Document:

exhibit_10-4.htm

Exhibit 10.4

FIRST AMENDMENT TO

BUSINESS AND DEVELOPMENT AGREEMENT

 

This First Amendment to Business and Development Agreement (this “First Amendment”) is made and entered into as of the 23rd day of November, 2010, by and between Global Energy, Inc., a corporation organized and existing under the laws of the State of Nevada (“Global”), and Renewable Diesel, LLC, a Delaware limited liability company (“Renewable”).

 

WHEREAS, Global and Renewable entered into a Business and Development Agreement dated as of February 6, 2008 (the “Agreement”);

WHEREAS, Global acknowledged a clarification requested by Renewable to one of the provisions of the Agreement in a letter dated July 31, 2008 (the “Letter”);

WHEREAS, AlphaKat GmbH, a company organized and existing under the laws of Germany (“AK”), and Covanta Energy Corporation, a Delaware corporation (“Covanta”), entered into a License and Manufacturing Agreement dated March 11, 2010 (the “LMA”) which authorizes Covanta, among other things, to manufacture and have manufactured Systems;

WHEREAS, the terms of the LMA requires that certain modifications be made to the terms of the Agreement; and

WHEREAS, Global and Renewable want to implement the modifications required by the LMA and certain other modifications and to incorporate the clarifications provided for in the Letter into the Agreement and to terminate the Letter;

 

NOW, THEREFORE, in light of the mutual premises set forth herein and other good and valuable consideration, the receipt and the sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows.

 

	
1.

	
Capitalized Terms.  All of the capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Agreement.

 

  

  

  

 

	
2.

	
Amendments to the Agreement.  The following amendments to the Agreement are made:

	
  

	
a.

	
The following new capitalized terms are added to Section 1.1 of the Agreement:

““Household Waste” means all non-hazardous, post-recycled municipal solid waste which is collected from residences, which waste is of the type normally accepted for processing at waste to energy facilities in the United States.”

““Manufacturing Agreement” means the License and Manufacturing Agreement dated March 11, 2010, entered into by and between AK and Covanta.”

	
  

	
b.

	
The following capitalized terms are deleted in their entirety from Section 1.1 of the Agreement:  (i) Consulting Agreement; (ii) Initial Period; (iii) Interim Period; and (iv) Trianon.

	
  

	
c.

	
The definitions of the following capitalized terms are modified to read as follows:

““Affiliate” means, in relation to any Person, any other Person that controls, is controlled by, or is in common control with, such Person.  For the purpose of this definition, control means the direct or indirect control of fifty percent (50%) or more of the voting rights in such Person or the power to direct the management or policies of such Person, whether by operation of law, by contract or otherwise.  Except as shall otherwise be expressly provided in this Agreement, and for the avoidance of any doubt, as of the Effective Date, (i) Renewable and American are Affiliates, (ii) Licensor and AK are Affiliates and (iii) Licensor and Global are Affiliates, but AK and Global are not Affiliates.”

““Business and Royalty Agreement” means the Business and Royalty Agreement dated February 6, 2008, entered into by Global and Covanta, as amended by the First Amendment to Business and Royalty Agreement of even date herewith, a copy of each of which has been provided to Renewable.”

““Covanta License Agreement” means the License Agreement entered into by Licensor and Covanta dated as of February 6, 2008, as amended by the First Amendment to License Agreement dated as of July 8, 2008 and the Second Amendment to License Agreement dated as of November 23, 2010, a copy of each of which has been provided to Renewable by Global.”

““Improvements” means all the techniques, enhancements, modifications, changes, experience, methods, information, data or knowledge that will be created or acquired in the future relating to the Technology and/or the manufacturing of the Systems and Parts (whether or not patentable, useful or workable) through the implementation, development, re-design, testing, operation, maintenance, monitoring, control, modeling, fabrication and improvement of the Technology and/or the manufacturing of the Systems and Parts and/or the operation of Systems.”

  

  

  

 

““Investment Agreement” means the Business and Investment Agreement dated February 6, 2008 entered into by Covanta and Renewable, as amended by the First Amendment to Business and Royalty Agreement of even date herewith.”

““KDV 500” means a system capable of producing a minimum of 500 liters of diesel oil per hour.”

““License Agreement” means the License Agreement entered into by American and Licensor dated as of February 6, 2008, as amended by the First Amendment to License Agreement dated as of July 8, 2008 and the Second Amendment to License Agreement dated as of November 23, 2010, a copy of each of which has been provided to Global by Renewable by Global.”

““Project” means a project to convert Feedstock to diesel using the Technology.”

““System” has the meaning set forth in the License Agreement.”

““Territory” means the United States.”

	
  

	
d.

	
All the capitalized terms defined herein by a reference to the definition of such term in the License Agreement shall mean, for the avoidance of any doubt, the License Agreement as it has been amended through the date of this First Amendment.  Future amendments to the License Agreement that modify any such capitalized term shall not be applicable unless the Parties agree to such modification by a further amendment of the Agreement.

	
  

	
e.

	
The word “and” at the end of Section 1.2(e) is deleted, the period at the end of Section 1.2(f) is changed to a semicolon and the following new provisions are added to Section 1.2:

“(h)           All the references herein to the terms “diesel,” “diesel oil” or “diesel fuel” or any similar term shall include kerosene, jet fuel and any other fuel that Feedstock can be converted into using the Technology; and

(i)              All references to Covanta in its capacity as a manufacturer of Systems shall include any Affiliate of Covanta, any Person (that is not an Affiliate of Covanta) that is manufacturing Systems in which Covanta or an Affiliate of Covanta has an ownership interest and any contractor or supplier manufacturing systems under an agreement with Covanta or any Affiliate of Covanta.”

  

  

  

 

	
  

	
f.

	
The first paragraph of Section 2.1 is modified to read as follows:

“Each Party shall have the right during the term of this Agreement, directly or through its Affiliates, to identify and develop Projects in the Territory, subject to the terms and conditions of this Agreement and the rights granted by Licensor to any Person.  The Parties further agree as follows:”

	
  

	
g.

	
The following sentence is added to the end of Section 2.1(d):

“Global acknowledges that all or a portion of the Renewable Percentage may be provided by Covanta.”

	
  

	
h.

	
Section 2.1(f) is hereby deleted and replaced in its entirety by the following:

“Notwithstanding anything that is contained herein to the contrary:  (i) if Renewable identifies a Carve-Out Project (as such term is defined in the Business and Royalty Agreement) for development in the Territory, the right to invest the equity that is required for the Carve-Out Project shall be offered sixty-five percent (65%) to Covanta and twenty-five percent (25%) to Global; and (ii) if Global identifies a Carve-Out Project for development in the Territory, the right to invest the equity that is required for the Carve-Out Project shall be offered sixty-five percent (65%) to Covanta and ten percent (10%) to Renewable.  If Global elects to invest less than twenty-five percent (25%) of the total equity required for a Carve-Out Project, Renewable shall be required to offer all of the available equity not taken by Global to Covanta.  If Renewable elects not to invest ten percent (10%) of the total equity required for the Carve-Out Project, Renewable shall first offer such investment to Global and, if Global elects not to accept such added investment, then Renewable shall offer it to Covanta.”

	
  

	
i.

	
The first paragraph of Section 2.2 is hereby deleted and replaced in its entirety by the following:

“Global hereby acknowledges that (i) Renewable has committed to give Covanta the right to invest up to twenty-four percent (24%) of the total equity required in all Subject Projects identified by Renewable during the term hereof on substantially the same terms as are being offered to Global hereunder, such commitment and the terms and condition for making such equity investment being set forth in the Investment Agreement, (ii) Renewable and Covanta will follow substantially the same procedures as are outlined below and (iii) Global approves any such investment by Covanta.  The following procedures are agreed to by Global and Renewable:”

  

  

  

 

	
  

	
j.

	
The following new Sections 2.3 and 2.4 are added:

“Section 2.3            Adjustment of Equity Investment Right.  Notwithstanding anything which is contained herein to the contrary, including Sections 2.1 and 2.2, if Renewable is the Finding Party with respect to a Subject Project, but such Subject Project was introduced to Renewable by a Person other than Covanta or a Covanta Affiliate (such Person other than Covanta or a Covanta Affiliate to be referred to hereinafter as a “Third Party”) and the Third Party has conditioned Renewable’s right to participate in the Subject Project on such Third Party’s retention of the right to invest a portion of the equity required for the Subject Project, then the amount of equity that is available for investment in the Subject Project by the Parties and Covanta for purposes of this Agreement shall be limited to the equity which is not committed to the Subject Project by such Third Party.  For example, if a Third Party approaches Renewable to work with it on a project and offers Renewable the right to invest sixty percent (60%) of the total equity required for such project, Renewable shall be obligated to offer thirty-five percent (35%) of such sixty percent (60%) investment right to Global and twenty-four percent (24%) of such sixty percent (60%) investment right to Covanta.

Section 2.4               No Right to the Covanta Equity.  Notwithstanding anything which may be contained herein to the contrary, if Covanta does not invest equity in a Subject Project for any reason, Renewable shall be free to invest such equity on its own or to find an investor to invest such equity in place of Covanta.  Renewable shall not be under any obligation to offer all or any part of such equity investment to Global.”

	
  

	
k.

	
As all of the obligations set forth in Article 3 have been fully performed, Article 3 is hereby deleted in its entirety and replaced with the following:

“ARTICLE 3 – OPTION TO INVEST GLOBAL EQUITY; TERMS

Section 3.1               Option to make Equity Investment for Global.  Renewable is interested in exploring an arrangement with Global that will grant Renewable the option to convert the equity investment right of Global in each Subject Project to a carried interest in the cash flow that would otherwise have been distributed in respect of such equity investment of Global.  The Parties have elected to defer this discussion to a later date.  Global agrees to discuss such subject in good faith at the request of Renewable.”

  

  

  

 

	
  

	
l.

	
Section 4.1 is hereby deleted and replaced in its entirety by the following:

“Section 4.1            Effective Date.  This Agreement shall become effective as of the date and year first above written (the “Effective Date”).”

	
  

	
m.

	
The notice address for Global in Section 9.3 is hereby deleted and replaced in its entirety by the following:

“Global Energy, Inc.

Gama Building, 5th Floor

Ramat Gan 52681, Israel

Attention:  Asi Shalgi

Facsimile:  +972-77-228-5678”

	
  

	
n.

	
Section 9.13 is hereby renumbered as Section 9.14 and the following new Section 9.13 is added:

“Section 9.13 Survival.  Upon the termination or the expiration of this Agreement, the following Articles will survive:  6, 7 and 9.”

	
3.

	
Letter No Longer Applicable.  The Letter is no longer applicable.

	
4.

	
Miscellaneous Provisions to Apply.  The provisions of Article 9 of the Agreement shall apply mutatis mutandis to this First Amendment as fully as if it was expressly set forth herein.

	
5.

	
Full Agreement of the Parties.  The Agreement, as amended by this First Amendment, embodies the entire understanding of Global and Renewable and supersedes all prior negotiations, understandings and agreements between them with respect to the subject matter thereof and hereof.

 

[Signature page follows]

  

  

  

IN WITNESS WHEREOF, the parties have executed this First Amendment to Business and Development Agreement as of the date first above written.

 

	 	
GLOBAL ENERGY, INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Asi Shalgi	 
	 	 	Asi Shalgi, Chief Executive Officer	 
	 	 	 	 
	 	 	RENEWABLE DIESEL, LLC	 
	 	 	 	 
	 	By:	/s/ Bruce I. Drucker	 
	 	 	Bruce I. Drucker, Chief Executive OfficerDC9833.pdf -- Converted by SEC Publisher 4.2, created by BCL Technologies Inc., for SEC Filing

FIRST AMENDMENT TO CREDIT AGREEMENT

     This First Amendment to Credit Agreement is made as of this 22nd day of November, 2010, by and among THE GC NET LEASE REIT OPERATING
PARTNERSHIP, L.P., a Delaware limited liability company, WILL PARTNERS REIT, LLC, a Delaware limited liability company, THE GC NET LEASE (SYLMAR) INVESTORS, LLC, a Delaware limited liability company, and RENFRO PROPERTIES LLC, a California limited
liability company (“Renfro Borrower”), each having an address at 2121 Rosecrans, Ste. 3321, El Segundo, California 90245 (collectively the “Borrowers” and each a “Borrower”), KEYBANK NATIONAL ASSOCIATION, as Agent (the
“Agent”) on behalf of the various Lenders party to the Credit Agreement from time to time. 

	
W I T N E S S E T H:

WHEREAS, reference is hereby made to that certain Credit Agreement dated as of June 4, 2010 (the “Credit Agreement”; unless otherwise defined herein, capitalized terms shall have the meanings provided in the Credit
Agreement) entered into by and among the Borrowers, KeyBank National Association, as Agent, and the Lenders; and 

WHEREAS, the Borrowers, the Agent and the Lenders have agreed to amend and modify the Credit Agreement as set forth herein. 

NOW, THEREFORE, it is agreed by and among the Borrowers, the Agent and the Lenders as follows: 

1. The definition of “Capital Expenditure Reserve” set forth in the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following:

“Capital Expenditure Reserve” means, on an annual basis, an amount equal to $0.25 per square foot for each office or educational property owned by a Borrower
or the Parent (or a Subsidiary thereof) and $0.10 per square foot for each warehouse, industrial or distribution property owned by a Borrower or the Parent (or a Subsidiary thereof), with such required Capital Expenditure Reserve being (a)
pro-rated based on the applicable proportionate uses for any mixed use property (unless the mixed use is de minimus) and (b) reduced as to any particular property based on the amount of capital reserves either funded by a tenant of such property or
funded by such tenant into a reserve which is available to the Borrower or the Parent (or a Subsidiary thereof) to cover capital expenditures that such entity is responsible for at such property.”

2. The definition of “EBITDA” set forth in the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following:

““EBITDA” means an amount derived from (a) net income or loss (after giving effect to the elimination of straight line rents), plus (b) to the extent
included in the determination of net income, depreciation, amortization, interest expense and income taxes, plus (c) to the extent expressly subordinated to the Loans, asset management fees, plus or minus (d) to the extent included in the
determination of 

net income, any extraordinary losses or gains resulting from sales or payment of Indebtedness, in each case, as determined on a consolidated basis in accordance with GAAP, and including (without duplication) the Equity Percentage
of EBITDA for the Borrower’s Unconsolidated Affiliates, plus (e) to the extent included in the determination of net income, acquisition fees and related acquisition expenses, plus or minus (f) non-recurring income or expense items or
extraordinary gains or losses, subject to the reasonable approval of Administrative Agent (g) the amount by which general and administrative expenses (“G&A”) exceeds a stabilized G&A budget as approved by the Administrative Agent
on an annual basis, plus (h) the net operating income from assets acquired during such calendar quarter as if such assets had been owned as of the first day of such quarter.”

3. The definition of “Fixed Charge Coverage Ratio” set forth in the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following:

“Fixed Charge Coverage Ratio” shall mean the ratio of (a) the sum of the Parent’s Adjusted EBITDA and the Borrower's Adjusted EBITDA for the immediately
preceding calendar quarter (adjusted to reflect the principal and interest expense related to assets acquired during such calendar quarter as if such assets had been owned as of the first day of such quarter); to (b) all of the scheduled principal
due and payable (excluding principal due at maturity) and principal paid on the Parent’s Indebtedness and on the Borrower’s Indebtedness (including scheduled payments on Capital Lease Obligations), plus all of the Parent’s and the
Borrower’s Interest Expense, plus the aggregate of all cash dividends payable on the preferred stock of the Parent or any of its Subsidiaries, in each case for the period used to calculate Adjusted EBITDA, all of the foregoing calculated
without duplication.”

4. The definition of “Interest Coverage Ratio” set forth in the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following:

“Interest Coverage Ratio” shall mean the ratio of (a) the sum of the Parent’s Adjusted EBITDA and the Borrower's Adjusted EBITDA for the immediately
preceding calendar quarter (adjusted to reflect the principal and interest expense related to assets acquired during such calendar quarter as if such assets had been owned as of the first day of such quarter) to (b) all Interest Expense of the
Borrower and the Parent for such period. 

5. The definition of “Liquidity” set forth in the Credit Agreement is hereby deleted in its entirety and shall be placed by the following:

“Liquidity” means the sum of unencumbered cash and cash equivalents plus unrestricted available borrowing capacity under the Commitments (subject to Borrowing
Base Availability calculation and compliance with all requirements of Section 5.02), excluding, without limitation, amounts posted for capital expenditure reserves.

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6. Section 5.02(a) of the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following: 

“(a) with respect to the calendar quarters ending December 31, 2010 and March 31, 2011 a Total Leverage Ratio no greater than seventy-two percent (72%) and at all other times after March 31, 2011, a Total Leverage Ratio no
greater than sixty-five percent (65%);”

7. Section 5.02(b) of the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following:

“(b) with respect to the calendar quarters ending September 30, 2010 and December 31, 2010 an Interest Coverage Ratio of not less than 1.80:1.00 and at all other times after December 31, 2010 an Interest Coverage Ratio of not
less than 1.85:1.00;”

8. Section 5.02(e) of the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following: 

“(e) a Tangible Net Worth of at least (i) $25,000,000.00, such amount increasing to $40,000,000.00 at the earlier of (A) the contribution of the Carlsbad property or (B) December 31, 2010 (such date to be extended in
Administrative Agent’s sole discretion with the approval of the Required Lenders), and further increasing to $50,000,000.00 by June 30, 2011, plus (ii) eighty-five percent (85%) of the net proceeds (gross proceeds less reasonable and
customary costs of sale and issuance paid to Persons not Affiliates of any Credit Party) received by the Parent or the Borrower at any time from the issuance of stock (whether common, preferred or otherwise) of the Parent or the Borrower after the
date of this Agreement, plus one hundred percent (100%) of the amount of equity in any properties contributed to the Parent after the Effective Date, at all times;”

9. Section 5.12(b) of the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following: 

“(b) Notwithstanding the foregoing, (i) from and after May 31, 2011 (such date to be extended in Administrative Agent’s sole discretion with the approval of the Required Lenders for up to one hundred twenty (120) days),
there shall be at least four (4) separate Mortgaged Properties in the Pool, and (ii) no single Mortgaged Property in the Pool shall have a Pool Value equal to or greater than 25% of the aggregate Pool Value, unless the outstanding Loans total less
than fifty percent of the aggregate Pool Value.

10. Effective as of the date hereof, the aggregate amount of the Commitments is hereby increased to Thirty- Five Million Dollars ($35,000,000.00).

11. Renfro Borrower agrees that, as a condition to the effectiveness of this Amendment, within ten (10) Business Days of the date hereof it shall cause its affiliated asset manager to deposit into accounts held with Agent all
funds which are currently held in accounts with Inland

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Bank or its affiliates and agrees that it shall cause such affiliate asset manager to maintain such deposits with Agent until such funds are required to be used either in connection with the properties managed by such affiliate,
or otherwise (to the extent such funds are the property of the Borrower).

12. The Borrower agrees to pay to the Administrative Agent, in addition to the commitment fee and advisory fee due in accordance with the Credit Agreement and the fee letter dated as of June 4, 2010, an amendment fee in the amount
of $52,500.00, which shall be paid at closing to be prorated amongst the Lenders per the Agent’s agreements with the Lenders.

13. The Borrowers represent and warrant to the Lenders that after giving effect to this Amendment (a) the representations and warranties of the Borrower and each other Loan Party contained in the Loan Agreement or any other Loan
Document are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties (i) relate solely to an earlier date (in which case such representation and warranties shall have been
true and correct in all material respects on and as of such earlier date) and (ii) have been modified to reflect events occurring after the date of the Loan Agreement, as same have been disclosed publicly or in writing to the Agent on or before the
date hereof or are permitted or not prohibited under the Loan Documents, and (b) no event has occurred and is continuing which constitutes a Default or an Event of Default.

14. Each Borrower represents and warrants as follows:

(a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.

(b) This Amendment has been duly executed and delivered by each Borrower and constitutes the Borrower’s legal, valid and binding obligations, enforceable in accordance with its terms.

(c) No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by each
Borrower of this Amendment

15. Except as expressly amended hereby, the remaining terms and conditions of the Credit Agreement shall continue in full force and effect.  All future references to the “Credit Agreement” shall be deemed to be
references to the Credit Agreement as amended by this Amendment.  It is intended that this Amendment, which may be executed in multiple counterparts, shall be governed by and construed in accordance with the laws of the State of New York.

16. This Amendment shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto.

17. For the purpose of facilitating the execution of this Amendment as herein provided and for other purposes, this Amendment may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed
to be an original, and such counterparts

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shall constitute and be one and the same instrument. Facsimile signatures shall have the same legal effect as originals.

	
[Remainder of Page Intentionally Left Blank]

	
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IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement under seal as of the date first written above.

THE GC NET LEASE REIT OPERATING PARTNERSHIP, L.P., a Delaware limited partnership

By: THE GC NET LEASE REIT, INC., a Maryland corporation, its General Partner

	
By: /s/ Kevin A. Shields

Name: Kevin A. Shields

Title: Authorized Officer

WILL PARTNERS REIT, LLC, a Delaware limited liability company

	
By: 
		
 		
The GC Net Lease REIT Operating Partnership, L.P., a Delaware limited partnership, Sole Member 
	
	
By: 
		
 		
The GC Net Lease REIT, Inc., General Partner 
	

	
By: /s/ Kevin A. Shields

Name: Kevin A. Shields

Title: Authorized Officer

THE GC NET LEASE (SYLMAR) INVESTORS, LLC, a Delaware limited liability company

	
By: 
		
 		
THE GC NET LEASE REIT OPERATING PARTNERSHIP, L.P., a Delaware limited partnership 
	
	
By: 
		
 		
THE GC NET LEASE REIT, INC., a Maryland corporation, its General Partner 
	

	
By: /s/ Kevin A. Shields 

Name: Kevin A. Shields

Title: Authorized Officer

	
[Signatures Continued on Next Page]

[Signature Page to First Amendment to Credit Agreement]

RENFRO PROPERTIES LLC, a California limited liability company

	
By: 
		
 		
THE GC NET LEASE REIT OPERATING PARTNERSHIP, L.P., a Delaware limited partnership 
	
	
By: 
		
 		
THE GC NET LEASE REIT, INC., a Maryland corporation, its General Partner 
	

	
By: /s/ Kevin A. Shields

Name: Kevin A. Shields

Title: Authorized Officer

KEYBANK NATIONAL ASSOCIATION, as Agent and as a Lender

	
By: 
		
 		
/s/ Christopher T. Neil 
	
	
Name: 
		
 		
Christopher T. Neil 
	
	
Title: 
		
 		
Senior Relationship Manager 
	

[Signature Page to First Amendment to Credit Agreement]

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