KL Energy has an association with O2Diesel, from OTOD's recent 10/14/08 8K:
Item 1.01 Entry into a Material Definitive Agreement
On October 9, 2008, O2Diesel Corporation (the “Company”) entered into a term loan agreement (the “Agreement”) with KL Energy Corporation (“KL”) to provide up to $1.0 million in funding for working capital. In addition, the Company signed a Supply and Distribution Agreement (the “Supply Agreement”) with KL to develop the commercial market in the United States and Canada for O2Diesel™, the Company’s cleaner burning ethanol diesel fuel blend.
The Agreement provides an initial loan of $250,000 in the form of a secured promissory note (the “Note”) at an annual interest rate of 10%, with the interest rate increasing to 12% in any period in which there is a default. Pursuant to the terms of the Agreement, the Company may make additional draws upon the delivery of written requests to KL specifying the amount and use of the funds. The Agreement matures on March 31, 2009 (“Maturity Date”). Interest accruing on the loan will be paid on the Maturity Date. On the Maturity Date, KL has the option of converting the outstanding loan obligation into shares of common stock of the Company at a conversion rate equal to the price of the Company’s stock on the Maturity Date. If the Company fails to pay the loan on the Maturity Date, the Company will pay KL an indemnification fee equal to 20% of the maximum principal amount outstanding during the term of the Agreement. As security for the loan, the Company has provided a senior security interest to the Company’s intellectual property. The Agreement and Note also contain customary events of default. There are no financial covenants related to this loan.
The parties also entered into a Supply Agreement, in which KL and the Company will jointly develop the market for O2Diesel™ in the United States and Canada during a three year period. As part of the Supply Agreement, KL will be the exclusive distributor of O2Diesel™ within the territory.
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