Exhibit 10.5
COMMISSIONING AND TRAINING AGREEMENT
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THIS AGREEMENT made as of the 2 day of October , 2000.
BETWEEN:
PLANET EARTH MANAGEMENT INC., a company duly incorporated
pursuant to the laws of Yukon Territory and having its principal
place of business located at 54 Mill Street West, Milverton,
Ontario N0K 1M0
(hereinafter referred to as "PEM")
OF THE FIRST PART
AND:
HAMILTON BIO CONVERSION INC., a company incorporated pursuant to
the laws of Ontario, and having an office at 2380 Brampton
Street, Hamilton, Ontario L8E 5V9
(hereinafter referred to as "NEWCO")
OF THE SECOND PART
WHEREAS:
A. NEWCO is the licensee of a certain technological process (and
certain patents, know-how, trade secrets and trade names) relating to the
digestion of biodegradable waste, which technological process is called
"Thermophilic Aerobic Digestion Process for Producing Animal Nutrients and other
Digested Products", and which technological process is described in patent
number US 5810903 and CDN patent application, number 2184044, (such
technological process together with the related trade secrets, know-how and
trade names being hereinafter collectively referred to as the "Process");
B. NEWCO is licensed to utilize the Process and all digesters and
supporting equipment (collectively called the "Equipment"), which digests
biodegradable waste, and produces an end product which may be commercially
utilized;
C. PEM has represented to NEWCO that it or its key employees possess
the ability to provide Services (as hereinafter defined) for Plants (as
hereinafter defined);
D. NEWCO wants PEM to provide the Services on the terms and conditions
hereinafter set forth.
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NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
promises as set out below, the parties hereto agree as follows:
1. INTERPRETATION
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1.1 Definitions. In this Commissioning and Training Agreement and in
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any schedules or amendments hereto, the following terms shall have the
following meanings:
(a) "Affiliate" when used in reference to a party to this agreement
means a corporation that is the subsidiary of a party or is a
fellow subsidiary of a party or is owned by the same person who
owns the party;
(b) "Effective Date of this Agreement" means the date first appearing
on page one hereof;
(c) "Equipment" has the same meaning as in Recital B herein;
(d) "Notice" has the same meaning as in Section 3.1 to this
Commissioning and Training Agreement;
(e) "Plant" means a digestion plant consisting of one or more pieces
of the Equipment and located at 2380 Brampton Street, Hamilton,
Ontario L8E 5V9;
(f) "Process" means the technological process described in Recital A
to this Commissioning and Training Agreement together with the
certain patents, trade secrets, know-how and trade names referred
to therein; and
(g) "Services" means the provision of commissioning, start-up,
operator, management and administrative training for the Plant.
2. RIGHT TO SUPERVISE
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2.1 Right to Supervise. NEWCO shall have the right, at its own
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expense, to supervise or inspect and review the provision of Services by PEM
pursuant to the terms of this Commissioning and Training Agreement.
3. PLANT COMMISSIONING AND START-UP
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3.1 Notice to PEM. NEWCO shall utilize the services of PEM to provide
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Plant commissioning and training and shall provide PEM with notice in writing in
accordance with Article 11.6 herein that the Plant is ready for commissioning
and training (the "Notice").
3.2 Covenants of PEM. PEM hereby covenants and agrees with NEWCO as
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ollows:
(a) PEM shall supply the required personnel to start to commission
and start-up the Plant within five (5) business days of receipt
of the Notice;
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(b) PEM will promptly and efficiently perform all procedures required
to establish the plant is ready for start-up;
(c) PEM will promptly provide NEWCO with notice in writing of any and
all identified defects or deficiencies in regard to the Plant;
(d) PEM will cooperate fully with NEWCO or NEWCO's agents in
completing remedial work related to identified defects or
deficiencies in regard to the Plant;
(e) PEM will promptly and efficiently perform all procedures to
initiate start-up of the Plant; and
(f) PEM will supply procedural checklists and other information
required under this Commissioning and Training Agreement to NEWCO
on a timely basis.
4. OPERATOR TRAINING
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4.1 Personnel Selection. PEM will advise NEWCO, within 3 months of the
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commissioning of the Plant, of all personnel required to operate the Plant and
to assist in the interviewing, selecting and negotiating contracts with all
personnel required to be hired by NEWCO to operate the Plant.
4.2 Personnel Training. PEM will fully train the personnel selected to
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operate the Plant in the detailed operation and maintenance of every system
contained in the Plant.
4.3 Overseeing of Plant Personnel. PEM's personnel shall supervise
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NEWCO's personnel for a period of up to three (3) months after the commencement
of operations in the Plant.
4.4 Additional Supervision. PEM will provide additional supervisory
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services in regard to operational personnel.
5. ADMINISTRATIVE PROCEDURES AND TRAINING
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5.1 Personnel Selection. PEM will advise NEWCO of all personnel
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required to administer the Plant and its related facilities, and will assist
NEWCO in the interviewing selecting and negotiating contracts with all personnel
required to be hired by NEWCO to administer the Plant.
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5.2 Personnel Training. PEM will fully train the personnel selected to
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administer the Plant in regard to all operational maintenance and safety
procedures such that after such training the personnel of NEWCO will be capable
of operating and maintaining the Plant, on a basis consistent with industry
standards. Plant operators will be trained in health and safety regulations
that apply in the jurisdiction where the Plant is located. The training will be
provided at the Plant site.
5.3 Procedure Manual. PEM will supply NEWCO prior to the selection of
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personnel with a detailed manual outlining the recommended procedures to ensure
proper administration of the Plant and its related facilities.
5.4 Interim Plant Manager. PEM will at the request of NEWCO provide an
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interim Plant manager for a period of up to three (3) months to operate the
Plant and to train a permanent Plant manager.
6. ONGOING MANAGEMENT OVERVIEW
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6.1 Additional Services. PEM agrees to provide a management oversight
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service to NEWCO for a period of twelve (12) months after the commencement of
operations at the Plant. This service shall include, but is not limited to, the
following:
(a) bi-weekly review of quality control records for incoming and
processed materials;
(b) trouble shooting assistance to Plant operators, as required;
(c) monthly reviews of accounts to ensure the proper and effective
operation of the accounting system;
(d) trouble shooting assistance to Plant administrators; and
(e) monthly reports to NEWCO on the Plant operations which will
highlight operational, administrative and financial performance
of the Plant.
7. COMPENSATION
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7.1 Compensation. NEWCO shall pay to PEM 110% of PEM's cost in
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providing any and all services pursuant to this Commissioning and Training
Agreement. PEM shall invoice NEWCO on a monthly basis, which invoices shall be
due and payable upon receipt by NEWCO. NEWCO agrees to pay the invoiced amounts
to PEM. PEM will provide sufficient particulars including supporting invoices
and logs in order to adequately support the invoices submitted to NEWCO pursuant
to this Section 7.1.
8. COVENANTS OF PEM
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8.1 Conduct of Business. PEM agrees that it shall conduct its
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business, and shall cause its employees to conduct themselves, in compliance
with all applicable laws, rules and regulations of each jurisdiction where NEWCO
carries on business and PEM shall maintain insurance in these jurisdictions
against public liability, loss or damage, and/or against product liability, loss
or damage, in the manner of a reasonably prudent businessman. PEM agrees that,
subject to the terms of this Commissioning and Training Agreement, it shall be
solely responsible for the hiring, compensation, termination and all other
matters relating to any persons, companies or corporations employed by PEM, for
any reason whatsoever, and shall indemnify NEWCO against any injuries, actions
or proceedings arising from the employment of such persons and/or companies or
any liabilities to the Workers Compensation Board resulting from the employment
of such persons and/or companies. PEM shall indemnify NEWCO, its agents,
servants and employees against all claims, losses and/or expenses, including
reasonable attorney's fees, arising out of performance of PEM's business, that
are caused in whole or in part by PEM's negligent acts or omissions, or the
negligent acts or omissions of anyone including subcontractors or agents
employed by PEM for whose acts PEM is or may be liable.
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9. TERM AND TERMINATION
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9.1 Commencement Date. This Commissioning and Training shall be deemed
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to have come into effect on the Effective Date of this Agreement. The
obligations of the parties to this Commissioning and Training Agreement will be
suspended until substantial completion of construction of the Plant.
9.2 Duration. Unless sooner terminated according to this Section 9,
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this Commissioning and Training Agreement shall remain in force for the period
of time necessary to allow PEM to perform its obligations hereunder.
9.3 Termination by NEWCO. Newco may immediately terminate this
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Commissioning and Training Agreement by providing notice in writing to PEM upon
the occurrence of the following events:
(a) upon the dissolution or liquidation of PEM or the insolvency or
bankruptcy of PEM provided such bankruptcy or insolvency shall
continue for a period of 30 days; or
(b) upon any material default by PEM of the provisions hereof
provided that 30 days advance written notice of default shall
have been given to PEM and provided further that if within such
30 day period PEM has not taken all reasonable steps to cure or
remedy such default. PEM shall not be deemed to be in default as
long as such reasonable steps continue subject to the curing of
such defaults within 90 days of the original default notice.
9.4 Termination by PEM. PEM may only terminate this Commissioning and
Training Agreement upon the commission of a material breach of this
Commissioning and Training Agreement by NEWCO and having given NEWCO 30 days
advance written notice of such material breach, and only if NEWCO takes no
reasonable steps after receipt of such notice to cure the breach during the 30
day notice period.
9.5 Results of Termination. Upon the termination of this Commissioning
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and Training Agreement, howsoever occasioned the following shall occur:
(a) all rights granted by NEWCO to PEM shall immediately be
relinquished by PEM;
(b) any indebtedness of NEWCO to PEM or to any associated company
shall become due and payable as at the date of termination of
this Commissioning and Training Agreement;
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(c) PEM shall deliver to NEWCO or other entity designated by NEWCO,
all information relating to the Process and the Equipment which
was provided by NEWCO to PEM; and
Upon termination by NEWCO without cause:
(d) NEWCO shall pay to PEM amount equivalent to 15% of PEM's
anticipated return for the remainder of the term, the length of
such term to be determined according to Section 9.2 of this
Agreement calculated from the date of Termination by NEWCO, such
anticipated return to be determined by agreement between the
parties.
9.6 Continuing Obligations. The termination of this Commissioning and
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Training Agreement, howsoever occasioned, shall be without prejudice to any
rights or obligations which shall have accrued prior to such termination and
shall not terminate or diminish the binding force or effect of any of the
provisions of this Commissioning and Training Agreement which are expressly or
by implication provided to come into force upon or continue in force after such
termination, including but not limited to all obligations to pay any monies
owing at the time of termination and all provisions relating to confidentiality.
9.7 No Liability. Neither party shall be liable to the other for any
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compensation, loss or damage arising from the termination of this Commissioning
and Training Agreement in accordance with its terms.
10. FORCE MAJEURE
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10.1 Obligations Suspended. If the parties fail to meet their
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respective obligations hereunder within the time prescribed, and such failure is
caused or materially contributed to by force majeure such failure shall be
deemed not to be a breach of the obligations of such party but such party shall
use its best efforts to put itself in a position to carry out its obligations
hereunder and the time for performance of obligations hereunder shall be
extended for the length of time that the force majeure continues. For the
purposes of this Commissioning and Training Agreement, force majeure shall mean
any act of God, strike, lock-out or other industrial disturbance, sabotage, or
blockades, insurrections, riots, epidemics, lightning, earthquakes, floods,
storms, fires, washouts, nuclear and radiation activity or fallout, arrests and
restraints of rules and people, civil disturbances, explosion, breakage or
accident to machinery or stoppage thereof for necessary maintenance or repairs,
inability to obtain labor, enumerated or otherwise not within the control of
such party, and which by the exercise of due diligence such party could not have
prevented. Lack of funds on the part of such party or parties shall be deemed
not to be a force majeure.
11. GENERAL PROVISIONS
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11.1 Law of Ontario. This Commissioning and Training Agreement shall
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be governed and interpreted in accordance with the laws of the Province of
Ontario and the parties agree to submit all disputes arising hereunder to the
courts of the Province of Ontario.
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11.2 Entire Agreement. This Commissioning and Training Agreement
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constitutes the entire agreement between the parties hereto relating to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties and there are no general or specific warranties, representations or
other agreements by or among the parties in connection with the entering into of
this Commissioning and Training Agreement or the subject matter hereof except as
specifically set forth herein.
11.3 Amendments. No erasure of or addition to any portion of this
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Commissioning and Training Agreement except filling in of blank spaces and lines
shall be binding upon the parties unless it is in writing signed by duly
authorized officers of both parties.
11.4 No Waiver. No failure or delay on the part of any party in
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exercising any power or right under this Agreement will operate as a waiver of
such power or right. No single or partial exercise of any right or power under
this Agreement will preclude any further or other exercise of such right or
power. No modification or waiver of any provision of this Agreement and no
consent to any departure by any party from any provision of this Agreement will
be effective until the same is in writing. Any such waiver or consent will be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on any party in any circumstances will
entitle such party to any other or further notice or demand in similar or other
circumstances.
11.5 Severability. It is intended that all of the provisions of this
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Commissioning and Training Agreement will be fully binding and effective between
the parties. If any particular provision or provisions or a part of one or more
is held to be invalid, illegal, void, voidable or unenforceable for any reason
whatsoever in any jurisdiction, then the particular provision or provisions or
part of the provision will be deemed severed from the remainder of this
Commissioning and Training Agreement. The remainder of this Commissioning and
Training Agreement will not be affected by the severance and will remain in full
force and effect.
11.6 Notice. Any notice required or permitted to be given under this
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Commissioning and Training Agreement shall be in writing and may be given by any
means reasonably calculated to reach the other party, including, without
limiting the generality of the foregoing, hand delivery (whether by courier or
otherwise), telegram, cablegram, telefax or prepaid mail addressed to such party
at its address as set forth on page one of this Commissioning and Training
Agreement. Such notice if given by hand delivery shall be deemed to be received
on the day delivered, if given by telegram, telefax, or cablegram shall be
deemed to have been received on the day following dispatch thereof and notice
given as aforesaid by prepaid mail shall be deemed to have been received five
(5) days after the mailing thereof. Either party may by notice in writing given
as herein provided change its address for notice hereunder and such address as
so changed shall be deemed to be the address of such party for the purposes of
notice hereunder.
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Without limiting the generality of the foregoing notice may be given to:
Hamilton Bio Conversion Inc.
2380 Brampton Street, Hamilton Ontario L8E 5V9
Attention: The President
Planet Earth Management Inc.
54 Mill Street West
Milverton, Ontario N0K 1M0
Attention: The President
Telephone: (519) 595-4933
Facsimile: (519) 595-8770
11.7 Headings. The headings in this Commissioning and Training
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Agreement are inserted for convenience of reference only and are not intended to
be used as an aid to the interpretation of the provisions hereof.
11.8 No Agency. PEM agrees that it is not and shall not represent
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itself to be an agent of NEWCO or any Affiliate company for any purpose and
shall not incur any obligations nor make any promise or representation on behalf
of the same, and further agrees to ensure that its agents do not incur any such
obligations or make any such promises or representations.
11.9 Independent Contractors. This Commissioning and Training
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Agreement does not in any way create an employer/employee relationship between
NEWCO or any Affiliate company and PEM and/or PEM's employees.
11.10 Assignment. PEM or NEWCO may assign the whole or any part of
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this Commissioning and Training Agreement without restriction.
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11.11 Enurement. This Commissioning and Training Agreement shall be
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binding upon and shall enure to the benefit of the respective parties hereto and
their successors and permitted assigns.
IN WITNESS WHEREOF the parties hereto have executed this Commissioning and
Training Agreement on the day and year first above written.
PLANET EARTH MANAGEMENT INC.
Per: /S/ Perry Smith
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Authorized Signatory
HAMILTON BIO CONVERSION INC.
Per: /S/ Edwin Kroeker
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Authorized Signatory
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