ceto fans youll love this, page-9

Here is a more comprehesive description of the actual arrangement between Carnegie & REH Plc - and yes what a shame Australian investors didn't have the foresight to keep this technology in Australian hands. One good point however is that Carnegie do own shares in REH Plc but not sure how many.

-Carnegie and REH have agreed to collaborate exclusively on the development and commercial roll-out of offshore wave power projects in the Southern Hemisphere (excluding Reunion Island in the Indian Ocean) (the “Territory of Exclusivity”), using REH’s proprietary CETO wave power technology. Carnegie previously co-funded the development of the CETO technology through its holding in SeaPower Pacific Pty Limited (“SeaPower”) prior to REH acquiring SeaPower in 2005.

-Under the terms of the Agreement, REH will, through SeaPower, continue to own all CETO intellectual property and Carnegie will commit to fund CETO’s development through to commercialisation from 1 July 2007. This is subject to Carnegie raising the requisite funds by no later than 1 December 2007. Carnegie’s liability with respect to funding will be limited to £3 million over a two year period. Commercialisation will be defined as the issue of the first invoice for power or water production from a CETO project.

- In lieu of it providing £3 million of funding for CETO’s commercialisation, Carnegie will be entitled to a 90% interest in the equity of each CETO development project in the Territory of Exclusivity, with the balance of 10% being a “free carry” held by REH. Should the CETO development funding requirement exceed £3 million and Carnegie provide such excess funding, REH’s equity interest in each project in the Territory of Exclusivity will decrease by one percentage point for every additional £100,000 provided by Carnegie over £3 million, down to a minimum REH interest of 2.5% (being a maximum interest for Carnegie of 97.5%). Similarly, if Carnegie chooses not to provide funding beyond the £3 million requirement, REH will have the right to provide such additional funding and Carnegie’s equity interest in each CETO development project in the Territory of Exclusivity will abate at the rate of 5% for each incremental £100,000 of funding provided by REH subject to Carnegie’s interest being no less than 51%.

- Carnegie may choose to discontinue funding of CETO’s development at anytime prior to commercialisation on providing three months’ written notice to REH. This would result in the forfeit of Carnegie’s exclusivity over the Territory of Exclusivity.

- Post-development funding, as described above, each CETO project within the Territory of Exclusivity will be developed by a separately established Special Purpose Company (“SPC”). Carnegie will have exclusive rights to develop and operate commercial sites for CETO throughout the Territory of Exclusivity. Subject to the adjustments that may be made in respect of funding requirements described above, REH will hold a 10% “free carry” in each SPC and Carnegie will hold 90%. All SPC’s will pay a license fee to REH for the exclusive use of the CETO technology in the Territory of Exclusivity, which will be 2% of the total project capital expenditure and will be payable in advance based on an estimate which will be adjusted accordingly to reconcile with 2% of the actual total capital expenditure retrospectively following project completion. Should Carnegie wish to “farm out” its interest in any SPC, REH will have a first option over such “farm out” and, at the agreement of REH and Carnegie, other partners can be invited to join any SPC.