolysis.

 

Resodyn is expressly prohibited from:

 

(a)                                  representing Biosource Fuels, LLC as a
commercial viable entity actively engaged in the business lines outlined in
paragraphs (a.) through (e.) above;

 

(b)                                 any representations on websites, in trade
magazines, promotional brochures, company literature or verbally that it can or
will engage in any activities as defined in paragraphs (a.) through (e.) above;

 

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(c)                                  any representation, technology development,
research, development, or business arrangements that infringe upon any biodiesel
or biofuels production technology identified in:

 

(i)                                     U.S. Patent Application Serial Number
10/776,740 filed 1/26/2004

 

(ii)                                  U.S. Provisional Patent Application Serial
Number 60,537,251 filed 1/15/2004

 

(iii)                               U.S. Provisional Patent Application Serial
Number 60,443,049 filed 1/27/2003

 

Seller agrees that all existing Employee Non-Compete Agreements for past
employees of any of the Members of the Seller are declared null and void with
respect to biodiesel or biofuels production, production technology as it relates
to this Agreement.

 

II.                            Confidential Information.

 

Resodyn and Buyer acknowledge that Seller has developed highly specialized and
technical knowledge with respect to the Business, including, but not limited to,
(i) information and technology relating to applications used to manufacture
biodiesel and other biofuels from animal and vegetable-based fats, oils and
greases including, but not limited, patent applications pending before the U.S.
Patent and Trademark Office; (ii) information relating to chemistry, process
methods, processing steps, processing times and conditions, costs of processing,
licensing fees, royalties and other technical or business sensitive information
relating to the Business; (iii) formulations, test results, manufacturing and
engineering specifications, production and manufacturing information and
know-how and other technical information relating to the formulation or
production of products or services of the Business; (iv) information concerning
products or services of the Business but not yet offered for sale or license or
offered for sale or license only on condition of confidentiality; (v)
information concerning pricing policies for the Business, the prices charged in
the Business to customers, the volume or order of such customers, and other
information concerning business transactions with customers or proposed
customers; (vi) customer lists for the Business; (vii) financial information
concerning the Business; (viii) information concerning the marketing programs or
strategies of the Business; and (ix) all other confidential and proprietary
information relating to the Business (“Confidential Information”).  Confidential
Information shall not include information which is publicly available on
Effective Date or which becomes publicly available through no fault of Resodyn
after Effective Date (but only after such information becomes- publicly
available).

 

Resodyn recognizes that the integrity and value of the assets sold by Seller
under the Asset Purchase Agreement are dependent upon the confidentiality of the
Confidential Information and that the protection of the Confidential Information
against unauthorized disclosure or use is of critical importance to Buyer. 
Resodyn agrees that it will not, without the prior written authorization of
Buyer, divulge to any person or entity, directly or indirectly, any of the
Confidential Information.

 

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If Resodyn is subpoenaed, or is otherwise required by law to testify concerning
any Confidential Information, Resodyn agrees to promptly notify Buyer upon
receipt of a subpoena, or upon reasonable belief that such testimony shall be
required so that Buyer may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement.  In any event,
Resodyn shall furnish only that portion of the Confidential Information that it
is advised by legal advisers to be legally required and shall exercise
reasonable best efforts to obtain reliable assurance that confidential treatment
shall be accorded the Confidential Information.  Further, Resodyn agrees not to
oppose action by Buyer to obtain an appropriate protective order or other
reliable assurance that confidential treatment shall be accorded the
Confidential Information.

 

III.                           Acknowledgement of Reasonableness and
Enforcement.

 

Buyer and Resodyn agree and stipulate that the agreements and covenants
contained in this Confidentiality and Non-Competition Agreement are fair and
reasonable in light of all of the facts and circumstances of the relationship
between Buyer and Seller including the consideration recited in the Asset
Purchase Agreement.

 

Buyer and Resodyn are aware that in certain circumstances courts have refused to
enforce certain agreements not to compete.  Therefore, in furtherance of, and
not in derogation of the provisions of this Confidentiality and Non-Competition
Agreement, Buyer and Resodyn agree that in the event a court should decline to
enforce any provision of this Confidentiality and Non-Competition Agreement,
then the provisions of this Confidentiality and Non-Competition Agreement shall
be modified or reformed in a manner which will restrict Resodyn’s competition
with Buyer to the maximum extent, as to time, geography and business scope,
consistent with the remaining terms of this Agreement.

 

The parties agree that if Resodyn violates the provisions of this
Confidentiality and Non-Competition Agreement, Buyer shall be entitled to
recover any actual damages that may be awarded at trial or in arbitration, as
applicable, and not reversed on appeal It is further agreed that Buyer, in
addition to and without limiting any other remedy or right that it may have,
will have the right to an injunction issued by a court of competent jurisdiction
against any breach or threatened breach of this Confidentiality and
Non-Competition Agreement in order to enjoin such breach.

 

IV.                           Miscellaneous

 

Resodyn acknowledges that Buyer is granting to Seller, a collateral assignment
of this Confidentiality and Non-Competition Agreement to secure the obligations
of Buyer under the Asset Purchase Agreement and a promissory note delivered
thereunder, and Resodyn irrevocably consents to such assignment.

 

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This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas.

 

The parties have caused this Agreement to be executed on this 17th day of
February, 2006 as set forth below.

 

RESODYN CORPORATION,

 

 

By:

/s/ Lawrence C. Farrar

 

 

Lawrence C. Farrar

 

President

 

 

Biosource America, Inc.,

 

 

By:

/s/ J.D. McGraw

 

 

J.D. McGraw

 

President

 

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