Exhibit 10.3
MASTER SERVICES AGREEMENT
MADE AMONG
THERMO TECH(TM) TECHNOLOGIES INC.
THERMO TECH(TM) BIO CONVERSION INC. AND
PLANET EARTH OPERATING SERVICES INC.
FOR THE
MARKETING, CONSTRUCTION AND OPERATION OF
THERMO MASTER(TM) PLANTS.
DATE OF AGREEMENT: APRIL 6, 2000
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CONTENTS
MASTER SERVICE AGREEMENT
1.0 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.0 Scope of Work. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.0 Work Authorizations. . . . . . . . . . . . . . . . . . . . . . . 10
4.0 Performance of the Work. . . . . . . . . . . . . . . . . . . . 10
5.0 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.0 Invoices and Payment. . . . . . . . . . . . . . . . . . . . . . 16
7.0 Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . 16
8.0 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.0 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.0 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.0 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . 21
12.0 General Provisions. . . . . . . . . . . . . . . . . . . . . . . 21
SCHEDULE A - SAMPLE TURNKEY CONSTRUCTION AGREEMENT
SCHEDULE B - SAMPLE COMMISSIONING AND TRAINING AGREEMENT
SCHEDULE C - SAMPLE MAINTENANCE SERVICES AGREEMENT
SCHEDULE D - SAMPLE TECHNICAL SERVICES AGREEMENT
SCHEDULE E - SAMPLE WASTE SUPPLY AGREEMENT
SCHEDULE F - SAMPLE END PRODUCT PURCHASE AGREEMENT
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MASTER SERVICE AGREEMENT
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THIS AGREEMENT is made as of the _____ day of _________2000.
AMONG:
THERMO TECH(TM) TECHNOLOGIES INC.
a corporation duly incorporated pursuant to the Canada Business
Corporations Act and as may be continued as a corporation under
the Business Corporations Act (Yukon Territory) and having its
principal place of business at 204 - 195 County Court Boulevard,
Brampton, Ontario, Canada, L6W 4P7
(hereinafter referred to as "TTTI")
OF THE FIRST PART
AND:
THERMO TECH(TM) BIO CONVERSION INC.
a company duly incorporated pursuant to the Company Act (British
Columbia) and having a place of business at 20436 Fraser Highway,
Langley, British Columbia, V3A 6K8
(hereinafter referred to as "TTBC")
OF THE SECOND PART
AND:
PLANET EARTH OPERATING SERVICES INC.
a corporation incorporated pursuant to the Canada Business
Corporations Act having a place of business located at 54 Mill
Street West, Milverton, Ontario, N0K 1M0
(hereinafter referred to as "PEOS")
OF THE THIRD PART
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WHEREAS:
A. TTBC is a subsidiary of TTTI.
B. TTBC is the owner 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 5,810,903 and
CDN Patent Application number 2184044 (such technological process together with
the related trade secrets, know-how and trade names, collectively referred to as
the "Process").
C. PEOS, through its subsidiary corporations, has significant know-how
concerning the design, construction, operation and maintenance of industrial
process plants (the "Plants" and each a "Plant") which utilize the Process.
PEOS, through its subsidiary, Earth Alliance Systems Inc. ("EAS") also has
know-how concerning the procurement and contracting for organic waste supplies
for the Plants.
D. Any references within this Agreement to PEOS is intended to be a general
reference to PEOS and all of its subsidiary corporations and it is understood,
whether or not explicitly stated herein, that the services described as being
provided by PEOS may be provided by one or more of PEOS's subsidiaries, as
appropriate, and as described under other specific services agreements related
to Plant construction, support and supply. The PEOS subsidiaries include but
are not limited to, Planet Earth Design Build Inc. ("PEDB"), Planet Earth
Management Inc. ("PEM") and EAS.
E. Except as may be otherwise noted or as the context requires, each
reference within this Agreement to TTTI or to TTBC is intended to be a general
reference to TTTI and all of its subsidiary, affiliate or associated
corporations (collectively, the "TTTI Group") and it is understood, whether or
not explicitly stated herein, that all of the obligations described herein of
either of TTTI or TTBC or both shall be joint and several obligations of each of
TTTI and TTBC and each member of the TTTI Group.
F. One or more members of the TTTI Group intend to license the Process to
various investors and to work with the investors to develop industrial plants
that utilize the Process. The TTTI Group requires technical support for
marketing the Process and services for preparing feasibility studies (the
"Feasibility Studies") for Plants that employ the Process in different locations
worldwide. Licensees of one or more of the TTTI Group (collectively "NEWCOs"
and individually "NEWCO") will require technical services for designing,
constructing, operating and maintaining the plants and in some cases will
require services for procurement and contracting for organic waste supplies.
G. PEOS agrees to provide the TTTI Group with technical support for
marketing and preparing technical and economic Feasibility Studies for the
Plants.
H. Once the feasibility of Plants have been confirmed by the Feasibility
Studies, a NEWCO will be established jointly by the TTTI Group and the investors
for constructing and operating the Plant. Each NEWCO, as a separate entity from
TTTI, will enter into a separate Turnkey Construction Agreement (the "Turnkey
Construction Agreement") with PEDB for the purpose of designing and constructing
the Plant.
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I. Within one month of the start of construction of the Plant, each NEWCO,
as a separate entity from TTTI, will enter into at least three separate
agreements with PEM for the purpose of providing commissioning, training,
operation supervision and maintenance services for the Plant. These agreements
include:
- Commissioning and Training Agreement; under which PEM will provide
plant commissioning services, and services and supervise the initial 3
months of the operation of the Plant.
- Maintenance Services Agreement; under which PEM will provide
preventative and routine maintenance services for the first 5 years of
the operation of the Plant.
- Technical Services Agreement; under which PEM will provide ongoing
engineering and technical services to the Plant for the life of the
Plant.
J. Each NEWCO, as a separate entity from TTTI, will enter into a Waste
Supply Agreement ("Waste Supply Agreement") with EAS under which EAS will
provide waste to a Plant.
K. Each NEWCO, as a separate entity firm TTTI, will enter into an End
Product Purchase Agreement with a buyer of waste products produced at a Plant.
L. This Master Service Agreement is executed by the Parties in order to
confirm the agreement of the Parties.
NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto agree with the
other as follows:
1.0 DEFINITIONS
Where used herein or in any amendments or Schedules hereto, the following
terms shall have the following meanings:
(a) "Arbitration Centre" has the meaning as stated in Section 11.0 of this
Agreement;
(b) "Commissioning and Training Agreement" means the Commissioning and
Training Agreement in the form attached hereto as Schedule B;
(c) "Consultant" has the meaning as stated in Section 1 of Schedule 3 to
this agreement;
(d) "Contract Employees" means those individuals, not normally part of the
PEOS staff that have been hired/contracted specifically to complete a
defined task or tasks necessary to the project;
(e) "Contractor" has the meaning as stated in Section 1 of Schedule 3 to
this agreement;
(f) "Environmental Permits" means those permits required by jurisdictional
authorities which relate to issues such as air emissions or other
regulated discharges, land uses and the like, that specifically have
environmental impact potentials;
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(g) "Feasibility Study" means the feasibility study carried out under the
direction of PEOS to confirm the capital cost and the technical and
economic feasibility of the Plant for NEWCO;
(h) "Feasibility Study Report" means the report of data and information
gathered in regard to any particular Plant project, including but not
limited to waste supply potentials and economic factors, competition,
site availability, regulatory climate, political climate,
environmental factors related to the site or region and other items
which may impact, positively or negatively on the potentials of the
proposed project. Such report will normally be completed prior to the
decision to proceed with the project;
(i) "Force Majeure Cause" has the meaning as stated in section 4.7 of this
Agreement;
(j) "Local Partner" means the business entity, (including public
organizations such as municipalities or other such civic bodies) which
enters into a partnership or joint venture arrangement with TTTI in
respect to a specific Plant project and business;
(k) "Local Subconsultants" means various contractors and service suppliers
engaged by PEOS from the general region of the Plant project to
deliver specific services as may be required by the project;
(l) "Maintenance Services Agreement" means the agreement to be entered
into between NEWCO and PEM for the preventative maintenance and repair
of Plants in the form attached hereto as Schedule C;
(m) "Milestone Dates" means those dates identified within the project
schedule and agreed to by NEWCO and PEOS, by which defined tasks must
be completed or measurable progress made, and upon which scheduled
payments will be based;
(n) "NEWCO" means any new company incorporated for the purpose of
constructing and operating a Plant that is licensed by TTTI for this
purpose;
(o) "Parties" means the parties to this Agreement;
(p) "Project Records" means a written document that details the sequential
events of the construction period. Such records should include but not
be limited to records of project meetings, equipment deliveries and
construction progression dates, milestone construction dates and a log
of all visitors to the site;
(q) "Process" means the patented Thermo Master(TM) Process as described in
Patent numbers US 5810903 and CDN Patent Application 2184044, and as
more particularly set out in recital B to this Agreement;
(r) "Plant" means a plant designed and built for the recycling of organic
waste into either animal feed or fertilizer ingredients to be
constructed using the Process, as more particularly set out in recital
C, but excluding, for greater certainty any plant or direct or
indirect use thereof in any way related to or in connection with any
uses other than the following permitted uses, namely the handling or
processing of any one or more of: food waste, municipal sludge, sewage
water, agricultural waste and agricultural manure;
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(s) "Reimbursable Cost" means costs or expenses directly incurred by PEOS
in support of conducting its contracted obligations and may include
items such as the costs of surveys, maps, drawings, analyses, reports
and similar as well as the costs of reproduction, delivery or
retrieval of such items, costs of communication expenses over and
above the agreed upon monthly budget for such expenses, fees for
permits and approvals, and out of pocket travel expenses;
(t) "Services" means all those contractual obligations normally
contemplated within the scope of delivering the turnkey plant project,
including feasibility studies which would precede the actual
commencement of plant construction;
(u) "Standard Thermo Master Plants" means the currently designed Plant(s)
by which the Process is delivered and which TTTI accepts and markets
as suitable for commercial application. Such standard Plants may vary
in size and may include some minimal flexibility of operational design
to allow for local standards, regulations or requirements;
(v) "SubConsultants" (each, a "SubConsultant") has the meaning as stated
in section 2.2.1 of this Agreement;
(w) "Subcontractors" (each, a "Subcontractor") has the meaning as stated
in Section 1 of Schedule 3 to this Agreement;
(x) "Specialist" means a professional practitioner, such as an engineer,
surveyor or other that may be required from time to time to deliver
specific services or materials in a professional manner, including
with certification of competency or authority;
(y) "Suppliers" (each, a "Supplier") has the meaning as stated in Section
1 of Schedule 3 to this Agreement;
(z) "Technical Services Agreement" means the agreement to be entered into
between NEWCO and PEM for the provision of ongoing engineering and
technical assistance to NEWCO in the form attached hereto as Schedule
D;
(aa) "TTTI Group" means that term defined in recital C to this Agreement;
(bb) "Turnkey Construction Agreement" means the agreement to be entered
into between NEWCO and PEDB for the engineering, procurement and
construction of Plants in the form attached as Schedule A;
(cc) "Vendor" has the meaning as stated in Section 1 of Schedule 3 to this
Agreement;
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(dd) "Waste Supply" means the available resource of organic waste materials
suitable for application of the Process in relation to the Plants,
including factors such as fees associated with management or disposal
of such materials;
(ee) "Waste Procurement Services Agreement" means a free-standing agreement
between NEWCO and EAS by which EAS agrees to collect or otherwise
acquire, prepare and deliver organic waste materials to NEWCO's Plant,
with specific contractual agreements therein as to such matters as
tonnages, payment terms, guarantees and contract duration;
(ff) "Waste Supply Agreements" means the optional raw waste supply
agreements to be entered into between NEWCO and local suppliers of
waste in the locality of the NEWCO Plant in the form attached hereto
as Schedule E;
(gg) "Work" means the scope of services, materials and other things
provided by PEOS to TTTI or to NEWCO;
(hh) "Work Authorization" has the meaning as stated in Section 3.0 of this
agreement.
Any defined term not listed above that is used in this Agreement or in any
of its schedules, exhibits or appendices shall have the meaning as defined
in Section 1 of Schedule 3 to this Agreement or in any other Schedule or
Appendix to this Agreement, as the case may be.
2.0 SCOPE OF WORK
The following section defines the scope of Work that will be provided by
PEOS to TTTI and TTTI's affiliates, subsidiaries, licensees and clients:
2.1 General Marketing Support
2.1.1 Sales and Marketing Support
PEOS will assist TTTI's sales and marketing efforts through, for
example, customer meetings, conference calls and customer visits and
by providing drawings, sketches and other descriptive materials of a
technical nature for the sales and marketing process.
2.1.2 Preparation of Brochures and Publications
PEOS will provide technical assistance to TTTI for the preparation of
brochures and similar publications for marketing of Plants.
2.1.3 Trade Shows and Conferences
PEOS will attend trade shows and conferences with TTTI's
representatives as requested by TTTI to provide technical support for
the marketing of Plants.
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2.1.4 Proposals
PEOS will provide technical assistance for the preparation of
proposals by TTTI for the sale of Plants.
2.2 New Plants Pre-design Services
PEOS will provide project management and engineering services during the
pre-design stage of new projects to develop a firm project design, capital
cost budget and project schedule and to ensure that the permitting for each
Plant is feasible. Such pre-design services will include the following:
2.2.1 Project Management
PEOS will prepare a work plan, budget and schedule for the pre-design
stage of each new project proposed. All Specialist Subconsultants and
Local Subconsultants (together with Specialist Subconsultants, the
"Subconsultant") involved in the pre-design activities will be hired
through PEOS and their work will be supervised by PEOS. Progress, key
activities and costs incurred for each project will be reported
monthly to TTTI. Variations from plans will be highlighted.
2.2.2 Evaluation of Local Requirements
PEOS will supervise the work of the Subconsultants and ensure that
they have the necessary information to expedite the pre-design studies
and evaluations, including evaluation of local requirements for new
projects.
2.2.3 Waste Supply Assessment
PEOS will evaluate the supply and quality of waste available for the
Plant and net revenue to the Plant for receiving the planned waste
stream.
2.2.4 Plant Capacity
Based on the quantity projections for waste available PEOS will
recommend a suitable plant capacity for the planned Plants.
2.2.5 Site Selection
PEOS will assist the Subconsultants to evaluate and select suitable
sites for new Plants, such evaluation to include but is not limited
to, the following:
(a) Review Available Sites;
(b) On-site Inspections;
(c) Preliminary Site Layout;
(d) Construction Cost Comparisons;
(e) Utilities and Fuel Cost; and
(f) Site Selection Recommendations.
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2.2.6 Plant Capital Cost Estimates
PEOS will work with the Subconsultants to develop capital cost
estimates for new Plants that include local cost factors for; but not
limited to, the following:
(a) Permitting;
(b) Site development;
(c) Foundations;
(d) Buildings;
(e) Plant equipment;
(f) Installation;
(g) Contingencies;
(h) Currency exchange rates;
(i) Interest during construction; and
(j) Other indirect costs.
2.2.7 Plant Operating Cost Estimates
PEOS will work with the Subconsultants to prepare estimates of
operating costs for the planned Plants, such estimates to include, but
are not limited to, costs for the following:
(a) Operating Supplies;
(b) Utilities and Fuel;
(c) Rentals and Services;
(d) Transportation;
(e) Maintenance; and
(f) Community Taxes and Fees.
2.2.8 Financial Pro Forma
(a) PEOS will prepare financial pro forma for each planned Plant
using PEOS's standard formats to be used at TTTI's discretion by
TTTI and Local Partners to obtain financing for the planned
Plant. TTTI will advise PEOS regarding the financing and other
project "soft costs" to be included in the financial pro forma;
(b) PEOS will employ the best available information and unless
otherwise directed by TTTI, apply standard model assumptions in
preparing each Plant's Financial pro forma.
2.2.9 Risk Assessment
PEOS, with Specialist Subconsultants, will carry out an identification
and analysis of technical, financial, political and other risks for
the planned Plants. TTTI and a Local Partner will advise PEOS of all
risks that they are aware of regarding the planned Plant.
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2.2.10 Feasibility Study Report
(a) PEOS will assemble the data collected throughout the pre-design
stage and prepare a summary Feasibility Study Report summarizing
the findings of the various studies and assessments;
(b) PEOS will apply reasonable standards in assembling data and
creating a Feasibility Study Report. Any decision made by TTTI to
continue with a project, when such decision relies on the
Feasibility Study Report, shall be made at the sole discretion of
TTTI.
2.2.11 Due Diligence Assistance
When requested by TTTI, PEOS will assist independent consultants
working for TTTI, financing parties, Local Partners, or others to
review and carry out due diligence on Feasibility Study information
and conclusions.
2.3 New Plant Permitting Services
2.3.1 Pre-Design Stage Permitting Services
At the pre-design stage, PEOS will, in association with the Local
Subconsultants and Specialist Subconsultants, contact the regulatory
agencies in the locality of the proposed Plant to identify all of the
permits and licenses required for design, construction and operation
of the Plant. It will be the responsibility of PEOS, the Local
Subconsultants and the Specialist Subconsultants to determine the
availability of these permits along with costs and expected time
required to obtain them. This information will be presented and used
in the Feasibility Study.
Potential plant sites identified at the pre-design stage will be
examined by PEOS with respect to critical permitting issues (site
related issues that would preclude or impede the granting of permits
and examined with respect to exposure risk issues (risks of complaints
owing to proximity of the site to sensitive neighbors or sensitive
site uses, e.g. residential areas, parks, recreation facilities).
2.3.2 Environmental Permits
Once the feasibility of the Plant is established, NEWCO is established
and funds are available for work on the project, PEOS will commence
the application for Environmental Permits. PEOS will prepare and
submit the permit applications and associated reports and drawings,
expedite permit approval, coordinate information exchange with the
various agencies having jurisdiction, publish and post permit
applications, coordinate all public meetings and negotiate permit
terms and conditions.
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2.3.3 Building Permits
PEOS will make all reasonable efforts to obtain all necessary permits,
including permits required for temporary construction facilities,
construction waste disposal, building permits, electrical permits,
plumbing permits, etc.
2.3.4 Other Construction Permits, Certificates and Approvals
PEOS will make all reasonable efforts to obtain all other required
permits, including, certificates and approvals for boilers and
pressure vessels and natural gas fired appliances.
2.4 Other Services
2.4.1 Standard Plant Engineering Services
PEOS will provide engineering and technical services to TTTI for the
development, modification and detailing of the design of Standard
Thermo Master Plants.
2.4.2 Research and Development Services
PEOS will provide scientific and engineering research and development
services to TTTI for the development of new processes and modification
of existing processes. PEOS will assist with patent applications as
required for new processes or improvements.
2.4.3 Maintenance Coordination Services
PEOS will develop and operate an information exchange program with
each Plant for the identification and sharing of maintenance problems
and new ideas for maintenance of the Plants.
3.0 WORK AUTHORIZATIONS
PEOS will not perform any Work prior to receiving an approved written
authorization from TTTI (the "Work Authorization") to proceed with the
Work. PEOS will provide the Work to TTTI in the stages and at the times
specified in writing by TTTI to PEOS from time to time. TTTI, by written
Change Order, may cancel all or any portion of the Work with respect to any
written Work Authorization or may reduce or expand the Work, and to reflect
such change may reduce or expand the time designated for the performance of
the Work.
4.0 PERFORMANCE OF THE WORK
PEOS will commence the performance of the Work upon the receipt of the
written Work Authorization and will perform the Work in a workmanlike
manner in accordance to the normal standards of skill and competence
employed by engineering consultants, construction contractors and
operations supervision suppliers in the waste industry. The Work will be
performed diligently and continuously with the required complement of
competent personnel so as to achieve the required deadlines for the Work.
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4.1 Schedule and Cost Estimate
Upon receipt of a written Work Authorization, PEOS will advise TTTI of the
expected schedule for the Work, personnel or Subconsultants assigned and
expected cost of the Work. This expected schedule will be provided in the
form of a bar-chart schedule with expected Milestone Dates, project
personnel list and cost for the Work with a breakdown of estimates.
4.2 Reasonable Notice
TTTI will, as far as possible, provide adequate notice to PEOS of TTTI's
requirements for Services. Failure to provide adequate notice will be an
acceptable reason for PEOS not meeting TTTI requirements and time for
performance by PEOS will be extended accordingly.
4.3 Transactions on Behalf of TTTI and NEWCO
PEOS may in some transactions and other business act as an agent for either
TTTI or NEWCO with their prior written approval. All transactions made by
PEOS on behalf of TTTI and/or NEWCO will be appropriately and promptly
recorded in Project Records.
4.4 Information Supplied to PEOS
PEOS will be entitled to rely on information provided by TTTI or the Local
Partner or NEWCO, unless the contrary is specifically stated in writing
when the information is provided. Where TTTI or their Local Partner have
information that is required by PEOS for the Work, this will be provided in
a suitable form to PEOS without undue delay.
4.5 Conflicts of Interest
PEOS, its agents, employees and Subconsultants will take all steps to
ensure avoidance of all conflicts of interest between any of their
individual interests and those of TTTI and NEWCO.
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4.6 Subconsultants
4.6.1PEOS is at liberty to hire sub-consultants and others necessary to
discharge its duties under this agreement. PEOS will be permitted to
employ Local Subconsultants, including but not limited to engineers,
architects, community planners, real estate agents, environmental
consultants, building permit consultants, fire protection consultants,
security consultants and similar consultants residing in the area of
the planned Plant and who are familiar with local conditions and
regulations. The Local Subconsultants will advise PEOS regarding the
local conditions, design requirements and operation requirements
during the pre-design activities.
4.6.2PEOS will be permitted to employ Canadian and international engineers
and technical specialists for pre-design studies, design development
and initial permitting work.
4.6.3PEOS will identify Subconsultants with the necessary qualifications
and capability to provide the services and technical advice for the
pre-design work. PEOS will interview the Subconsultants and select
them based on criteria agreed to by TTTI.
4.6.4PEOS will negotiate and enter into subcontracts for the
Subconsultants' services that include all necessary requirements for
secrecy, protection of proprietary knowledge, insurance and other
requirements specified by TTTI.
4.7 Force Majeure
4.7.1PEOS's performance of any of the obligations in this Agreement, other
than financial obligations, may be delayed or suspended as only so
long as PEOS is prevented from performance by any cause, except lack
of funds. Such causes shall include any that are beyond PEOS's
reasonable control (a "Force Majeure Cause"). For the purposes of this
section, a labor dispute is beyond the reasonable control of PEOS if,
in its judgement, settlement of the dispute would not be compatible
with PEOS's best interests. PEOS will immediately report to TTTI if it
becomes aware of any labor demands, labor disputes, labor trends,
pending or ongoing labor negotiations or any other problems relating
to labor that may affect the Work and its performance.
4.7.2PEOS will give TTTI notice within 24 hours after the occurrence of
any Force Majeure Cause in respect of which PEOS intends to claim
entitlement to either a suspension in performance or delay in
completion of any of the Work. PEOS will promptly give notice to TTTI
on conclusion of the event giving rise to the occurrence of the Force
Majeure Cause.
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4.8 Independent Contractor
PEOS is an independent contractor with respect to any Work. Notwithstanding
TTTI's rights of consent or approval as provided in this Agreement, PEOS
has the right of complete control, supervision and direction of the method
and manner of obtaining the required results for any Project or Work.
5.0 COMPENSATION
5.1 Reimbursable Costs and Flat Rate Charges
TTTI will pay PEOS for all Services based on hourly rates and will pay PEOS
for all relevant Reimbursable Costs and flat rate charges, including, but
not limited to the following:
5.1.1 Services by PEOS Employees
Technical and other services will be charged at hourly rates
calculated according to the following formula:
Hourly Rate = Gross Annual Salary 2000 x 2
Timesheets will be provided with PEOS's invoices to substantiate the
invoiced amounts and Services provided.
5.1.2 Services by PEOS Contract Employees
Where Contract Employees are employed by PEOS to perform the Work and
their normal place of work is in PEOS's offices, PEOS will invoice
TTTI for the services performed by the Contract Employee at a rate
that is equivalent to an amount equal to the hourly rate charged for
an existing staff member with similar qualifications and experience as
the Contract Employee. If there are no similar staff members to draw a
comparison against, Contract Employees will be invoiced at the hourly
rate paid to the Contract Employee by PEOS plus a 30% mark-up.
Timesheets will be provided with PEOS's invoices to substantiate the
invoiced amounts and Services provided.
5.1.3 Reimbursable Subcontracts
TTTI will reimburse PEOS for, as and when invoiced:
(a) the cost of Local Subconsultants and Specialist Subconsultants
for feasibility studies and special technical advisory services;
(b) the cost of graphic artists services, special photography,
typesetting and advertising incidental to the Work.;
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5.1.4In addition to the costs and flat rate charges for Subcontractors and
Subconsultants, PEOS shall be entitled to and paid a mark-up of 15% on
such reimbursable costs and flat rate charges to compensate PEOS for
office services, administration, handling and carrying costs.
5.1.5Copies of invoices will be provided with PEOS's invoices to
substantiate the invoiced amounts and scope of the work performed.
5.1.6 Reimbursable Expenses
TTTI will reimburse PEOS as and when invoiced for:
(a) the cost of obtaining surveys, including topographical and
geodetic surveys, aerial photography, soil reports, soil
sampling, water analyses, testing, subsurface investigations,
zoning restrictions and utility locations as may be required by
PEOS to assess the most suitable location on the Site for the
Plants;
(b) the cost of reproduction and delivery of information, drawings,
specifications and other documents necessary for the feasibility
studies, including but not limited to plans, drawings,
specifications, contracts and purchase orders;
(c) the expense of long distance telephone calls, telegrams and telex
beyond the agreed monthly budget for these items;
(d) the expense of reproduction and delivery of information,
drawings, specifications and other documents necessary to the
Project, and fees paid for securing approvals, permits or
licenses from regulatory agencies having jurisdiction over the
Project; and
(e) the expense of transport, subsistence and lodging in connection
with the Work beyond the agreed monthly budget for these items.
Car expenses shall be charged at $0.35 per kilometre, and other
means of travel at cost plus 15%.
5.1.7 Other Reimbursable Items
TTTI will reimburse PEOS as and when invoiced for:
(a) the costs to PEOS that can be demonstrated to result from the
insolvency or failure to perform of any Contractor or
Subcontractor;
(b) the costs of quality assurance such as independent inspection and
testing services;
(c) charges levied by authorities having jurisdiction over the Work
which were not reasonably foreseeable at the time of execution of
the Agreement;
(d) premiums for all bonds and insurance which PEOS may be requested
by TTTI to provide over and above those normally maintained by
PEOS, unless specified elsewhere in the Agreement to be provided
without charge to the Client;
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(e) costs incurred due to emergencies affecting the safety of persons
or property;
(f) legal costs incurred by PEOS, arising out of the performance of
the Agreement provided that such do not arise out of any
negligence or failure to perform the Agreement in accordance with
its provisions;
(g) costs incurred by PEOS, with TTTI permission, in expediting the
rejected work or the warranty work of Subcontractors,
Subconsultants and Vendors;
(h) the costs of auditing when requested by TTTI; and
(i) all other costs reasonably incurred by PEOS in the performance of
the Work.
5.1.8 Rates and Mark-up Charges
All reimbursable costs specified in the immediately preceding sections
of this Article 5 that are internal costs to PEOS shall be reimbursed
at the prevailing rates charged for such costs by other consultants in
the same location as PEOS. Items for which there are no prevailing
rates shall be reimbursed at a rate to reflect PEOS's reasonable
internal cost plus reasonable profit to PEOS as determined by PEOS,
acting reasonably.
In addition to the above reimbursable internal costs and flat rate
charges, PEOS shall be entitled to and paid thereon a markup of 15% on
such reimbursable costs and flat rate charges to compensate PEOS for
office services, administration, handling and carrying costs.
5.1.9 Rate Adjustments
Billing rates and in-house costs included in this section may, at
PEOS's option, be adjusted upward on an annual basis to reflect
increases in the local Consumer Price Index as prepared by Statistics
Canada.
5.1.10 Exclusive Engagement and Related
Notwithstanding any terms or conditions of this Agreement or contained
in the Schedules and Appendices or in such agreements entered into
pursuant thereto, the TTTI Group hereby appoints, engages and agrees
to pay PEOS and the affiliates and associates of PEOS, as PEOS may
designate, as the exclusive suppliers and providers of all of the
goods and services which are the subject matter of this Agreement. For
the purposes of such appointment, engagement and agreement in the
immediately preceding sentence, TTBC and TTTI hereby warrant, as duly
authorized agents for and on behalf of each other member of the TTTI
Group, all necessary authority so to do. For greater certainty, such
exclusive supplier and provider appointment and engagement shall bind,
encompass and relate to all members of the TTTI Group during the term
of this Agreement (as
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the term is defined in section 7.0 of this Agreement) and shall
comprise and relate to all of the respective licensees, sub-licensees
and customers of each such member of the TTTI Group, whether past,
present or future. TTTI and TTBC, as an irrevocable joint and several
obligation of TTTI and TTBC to and favour of PEOS, shall at all times
cause each and every member of the TTTI Group, from time to time, to
specifically, duly and punctually observe and perform all of the
representations, warranties, covenants, agreements and obligations of
TTTI and TTBC under this Agreement or contained in the Schedules and
Appendices to this Agreement or in such agreements entered into
pursuant thereto, failing which each of TTTI and TTBC hereby forever
indemnifies fully and holds harmless PEOS, its successors and assigns.
6.0 INVOICES AND PAYMENT
6.1 PEOS will submit invoices to TTTI on a monthly basis.
6.2 TTTI will pay such invoices within 15 days of presentation by PEOS.
6.3 Any amounts on an invoice that are disputed by TTTI will be deducted from
the invoice and the balance of undisputed charges will be paid promptly.
TTTI will promptly notify PEOS of disputed items on the invoices within 7
days of receipt of the invoice. PEOS will promptly adjust, correct or
provide substantiation for the charges contained within the invoice.
6.4 TTTI will pay PEOS interest on invoiced amounts that remain unpaid 15 days
after receipt of the invoice in the case of undisputed items and 15 days
after resolution of the dispute in the case of disputed items. Interest
will not begin to accrue until the respective 15 day period has elapsed.
Interest on the amount outstanding will be charged at a rate of 1.5 % per
month (18% per annum). Interest amounts will be invoiced on a monthly
basis.
7.0 TERM OF AGREEMENT
The term of the Master Services Agreement is twenty (20) years from the
date of this Agreement.
8.0 TERMINATION
8.1 Termination by TTTI with Cause
If PEOS is adjudged bankrupt, or if it makes a general assignment for the
benefit of its creditors, or if a receiver is appointed on account of its
insolvency, or if it disregards laws, ordinance, rules, regulations or
orders of any authority having jurisdiction in a material way, or subject
to the Agreement is otherwise in continuing breach of a material provision
of the Agreement, then TTTI may, without prejudice to any right or remedy
and after giving PEOS 90 days written notice, during which period PEOS
fails to cure the violation, terminate
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the Agreement. If it is not possible to cure the violation within 90 days,
PEOS will be deemed to have cured the violation if it commences to cure the
violation within those 90 days and provides TTTI with a schedule indicating
the violation will be cured within a reasonable time. Termination by TTTI
in accordance with the foregoing will not affect any rights or remedies
TTTI would otherwise have under the Agreement or which may otherwise be
available to TTTI at law or in equity, including the right to recover
damages, nor will any such action relieve PEOS from any consequences or
liabilities arising from its acts or omissions.
8.2 Termination by TTTI
8.2.1TTTI may, without cause, terminate the Agreement upon 180 days' prior
written notice to PEOS.
8.2.2In the event of termination of the Agreement with or without cause,
PEOS will be paid:
(a) an amount equal to PEOS's fee earned for all Work performed to
the date of termination, as well as to such later date as may
reasonably be required by the authorities having jurisdiction and
by professional responsibilities of PEOS to perform an orderly
termination and winding up of the Work and the Project, plus all
reimbursable costs reasonably incurred; and
(b) PEOS's reasonable demobilization costs and expenses, plus any
costs and expenses incurred by PEOS in the cancellation of any
contracts it has with its Subconsultants.
8.2.3In the event of termination of the agreement without cause, PEOS will
be paid an amount equivalent to 15% of PEOS's anticipated average
return per year for a period of two years from the date of Termination
by TTTI, such anticipated average return to be determined by agreement
between the parties.
8.2.4After receipt of the foregoing payments, PEOS will execute and
deliver all such papers and take all such steps including, if
requested, the legal assignment of its contractual rights, as TTTI may
reasonably require for the purpose of fully vesting in TTTI the rights
and benefits of PEOS under such obligations or commitments.
8.3 Termination by PEOS with Cause
8.3.1If TTTI is adjudged bankrupt, or if it makes a general assignment for
the benefit of its creditors, or if a receiver is appointed on account
of its insolvency, or if it disregards laws, ordinance, rules,
regulations or orders of any authority having jurisdiction, or fails
to make payment to PEOS when due, or is considered by PEOS to be
otherwise in breach of a material provision of the Agreement, then
PEOS may, without prejudice to any right or remedy and after giving
TTTI 90 days written notice, during which period TTTI fails to cure
the violation, terminate the Agreement. If it is not possible to cure
the violation
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within 90 days, TTTI will be deemed to have cured the violation if it
commences to cure the violation within those 90 days and provides PEOS
with a schedule acceptable to PEOS indicating the violation will be
cured within a reasonable time. Termination by PEOS will not affect
any of the rights or remedies of PEOS under the Agreement or which may
otherwise be available to PEOS at law or in equity, including the
right to recover damages, nor will any such action relieve TTTI from
any consequences or liabilities arising from its acts or omissions.
In addition to any other right of suspension or termination contained
elsewhere in this Section 8 or the Agreement, PEOS in its sole
discretion may suspend or terminate the Agreement in accordance with
the following:
(a) If TTTI fails to pay any invoice or account when due, PEOS may
suspend all Work upon 5 days written notice to TTTI. If TTTI
fails to make the payment within 7 days after receipt of notice,
PEOS, at is sole option, may elect to immediately terminate the
Agreement or suspend the performance of the Work for such period
of time as PEOS in its discretion may decide.
(b) If TTTI requests PEOS to provide any part of the Work contrary to
the professional judgment of PEOS or in a manner contrary to the
professional judgment of PEOS or the requirements of any
authority having jurisdiction, PEOS may terminate the Agreement
immediately upon written notice to TTTI.
(c) If PEOS encounters a conflict in interest in the performance of
the Work, which cannot be resolved to the satisfaction of PEOS,
PEOS may suspend the Work until such conflict is resolved or may
terminate the Agreement after giving reasonable notice to TTTI,
of not less than 30 days.
9.0 INDEMNIFICATION
9.1 Subject to any limitations of liability in the Agreement, PEOS will at its
own cost and expense, such costs and expenses to include attorney fees,
defend, indemnify and hold harmless TTTI and its agents and employees from
and against the following:
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9.1.1all claims or liens of Subconsultants of PEOS arising out of PEOS's
failure to pay its Subconsultants in accordance with its agreements
with those Subconsultants, provided such failure is not caused by a
failure of TTTI to make payment to PEOS;
9.1.2all fines, penalties, assessments or other exactions imposed by any
governmental authority by reason of PEOS's failure to comply with the
Agreement; and
9.1.3all claims, damages, losses and expenses, including attorney fees,
arising out of or resulting from the performance of the Agreement,
provided that any such claim, damage, loss or expense:
(a) is attributable to bodily injury, sickness, disease or death, or
to injury or destruction of tangible property (other than some
part of the Project itself); and
(b) is caused solely by, or to the extent it is caused by, any
negligent act or omission of PEOS or any of its officers, agents,
employees, representatives, Subconsultants, or anyone directly or
indirectly employed by any of them;
9.2 TTTI will at its own cost and expense, such cost and expense to include
attorneys fees, defend, indemnify and hold harmless PEOS, its agents and
employees, from and against the following:
9.2.1 all claims or liens of TTTI's Consultants and Contractors;
9.2.2all fines, penalties, assessments or other financial charges imposed
by any governmental authority by reason of TTTI's failure to comply
with the Agreement;
9.2.3all claims, damages, losses and expenses, including attorney fees,
arising out of or resulting from the performance of the Agreement or
the construction of the Plant, provided that any such claim, damage,
loss or expense;
(a) is attributable to bodily injury, sickness, disease or death, or
to injury or destruction of tangible property (other than some
part of the Work itself); and
(b) is caused solely by, or to the extent it is caused by, any
negligent act or omission of TTTI or any of its officers, agents,
employees, representatives, Consultants, Contractors, Suppliers
or anyone directly or indirectly employed by any of them.
9.2.4all claims, damages, losses and expenses incurred as a result of a
defect in title or ownership of the lands on which the Plant is or is
to be located; and
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9.2.5all claims, damages, losses, expenses, fines, penalties and
assessments, including but not limited to fines, penalties,
assessments and other exactions imposed by any governmental authority
and actual legal fees and disbursements, arising out of, relating to,
resulting from or in any way connected with the actual, potential or
alleged presence, release, escape or discharge of any hazardous
substances on, in or under the Plant howsoever caused and whether
occurring prior to or after the date of the Agreement. Without
limiting the generality of the foregoing, such indemnity extends to
claims which arise or are alleged to arise out of the actual or
threatened dispersal, discharge, escape, release or saturation
(whether sudden or gradual) of any hazardous substances in or into the
atmosphere, or on, upon, in or into any one or more of the surface or
subsurface soils, water, watercourses, persons, objects, structures or
any other tangible matter.
10.0 INSURANCE
10.1.1 PEOS will provide, maintain and pay for the insurance coverages
specified in this Article 10. Unless specified otherwise in this
Article 10, the duration of each insurance policy shall be from the
date of commencement of the Work until the termination of the
Agreement.
10.1.2 PEOS will be responsible for deductible amounts under the policies
of insurance.
10.2 Professional Liability - Errors and Omissions
10.2.1 PEOS, their Subconsultants, surveyors, inspectors and testing firms,
must be covered under separate policies of professional liability
(E&O) insurance.
10.2.2 PEOS will provide E&O insurance, in an amount not less than
$5,000,000 (FIVE MILLION DOLLARS) per occurrence with an aggregate
policy limit of $5,000,000 (FIVE MILLION DOLLARS).
10.3 Automobile Public Liability and Property Damage Insurance
10.3.1 PEOS will provide Automobile Public Liability and Property Damage
insurance coverage for all vehicles owned or leased, operated and/or
licensed by the Contractor or its Subcontractors with a single
combined limit of $5,000,000 (FIVE MILLION DOLLARS) for each
occurrence involving bodily injury, death or property damage. PEOS
will provide TTTI with not less than 15 days notice in writing in
advance of cancellation, change or amendment restricting coverage.
10.4 General Comprehensive Liability Insurance
PEOS will provide General Comprehensive Liability insurance coverage in the
joint names of PEOS and TTTI, including insurance for non-owned automotive
units used in performing the Work. The value of the insurance, covering
products and completed operations and contractual liability, will have a
combined limit of not less than $5,000,000 (FIVE MILLION DOLLARS)for each
occurrence involving bodily injury, death or property damage. The policy
will have a property damage deductible not exceeding $2,500, payment of
which will be the responsibility of PEOS. The insurance referred to in
subsection 10.3, will be in effect from the time the Work commences until
the final completion date thereof plus twelve (12) months thereafter for
completed operations thereunder.
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Policies will be endorsed to provide TTTI with not less than 30 days notice
in writing in advance of any cancellation, and of change or amendment
restricting coverage.
10.5 Workers Compensation
PEOS will comply with the Workers Compensation Act or equivalent in the
Province or State of the Plant and the rules and regulations of the local
jurisdiction.
10.6 Certificates of Insurance
10.6.1 Before starting the Work, both PEOS and TTTI will provide, each to
the other, certificates of insurance as evidence that each has
obtained the required insurance.
10.6.2 Before permitting any Subcontractors or Subconsultants to perform
any of the Work, PEOS will obtain certificates of insurance from each
of the Subcontractors and Subconsultants as evidence that each has
obtained the required insurance.
11.0 DISPUTE RESOLUTION
If the parties are unable to resolve, by unanimous agreement, any matter
arising out of or relating to the terms of the Agreement, or their
interpretation, existence, validity, termination or breach, either party
may submit the matter to the President of TTTI and to the President of PEOS
for a final determination by them.
Provided that no other party is or may become involved in a dispute with
either or both TTTI and PEOS related to the subject matter of the dispute,
if the respective presidents of TTTI and PEOS fail to settle the dispute
referred to them within thirty (30) days following its submission to them,
all such disputes arising out of or in connection with the Agreement, or in
respect of any defined legal relationship associated therewith or derived
therefrom, may, subject to the written agreement of the respective
presidents of TTTI or PEOS, be referred to and finally resolved by
arbitration under the rules of the Arbitration and Mediation Institute of
Canada Inc. or its successor, or if it is no longer in existence then a
suitable arbitration center located in Ontario, Canada (collectively and
individually the "Arbitration Centre"). The appointing authority will be
the Arbitration Centre and the case will be administered by the Arbitration
Centre in accordance with its procedures for cases under its rules. The
Place of Arbitration will be Toronto, Ontario, Canada.
The award rendered by the arbitrator(s) will be final and binding and
judgement may be entered upon it in accordance with applicable law in any
court having jurisdiction.
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If either party becomes involved in litigation with another party which
involves the same disputes or the same factual or legal issues as the
dispute(s) between TTTI and PEOS, either TTTI or PEOS may apply to the
arbitrator or a court of competent jurisdiction for a stay of any
arbitration proceedings then in progress, and the arbitrator or court may,
if it considers it to be just and convenient to do so, order a stay of the
arbitration pending the outcome of the litigation.
12.0 GENERAL PROVISIONS
12.1 Time shall be of the essence of this Agreement.
12.2 The section headings are for the purpose of convenience of reference only
and shall not be construed as interpretation of the text.
12.3 Except as contemplated herein, this Agreement contains the whole agreement
between the parties hereto in respect of the construction of the Thermo
Master Plant and there are no warranties, representations, terms,
conditions or collateral agreements expressed, implied or statutory, other
than as expressly set forth in this agreement.
12.4 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
12.5 No failure or delay on the part of any party in exercising any power of
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.
12.6 Any notice to be given under this Agreement shall be duly and properly
given if made in writing and by delivering or telecopying the same to the
addressee at the address as follows:
If to TTTI, TTBC or any member of the TTTI Group, then to:
---------------------------------------------------------------------
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Thermo Tech(TM) Technologies Inc.
204 - 195 County Court Boulevard
Brampton, Ontario
L6W 4P7
Attention: Karl Gonnesen,
---------
President
Telephone: (905) 451-5522
Facsimile: (905) 451-5833
If to PEOS, then to:
------------------------
Planet Earth Operating Services Inc.
54 Mill Street West
Milverton, Ontario
N0K 1M0
Attention: Perry Smith
---------
President
Telephone: (519) 272-7778
Facsimile: (519) 595-8770
12.7 Any notice given as aforesaid shall be deemed to have been given or made
on, if delivered, the date on which it was delivered or, if telecopied, on
the next business day after it was telecopied. Any party hereto may change
its address for notice from time to time by notice given to the other
parties hereto in accordance with the foregoing.
12.8 This Agreement may be executed in one or more counterparts, each of which
so executed shall constitute an original and all of which together shall
constitute on and the same agreement.
12.9 Each of the Parties confirms and agrees that it has been duly advised (and
fully and fairly informed with respect to such matters) to obtain all
necessary and independent legal, accounting, taxation, financial,
engineering and other applicable professional advice and counsel prior to
entering to this Agreement and the transactions and agreements referenced
herein. Each such party has either obtained all such advice and counsel as
it has determined necessary to its own satisfaction.
12.10This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the Province of
Ontario, and each of the parties hereto attorns to the jurisdiction of the
Courts of the Province of Ontario.
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IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day
and year first above written.
THERMO TECH(TM) TECHNOLOGIES INC.
/S/ Edwin Kroeker
------------------------------------------
Authorized Signatory
------------------------------------------
Authorized Signatory
THERMO TECH(TM) BIO CONVERSION INC.
/S/ Rene J. Branconnier
------------------------------------------
Authorized Signatory
------------------------------------------
Authorized Signatory
PLANET EARTH OPERATING SERVICES INC.
/S/ Perry Smith
------------------------------------------
Authorized Signatory
------------------------------------------
Authorized Signatory
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SCHEDULE A
TURNKEY CONSTRUCTION AGREEMENT
------------------------------
THIS AGREEMENT ("Agreement") made as of the ____ day of _________, 2000.
BETWEEN:
PLANET EARTH DESIGN BUILD INC., a Corporation incorporated under the
laws of the Yukon having its principal place of business located at 54
Mill Street West, Milverton, Ontario, N0K 1M0
("PEDB")
AND:
NEWCO BIO CONVERSION INC., a Company incorporated under the laws of
_____________________ and having an office at
___________________________________
("NEWCO")
WHEREAS NEWCO intends to engage the professional services of PEDB in connection
with the project as (hereinafter described as the "Project") such Project being
construction of:
NEWCO Bio Conversion Inc. Thermo Master(TM) Plant located at
______________________________________________.
NOW THEREFORE NEWCO and PEDB, in consideration of their mutual promises, duties
and responsibilities to each other as set forth herein, AGREE AS FOLLOWS:
1 THE SERVICES
1.1 PEDB shall provide and perform for NEWCO the services ("Services")
described in Schedule 1 to this Agreement, which are generally described
as:
Project Management, Engineering, Procurement and Construction for the
construction of a Thermo Master(TM) Plant on property located at
____________________________
1.2 The Services shall be performed generally in accordance with Schedule 5 to
this Agreement.
<PAGE>
2 AGREEMENT
2.1 The following documents are specifically incorporated into this Agreement
by reference and shall be interpreted and construed in the same manner and
to the same effect as if repeated verbatim herein:
SCHEDULE DESCRIPTION
-------- -----------
1 SCOPE OF WORK/SERVICES
2 COMPENSATION
3 GENERAL CONDITIONS
4 SPECIAL CONDITIONS
5 PROJECT SCHEDULE
6 DRAWINGS
3 CONTRACT PRICE AND PAYMENT
3.1 NEWCO agrees to pay PEDB, in the manner specified in the General Conditions
in Schedule 3 and the Compensation provisions specified in Schedule 2 to
this Agreement, which compensation shall be subject to adjustments as may
be required in accordance with the provisions of the Agreement.
4 ADDRESSES FOR NOTICES
4.1 All notices (the "Notices") under this Agreement shall be in writing and
shall be delivered by person, sent by prepaid registered mail or
transmitted by facsimile or other form of electronic media, provided that
in the case of transmission by facsimile or other form of electronic media,
such system is satisfactorily tested immediately prior to transmission and
confirmation of receipt is obtained. Such notices shall be addressed as
follows:
TO PEDB:
Planet Earth Design Build Inc.
54 Mill Street West,
Milverton, Ontario N0K 1M0
Attention: Mr. Perry Smith
Fax No.: (519) 595-8770
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TO NEWCO:
_________________________
__________________________
__________________________
Attention: Mr. ____________________
Fax No.: (_____) _________________
4.2 Notices delivered in accordance with the Agreement will be deemed to have
been given and received on the day delivered if delivered by prepaid
registered mail or on the day received if transmitted by fax or other
electronic media, but only if received at the specified address of the
recipient prior to 4:30 p.m. on the relevant business day, otherwise the
Notice will be deemed to have been given and received on the immediately
following business day. In case of postal strike, slowdown or other postal
disruption, notices shall not be mailed but either delivered by hand or
transmitted by facsimile or other form of electronic media, in accordance
with the Agreement.
5 EXECUTION BY FAX
5.1 This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, and all of which shall constitute one
and the same instrument. All of these counterparts will for all purposes
constitute one agreement, binding on the parties, notwithstanding that all
parties are not signatories to the same counterpart. A faxed transcribed
copy or photocopy of this Agreement executed by a party in counterpart or
otherwise will constitute a properly executed, delivered and binding
agreement or counterpart of the executing party.
IN WITNESS WHEREOF the parties hereto have executed this Agreement effective as
of the day and year first above written.
PLANET EARTH DESIGN BUILD INC. NEWCO
_________________________________ _________________________________
Signature Signature
_________________________________ _________________________________
Title Title
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SCHEDULE 1
OF
SCHEDULE A
SCHEDULE 1
SCOPE OF SERVICES
PART A - SERVICES INCLUDED
PEDB shall provide the following services:
1. CONSULTING, ADVISORY AND PREDESIGN SERVICES
1.1 Acting as NEWCO's agent as required in connection with the Project;
1.2 Preparing an Engineering Program based upon NEWCO's written instructions in
accordance with the Agreement;
1.3 Assessing and advising on the appropriateness of the program of inspection
and testing services which may be required by NEWCO or imposed by law, for
the execution of the Project by the Contractor;
1.4 At the option of NEWCO, preparing preliminary estimates of the cost of the
Work and Contract Time;
1.5 Preparing submissions required for regulatory and municipal approvals and
assisting NEWCO to apply for such required regulatory and municipal
approvals.
2. ENGINEERING SERVICES
2.1 PEDB will be responsible for performing the following engineering services:
2.1.1General engineering and conceptual design services to describe and
define the Project sufficient to allow detailed design to be performed
by Suppliers of equipment, materials, products and systems to be
incorporated into the Project.
2.1.2 Coordinate with Suppliers regarding interface requirements.
2.1.3Obtain, prepare and review for the site on which the Plant is
intended to be located such surveys, including topographical and
geodetic surveys, soil reports, soil sampling, water analyses,
testing, subsurface investigations, zoning restrictions and utility
locations as may be required by PEDB to assess the most suitable
location on the site for the Project. The cost of obtaining such
information shall be a Reimbursable Cost to PEDB.
2.2 PEDB will perform the Engineering Services described in this Section 2 in
two phases more particularly described, without limiting the generality of
the foregoing, as follows:
1
<PAGE>
2.2.1Phase One: Based upon the General Technical Specifications, as defined
in Section 1.26 of the General Conditions at Schedule 3, to this
Agreement, PEDB will provide conceptual design services. These
services will include preparing the following in preliminary form:
schematic designs; design development documents; general site layout;
plot plan; grading plan; general building and equipment arrangement;
building requirements in terms of general specifications, sizes and
overall shape and configuration; equipment list; calculations and
diagrams; environmental and utilities information as required to
assist NEWCO in obtaining required permits, licenses and approvals;
erosion control plan before and after construction; process and
instrumentation diagrams; and detailed written Project description.
2.2.2Phase Two: From the documents prepared during Phase One, referred to
in subsection 2.2.1 above PEDB will prepare plans, drawings, and
specifications (the "Drawings and Specifications") setting forth the
requirements for the construction and equipping of the Project.
3. PROJECT MANAGEMENT SERVICES PRIOR TO CONSTRUCTION PHASE
From the date of execution of this Agreement to the date that the
construction phase of the Project commences, PEDB will provide the
following services:
3.1 CONSULTATION DURING PROJECT DEVELOPMENT
Such consultation to include:
3.1.1 Review conceptual designs during development;
3.1.2 Advise on site use and improvements;
3.1.3 Advise on selection of materials, building systems and equipment;
3.1.4Provide recommendations on construction feasibility, availability of
materials and labour, time requirements for installation and
construction, factors related to cost, including costs of alternative
designs or materials, preliminary budgets, and possible economies; and
3.1.5Prepare bid documents, technical specifications, Contracts, other
agreements and documents.
3.2 SCHEDULING
Such scheduling services to include the following:
3.2.1 Supervise, schedule and coordinate all Project activities;
3.2.2 Prepare a Project Schedule;
2
<PAGE>
3.2.3Update the Project Schedule as required, incorporating a detailed
schedule for the construction of the Project;
3.2.4Utilize critical path methods and procedures, using realistic
activities, sequences and duration, including: dates for release of
bid packages; allocation of labour and materials; processing of shop
drawings and samples; and delivery of products requiring long
lead-time procurement;
3.2.5 Develop general construction schedules for the Contractors;
3.2.6Include NEWCO's occupancy requirements, indicating those portions of
the Project that have occupancy priority;
3.2.7Establish completion dates for construction and supply phases of the
Project and for final completion of the Project; and
3.2.8Keep NEWCO informed as to the status of and changes in the Project
Schedule.
4. CONSTRUCTION BUDGET
PEDB will prepare a Construction Budget as soon as major Project
requirements have been identified, and will periodically update the
Construction Budget. PEDB will also prepare a detailed line item estimate
based on a quantity survey of drawings and specifications and update and
refine this estimate as the development of the Drawings and Specifications
proceeds.
5. COORDINATION OF CONSTRUCTION CONTRACTS
PEDB will review the Contracts as they are prepared by or on behalf of
NEWCO and will recommend alternative solutions whenever design details
affect construction feasibility or schedules.
6. PROCUREMENT AND CONTRACTING
PEDB will procure and coordinate the delivery of all equipment, materials
and services required for the engineering, construction and commissioning
of the Project, such procurement and contracting to include the following:
6.1 Prepare a procurement schedule for planning and monitoring the purchase of
goods and services for the Project to meet the overall Project Schedule;
6.2 Evaluate and pre-qualify selected bidders. For each bid package to be
issued recommend a list of no less than three and no more than eight
qualified bidders;
6.3 Prepare standard bid documents for including with each bid set. This
includes standard bid documents, Invitation to Bid Forms, Bid Forms,
Standard Bid Information Requests, Site Conditions, Standards and
Requirements, General Conditions, Special Conditions, Terms and Conditions
of Purchase Order/Contract, Information to Bidders and Information to
Contractors;
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6.4 Prepare bid packages for each bid such packages to include Bidders List,
Technical Specifications, Drawings, and standard bid package attachments;
6.5 Organize and Coordinate pre-bid site meetings;
6.6 Receive bids from Suppliers and Contractors;
6.7 Recommend equipment, materials and products for purchase;
6.8 Expedite the procurement of long-lead items in accordance with purchase
specifications to obtain delivery by the date scheduled in the Project
Schedule;
6.9 Prepare bid specifications and prepare documents to facilitate the bidding
and awarding of Contracts, allowing for phased construction and taking into
consideration such factors as time of performance, availability of labour,
overlapping trade jurisdictions, provisions for temporary facilities, and
existing operations;
6.10 Determine applicable requirements for equal employment opportunity programs
and union labour requirements compatible with NEWCO's labour union
agreements for inclusion in Contracts;
6.11 Administer labour relations to minimize labour disputes during the Project;
6.12 Review the Contracts to eliminate areas of conflict and overlap in work to
be performed by the various Contractors, and prepare pre-qualification
criteria for bidders. Prepare lists of pre-qualified bidders in
co-operation with NEWCO;
6.13 Solicit interest of prospective Suppliers and Contractors in the Project;
6.14 Receive and analyse competitive bids for the various Contracts and select
appropriate Contractors and Suppliers. Provide consultation services to
TTTI on technical and commercial matters as and when reasonably required;
and
6.15 Initiate, maintain and monitor safety precautions and programs in
connection with the Project to minimise personal injuries and property
damage. This will include the development of a Project Safety Program
compatible with NEWCO's standards.
7. PROCUREMENT
PEDB will procure all equipment and services required for the completion of
the Project, such services to include preparation of procurement plans and
schedules.
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8. CONSTRUCTION MANAGEMENT SERVICES
8.1 PEDB will establish and implement an on-site organization structure and
lines of authority, as required, for the exchange of information and
instructions between PEDB, PEDB's Subconsultants, NEWCO, the Contractors
and the Suppliers with respect to all construction, budget and scheduling
aspects of the Project.
8.2 PEDB will provide and maintain sufficient and competent full-time staff at
the Site to review, inspect, co-ordinate and direct the overall work and
progress of the Contractors and Suppliers.
8.3 PEDB will appoint, and will inform NEWCO of such an appointment, a
Construction Manager who will be:
8.3.1 Fully acquainted with the Project;
8.3.2 Available for consultation with NEWCO; and
8.3.3Present at the Site as required when construction is performed at
Site.
8.4 PEDB may substitute or replace the Construction Manager and will inform
NEWCO of any such change.
8.5 With regard to Contractors and Suppliers, PEDB will:
8.5.1 Co-ordinate the work of the Contractors and Suppliers;
8.5.2Co-ordinate the work of the Contractors and Suppliers with the
activities and responsibilities of NEWCO;
8.5.3Require Contractors and Suppliers to handle and warehouse (according
to the manufacturer's recommendations) materials, supplies, products,
equipment and systems for permanent and temporary construction;
8.5.4Require the Contractors and Suppliers to maintain the work,
materials, supplies, products, equipment and systems free from injury
or damage, including injury or damage from rain, wind, snow, storm,
heat, or cold; and
8.5.5Obtain from the Contractors and Suppliers certificates of insurance
and performance bonds and review same for general compliance with the
insurance and bonding requirements of their Contracts.
8.6 PEDB will schedule delivery of, expedite and receive at Site purchases and
supplied equipment and, in connection with such equipment, will:
8.6.1Implement expediting procedures to maintain equipment delivery
schedules;
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8.6.2Implement equipment receiving procedures, including checking against
purchase orders, inspecting for damage, preparing damage claims if
necessary, recommending approval of invoices for payment, controlling
holdbacks and presenting backcharges;
8.6.3 Arrange warehousing of equipment received; and
8.6.4Co-ordinate with NEWCO for the warehousing of spare parts and
consumable materials for the Project.
9. PERMITS AND APPROVALS
9.1 PEDB will assist NEWCO to:
9.1.1Obtain any necessary permits, licenses, certificates, including,
building permits and special permits, authorizations and certificates
for permanent improvements and equipment that may be required for the
Project, excluding permits for inspection or temporary facilities
required to be obtained directly by the various Contractors;
9.1.2 Obtain necessary approvals from the authorities having jurisdiction;
9.1.3Obtain any necessary permits, licenses, certificates or approvals
required by authorities having jurisdiction;
9.1.4Collect from Contractors and Suppliers such information, calculations
and other materials that may be necessary to prepare documentation
normally required to obtain approvals, permits, licenses and
certificates from authorities having jurisdiction and which can only
be obtained by NEWCO; and
9.1.5Comply with applicable laws, regulations and requirements of
authorities having jurisdiction over the Project.
10. SCHEDULE CONTROL
10.1 PEDB will review the adequacy and ability of the Contractors' and
Suppliers' personnel and equipment and the availability of materials,
products, supplies and systems required to meet the Project Schedule.
10.2 PEDB will schedule and conduct weekly progress meetings at which the
Contractors, Suppliers, PEDB and NEWCO may discuss such matters as
co-ordination, procedures, progress, problems and scheduling.
10.3 On a regular basis, PEDB will monitor and update the Project Schedule as
construction progresses, and will:
10.3.1 Keep NEWCO regularly informed of changes in the Project Schedule;
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10.3.2 Review schedule problems with Contractors and Suppliers and
recommend courses of action to NEWCO if Contractors or Suppliers are
not meeting the requirements of their Contracts;
10.3.3 Identify potential variances between scheduled and probable
completion dates;
10.3.4 Review the Project Schedule for work not started, delayed or
incomplete and recommend adjustments in the Project Schedule to NEWCO,
Suppliers and Contractors to meet the probable completion date; and
10.3.5 On a monthly basis, provide summary reports of all changes that
occurred during the month in the Project Schedule.
11. COST CONTROL
11.1 PEDB will adopt a mutually satisfactory Cost Control Procedure ("Cost
Control Procedure") for monitoring costs during construction, consistent
with the provisions of the Agreement. The Cost Control Procedure will
include details of accounts, audits, orders, Contracts, invoices, payrolls,
insurance, financial reports, progress reports and all other major
administrative procedures and policies.
11.2 PEDB will use on-site monitoring and supervision to monitor, control and
estimate cost during construction in accordance with the Cost Control
Procedure for cost control established prior to commencement of
construction, and will:
11.2.1 Revise and refine the initially approved Construction Budget;
11.2.2 Incorporate approved changes to the Construction Budget as they
occur;
11.2.3 Develop cash flow reports and forecasts as required;
11.2.4 Identify variances between actual, budgeted and estimated
construction costs as applicable and advise NEWCO;
11.2.5 Maintain cost accounting records on authorized work performed on a
unit price, actual cost or force account basis; and
11.2.6 Monitor all materials, equipment and labour entering into the Work
for purposes of progress payments to Contractors.
11.3 PEDB will have the authority to exceed the Construction Budget without the
NEWCO's prior approval, but not without first informing NEWCO of such an
anticipated cost overrun, subject to the following conditions:
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11.3.1 For a specific item, piece of equipment or component required for a
given sector or phase of a Project if the expected increase in cost
does not exceed 10% of the amount originally budgeted for that
specific item, equipment or component; and
11.3.2 For a particular phase or sector of the Project if the expected
increase in cost does not exceed 5% of the amount originally budgeted
for completion of that particular phase or sector of the Project.
11.4 NEWCO will be provided with access to all PEDB's records, books,
correspondence, instructions, drawings, receipts, vouchers, memoranda and
similar data relating to the Project.
11.5 PEDB will preserve all such records, books, correspondence, instructions,
drawings, receipts, vouchers, memoranda, and similar data relating to the
Project for a period of three (3) years from the date of Final Payment, or
for such longer period as may be required by law.
12. PAYMENTS TO CONTRACTORS AND SUPPLIERS
12.1 PEDB will develop and implement a system for the review and processing of
applications for progress payments and final payments by Contractors and
Suppliers. This system will include the review of such applications for
correctness, completeness and compliance with contractual requirements,
including waivers of liens, inspections, and backcharges for faulty work
and equipment.
13. CHANGE ORDERS
13.1 PEDB will develop and implement a system for reviewing and processing of
Change Orders under the Contracts and will:
13.1.1 Determine and approve any necessary or desirable Changes;
13.1.2 Review requests for Changes from Contractors and Suppliers; and
13.1.4 Notify NEWCO of all Change Orders made.
14. MONITORING AND INSPECTION
14.1 PEDB will monitor the construction work in progress, including that of the
Contractors and Suppliers, for compliance with the requirements of the
overall design for the Project, the Contracts, the Purchase Orders and the
Supplier Contracts. If any construction work is found not to be in
compliance with the foregoing, or is otherwise found to be defective or
deficient, then PEDB, provided it has been given appropriate authority
under the Contracts, and if PEDB has not been given appropriate authority
then NEWCO, will:
14.1.1 Require the Contractor or Supplier to stop all or any portion of its
work and require special inspection or testing of such work to be
performed to determine whether it is in compliance with the
requirements of the applicable Contract or Purchase Order, whether or
not such work is then fabricated, installed or completed; and
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14.1.2 Reject and cause to be remedied the work which does not conform to
the requirements of the Contracts or Purchase Orders, or which is
defective or unlawful for any reason.
14.2 Provided, however, that any monitoring or inspection, or failure to monitor
or inspect, by PEDB shall not relieve the Contractors or Suppliers from
their responsibility for construction means, methods, techniques, sequence
and procedures, nor from their responsibility to carry out their Contracts
strictly in accordance with their terms.
14.3 With regard to Project safety, PEDB will:
14.3.1 Designate a responsible member of PEDB's organization whose duties
will include safety at the Site; and
14.3.2 Monitor compliance by Contractors, Suppliers and others at the Site
with the Project Safety Program initiated by PEDB for the Project,
other safety requirements and the programs of authorities having
jurisdiction, provided however that such monitoring will not relieve
the Contractors or Suppliers of their sole responsibilities for the
safety of persons and property, for compliance with the requirements
of all authorities having jurisdiction with regard to the performance
of their work for the Project or from their sole responsibility to
carry out their Contracts strictly in accordance with Contract's
terms.
15. CONTRACTS
15.1 PEDB will reproduce and distribute copies of the Contracts and other
documents required for bidding and field purposes. The costs of
reproduction and distribution will be Reimbursable Costs to PEDB.
16. CONTRACT INTERPRETATION
16.1 If PEDB is expressly given authority by NEWCO in the Contracts to interpret
design intent, then PEDB will do so in an unbiased and impartial manner and
NEWCO will accept such interpretations. If PEDB is not given such authority
in the Contracts, then PEDB will refer all questions relating to the
interpretation of design intent and the Contract to NEWCO, together with
PEDB's recommendations regarding the same.
17. SHOP DRAWINGS AND SAMPLES
17.1 PEDB will review and approve for general conformance with design all shop
drawings, product data and samples submitted by Contractors and Suppliers.
PEDB will establish and implement procedures for expediting, processing and
approving shop drawings, product data and samples.
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18. REPORTS AND PROJECT SITE DOCUMENTS
18.1 PEDB will record the progress of the Project and will submit written
progress reports to NEWCO on a weekly basis, or at such other frequency and
times as NEWCO may reasonably request. The progress reports will include
information on the Contractor's work, status of Supplier Contracts, the
percentage of completion, whether the Project is on schedule, updates to
the Project Schedule, a listing of Change Orders and other relevant
documents. PEDB will keep a daily Project report available for review by
NEWCO and will:
18.1.1 Maintain a current record at the Site of all necessary Contracts,
shop drawings, samples, purchases, materials, equipment, maintenance
and operating manuals, instructions, and other documents, including
revisions thereto, which arise out of the Contracts or the Project;
18.1.2 Obtain from Contractors and Suppliers a current set of record
drawings, specifications, and operating and maintenance manuals. At
the completion of the Project, PEDB will deliver to NEWCO;
(a) Copies of record drawings including: one (1) electronic copy, two
(2) reproducible copies (sepias) and four (4) prints,
(b) Two (2) copies of all specifications, design standards and site
reports
(c) Four (4) copies of all operation and maintenance manuals.
18.1.3 Prepare, maintain and submit to NEWCO cost-control summary reports,
cost-control log, quotation log, vendor log and other reports as
necessary or as required by NEWCO.
19. START-UP ASSISTANCE AND SUPERVISION
19.1 PEDB's construction management staff will assist in and direct the initial
start-up and testing of equipment and systems by the Contractors. PEDB will
provide service under a separate Commissioning and Training Agreement for
start-up assistance and supervision.
20. CHECK-OUT AND COMMISSIONING
20.1 In connection with the check-out and commissioning of equipment and
components of the Project, PEDB will, under the Commissioning and Training
Agreement perform the following services:
20.1.1 Arrange for and schedule such installation and start-up
representatives of Suppliers as PEDB may consider necessary to be
present during start-up;
20.1.2 Schedule the final check-out of equipment by piece and by area;
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20.1.3 In conjunction with the maintenance personnel;
(A) direct the check out of utilities, equipment and operating
systems by the Contractors; and
(B) check equipment and installation of equipment for compliance with
the requirements of the manufacturers of such equipment;
20.1.4 Schedule and implement test running and test start-up procedures and
performance tests to demonstrate compliance with guaranteed
performance levels; and
20.1.5 Co-ordinate the take over by NEWCO's operation personnel of
equipment from Suppliers and Contractors of equipment, by area.
21. COMMISSIONING AND START-UP
21.1 PEDB will provide NEWCO with ten days notice in advance of the date
commissioning of the Project will commence.
21.2 PEDB, under the Commissioning and Training Agreement, will provide
commissioning personnel who will supervise the commissioning of the Project
after start-up. NEWCO will provide operation personnel throughout the
commissioning period who will take instructions from PEDB's commissioning
personnel.
21.3 PEDB will co-ordinate the commissioning personnel of the Contractors and
Suppliers.
21.4 During commissioning of the Project, PEDB will monitor the check-out of
utilities and the operation of systems and equipment by the Contractors,
Suppliers and NEWCO's personnel for readiness, calibration of controls and
equipment, functional verification testing, and other initial operation
functions associated with the start-up and commissioning of the Project as
a whole.
22. OPERATIONS MANUAL
22.1 PEDB will prepare an operations manual for the completed Project. Training
of NEWCO's plant operation personnel, if required by NEWCO, will be
provided under the Commissioning and Training Agreement.
23. SUBSTANTIAL PERFORMANCE
23.1 PEDB will determine and certify the date of Substantial Performance of the
Project and the date of Substantial Performance of each of the construction
Contracts. PEDB will prepare for each Contract a deficiency list of
incomplete or unsatisfactory items and a schedule for their completion.
PEDB will monitor and review the correction and completion by the
Contractors of all defects and deficiencies on their respective deficiency
lists.
24. TOTAL PERFORMANCE
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24.1 PEDB will determine and certify the dates of total performance of each of
the Contracts. PEDB will obtain and transmit to NEWCO the guarantees,
affidavits, releases, bonds and waivers required by the Contracts. PEDB
will turn over to NEWCO all necessary keys, manuals, record drawings and
maintenance manuals received from the Contractors.
25. FINAL INSPECTION PRIOR TO EXPIRY OF WARRANTY
25.1 At the request of NEWCO, PEDB will inspect the Project 60 to 90 days prior
to the end of the guarantee period provided for in the Contracts with the
Contractors and Suppliers, and PEDB will provide to NEWCO a detailed
written report of any non-conformities or deficiencies covered by such
guarantees.
26. CLAIM ASSISTANCE
26.1 If any claim or action is made or brought against NEWCO by any Contractor
or Supplier, PEDB will assist NEWCO in evaluating and defending against
such claim or action. Provided that such evaluation and assistance does not
require a time commitment of more than three (3) working days of an officer
or employee of PEDB, such assistance will be provided without charge. If
such evaluation and assistance extends beyond three (3) working days NEWCO
will pay PEDB at a rate equivalent to PEDB's normal chargeout rates, plus
expenses, for this additional period .
27. POST-CONSTRUCTION SERVICES:
27.1 PEDB will conduct a final Project review and will advise NEWCO as to
continuing or newly-observed defects or deficiencies in the Project
observed during that review.
28. SCHEDULE FOR PERFORMANCE OF SERVICES
28.1 PEDB will provide the Services generally in accordance with the Schedule
for Engineering attached as Appendix A to this Schedule 1, Scope of
Services.
29. DRAWINGS TO BE PROVIDED BY PEDB
29.1 PEDB will prepare the necessary drawings for the Project for tendering and
construction purposes according to the List of Drawings to be provided,
attached as appendix B to this Schedule 1. Suppliers and Contractors will
be responsible for all drawings according to this same appendix B.
29.2 PEDB will determine the actual number of drawings required for the
fulfilment of its responsibilities under this Agreement. If PEDB determines
that it is not necessary to supply all drawings included on the List of
Drawings in appendix B to this Schedule 1 PEDB will not be required to
supply such drawings. If PEDB is required to supply more than an additional
5% of the number of drawings listed on the list of drawings to be provided
in appendix B to this Schedule 1 then NEWCO will pay PEDB for preparing and
providing those drawings based on PEDB's normal hourly chargeout rates.
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29.3 PEDB will provide copies of the following documents in the following
quantities to NEWCO for its review:
Drawing Type and Destination Print Reproducable
------------------------------- ----- ------------
a) General Layouts, Process
and Instrument Diagrams
and Electrical Drawings:
i) Conceptual 2 0
ii) ertified 2 1
b) Other Engineering Drawings Certified 2 1
c) Design Standards and
Specifications Certified 2 0
d) Vendor Drawings:
i) Preliminary 3 0
3 0
ii) Certified
e) Vendor Manuals 4 0
f) Site Surveys and Reports 2 0
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PART B - SERVICES EXCLUDED
PEDB will not be required to provide the following services, rather these
services, as required for the execution of the Project, will be procured by PEDB
on behalf of, and in the name of NEWCO:
1. GENERAL
1.1 All geological investigation and geotechnical engineering;
1.2 Advising on insurance and bonding;
1.3 All environmental investigations, consulting and advice;
1.4 All work and services related to hazardous substances, including but not
limited to encountering, handling, treating or disposing of hazardous
substances;
1.5 All services or work related to nuclear hazards;
1.6 All services and work indicated in the Turnkey Construction Agreement to be
provided by TTTI; and
1.7 All other services and work not specifically mentioned in Part A of this
Schedule 1.
PART C - ADDITIONAL SERVICES
The following Services shall constitute additional Services for which PEDB shall
be paid additional compensation under the Commissioning and Training Agreement
or under the Maintenance Services Agreement to be entered into by PEDB and
NEWCO.
1. GENERAL
1.1 Training of operating and maintenance staff;
1.2 Post-start-up services and assistance for operation or maintenance of the
project facilities.
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SCHEDULE 1 - APPENDIX A
SCHEDULE FOR ENGINEERING
<PAGE>
SCHEDULE 1 - APPENDIX B
LIST OF DRAWINGS TO BE PROVIDED
<PAGE>
SCHEDULE 2
OF
SCHEDULE A
SCHEDULE 2
COMPENSATION
1.0 FIXED FEE
1.1 NEWCO will pay a lump sum, fixed fee to PEDB in the following amount (the
"Fixed Fee"), exclusive of all Taxes and custom duties:
__________________________________________________________________
1.2 NEWCO shall pay, in addition to the Fixed Fee, all applicable Taxes and
custom duties.
1.3 The Fixed Fee will be subject to adjustment based on changes to the
Services required by NEWCO under this Agreement.
1.4 The Fixed Fee shall be paid to PEDB in accordance with the following:
1.4.1A down payment of __________________________ percent (____%) of the Fixed
Fee within 14 days of receipt by NEWCO of PEDB's invoice therefor, less the
advance of $______________ paid to PEDB by NEWCO prior to or upon execution
of this Turnkey Construction Agreement; and
1.4.2The balance of the Fixed Fee in instalments in accordance with the
following schedule of progress payments:
<PAGE>
% OF TOTAL
TURNKEY
CONSTRUCTION TOTAL INVOICE
PROGRESS NO. INVOICE DATE PAYMENT DATE AGREEMENT AMOUNT
================ ============ ============ ============= =============
Paid to Date %
Down Payment %
1 %
2
3
Final Payment,
inclusive of all
holdbacks %
TOTALS 100%
2.0 REIMBURSABLE COSTS AND FLAT RATE CHARGES
2.1 In addition to the amounts to be paid to PEDB as provided for elsewhere in
the Turnkey Construction Agreement, PEDB shall be paid by NEWCO the
following reimbursable costs and flat rate charges:
2.2 The cost of obtaining surveys, including topographical and geodetic
surveys, soil reports, soil sampling, water analyses, testing, subsurface
investigations, zoning restrictions and utility locations as may be
required by PEDB to assess the most suitable location on the Site for the
Project;
2.3 The cost of reproduction and delivery of information, drawings,
specifications and other documents necessary for the Project, including but
not limited to plans, drawings, specifications, contracts and purchase
orders;
2.4 The expense of long distance telephone calls, telegrams and telex;
2.5 The expense of reproduction and delivery of information, drawings,
specifications and other documents necessary to the Project, and fees paid
for securing approvals, permits or licenses from regulatory agencies having
jurisdiction over the Project;
2.6 The expense of transport, subsistence and lodging in connection with the
Project. Car expenses shall be charged at $0.35 per kilometre, and other
means of travel at cost plus 15%;
2.7 The costs to PEDB that can be demonstrated to result from the insolvency or
failure to perform of any Contractor or Subcontractor;
2.8 The costs of quality assurance such as independent inspection and testing
services;
2.9 Charges levied by authorities having jurisdiction over the Project which
were not reasonably foreseeable at the time of execution of this Agreement;
2.10 Premiums for all bonds and insurance which PEDB may be requested by NEWCO
to provide over and above those normally maintained by PEDB, unless
specified elsewhere in this Agreement to be provided without charge to
NEWCO;
2.11 Costs incurred due to emergencies affecting the safety of persons or
property;
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2.12 Legal costs, incurred by PEDB, arising out of the performance of this
Agreement provided that such do not arise out of any negligence or failure
to perform this Agreement in accordance with its provisions;
2.13 Costs incurred by PEDB, with NEWCO's permission, in expediting the rejected
work or the warranty work of Contractors and Subcontractors;
2.14 The costs of auditing when requested by NEWCO;
2.15 The cost of all advertising incidental to the Project; and
2.16 All other costs reasonably incurred by PEDB in the performance of the
Services.
3.0 Any reimbursable costs specified in the immediately preceding Section 2
that are internal costs to PEDB shall be reimbursed at the prevailing rates
charge by other consultants in the same jurisdiction as PEDB for such
costs. Items for which there are no prevailing rates shall be reimbursed at
a rate to reflect PEDB's reasonable internal cost.
4.0 In addition to the above reimbursable costs and flat rate charges, PEDB
shall be entitled to and paid a markup of 15% on such reimbursable costs
and flat rate charges to compensate PEDB for office services,
administration, handling and carrying costs.
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<PAGE>
SCHEDULE 3
OF
SCHEDULE A
SCHEDULE 3
GENERAL CONDITIONS
CONTENTS
--------
PAGE
----
1. DEFINITIONS AND INTERPRETATION 1
2. PEDB'S SERVICES . . . . . . . . . . . . . . . 6
3. COST ESTIMATES. . . . . . . . . . . . . . . . 6
4. CAD DRAWINGS, COMPUTER SOFTWARE AND DATA. . . 7
5. STANDARD OF SERVICES. . . . . . . . . . . . . 8
6. CHANGES . . . . . . . . . . . . . . . . . . . 9
7. EMPLOYEES AND SUBCONSULTANTS OF PEDB. . . . . 10
8. NEWCO'S RIGHTS AND RESPONSIBILITIES . . . . . 11
9. CONTRACTORS . . . . . . . . . . . . . . . . . 13
10. SCHEDULE, DELAYS AND SUSPENSION OF WORK . . . 13
11. FORCE MAJEURE . . . . . . . . . . . . . . . . 14
12. WARRANTIES AND REPRESENTATIONS. . . . . . . . 15
13. TAXES AND DUTIES. . . . . . . . . . . . . . . 15
14. REIMBURSABLE COSTS. . . . . . . . . . . . . . 16
15. PROGRESS PAYMENTS AND WITHHOLDING OF PAYMENTS 16
16. DAMAGES . . . . . . . . . . . . . . . . . . . 17
17. INDEMNIFICATION . . . . . . . . . . . . . . . 18
18. INSURANCE . . . . . . . . . . . . . . . . . . 20
19. TERMINATION . . . . . . . . . . . . . . . . . 20
20. DISPUTE RESOLUTION. . . . . . . . . . . . . . 22
21. INTELLECTUAL PROPERTY . . . . . . . . . . . . 23
22. HAZARDOUS SUBSTANCES. . . . . . . . . . . . . 27
23. SAFETY AND WORKERS COMPENSATION . . . . . . . 28
24. COMPLIANCE WITH APPLICABLE LAWS . . . . . . . 28
25. WAIVER. . . . . . . . . . . . . . . . . . . . 28
26. INDEPENDENT CONTRACTOR. . . . . . . . . . . . 29
27. LAW AND LANGUAGE OF THE CONTRACT. . . . . . . 29
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28. SUCCESSION. . . . . . . . . . . . . . . . . . 29
29. ASSIGNMENT. . . . . . . . . . . . . . . . . . 29
30. SEVERABILITY. . . . . . . . . . . . . . . . . 29
31. ENTIRE CONTRACT . . . . . . . . . . . . . . . 29
ii
<PAGE>
GENERAL CONDITIONS
1. DEFINITIONS AND INTERPRETATION
1.1 "AGREEMENT" where used in this agreement means the executed Turnkey
Construction Agreement between NEWCO and PEDB, including the attached
Schedules incorporated by reference into the Agreement and which form an
integral part of the Agreement.
1.2 "AUTHORITIES HAVING JURISDICTION" means such provincial, state, federal,
regional, municipal and other authorities and bodies that may or do
exercise some measure of control over the Project or Site through any one
or more of codes, laws, rules, regulations, ordinances, by-laws, decrees
and directions, whether written or unwritten.
1.3 "CHANGE" in relation to the Services means an addition, substitution,
deletion, variation, cancellation, omission or delay of part or all of the
Services required to be performed or provided under the Agreement but, in
relation to the Contract of any Contractor or Supplier, means an addition,
substitution, deletion, variation, cancellation, omission or delay of part
or all of the work required to be performed or provided under the Contract
of that Contractor or Supplier.
1.4 "CHANGE ORDER" in relation to the Services means NEWCO's written
authorization to proceed with a Change in the Services, signed by or on
behalf of NEWCO and PEDB by their respective authorized representatives
but, in relation to the Contract of any Contractor or Supplier, means
PEDB's written authorization to changes in the Contracts, signed by PEDB
and the Contractor or Supplier or by their respective authorized
representatives.
1.5 "CONSEQUENTIAL DAMAGES" to NEWCO means damages, loss, costs and expenses
howsoever caused or arising, related to loss of use, loss of actual or
anticipated profits, loss of markets, loss of production, loss of
productivity, loss of revenue, interest expense, standby time, delay,
impacts, overhead and all other indirect and consequential loss, injuries,
costs, expenses and damages, including without limitation liability to
NEWCO's customers, Contractors, Suppliers and other third parties arising
out of any of the foregoing.
1.6 "NEWCO" is the person, firm or corporation identified as such in the
executed Agreement.
1.7 "NEWCO'S CONSULTANT" means professionals and other specialists, other than
PEDB, engaged by NEWCO directly.
1.8 "CONSTRUCTION BUDGET" means PEDB's estimated Construction Cost including
contingencies for cost increases.
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1.9 "CONSTRUCTION COST" means the total of all Contracts, Supplier Contracts,
Purchase Orders and all other costs of the Project, including all
applicable Taxes whether recoverable or not, but does not include the
compensation of PEDB and its Subconsultants under this Agreement, the cost
of the land, financing costs, legal costs, development costs, or the costs
of the employees and consultants of NEWCO.
1.10 "CONSTRUCTION MANAGER" means the representative of PEDB designated as such
by PEDB in writing to NEWCO.
1.11 "PEDB" has the meaning specified in the preamble to this Agreement.
1.12 "CONTRACT" and "CONTRACTS" means the agreement(s) with the Contractor(s)
for the provision of one or more of labour, services, materials, products,
equipment and systems in connection with the construction of the Project.
1.13 "CONTRACT DOCUMENTS" means the documents comprising the Contract or
Contracts, as applicable, including but not limited to all plans, drawings,
specifications and other documents relating to the Project issued by or
through PEDB that are referenced in or otherwise incorporated into the
Contracts.
1.14 "CONTRACTOR" and "CONTRACTORS" means the party or parties contracting
directly with NEWCO or PEDB as NEWCO's agent for the provision of one or
more of labour, services, materials and equipment in connection with the
construction of the Project, and unless the context otherwise requires
includes Suppliers.
1.15 "CONTRACT TIME" with respect to each Construction Contract means the
projected date for substantial performance of the Construction Contract as
specified in the Contract between PEDB or NEWCO and the Contractor.
1.16 "COST CONTROL PROCEDURE" has the meaning as defined at 11.1 of Schedule 1
to this Agreement.
1.17 "DAY" and "DAY" means one calendar day.
1.18 "ELECTRONIC INFORMATION" has the meaning as defined at 4.1 of these General
Conditions.
1.19 "ENGINEERING PROGRAM" means the package of engineering services required to
deliver the specific Turnkey Plant Project, including such things as site
engineering, preparation of site specific plant drawings, local engineering
tasks and engineering modifications and interpretations which may be
required to meet local regulatory requirements;
1.20 "DRAWINGS AND SPECIFICATIONS" means the plans, drawings and specifications
prepared by PEDB for the Contracts based on the preliminary design, general
layout and specifications for the Project approved by NEWCO.
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1.21 "FIELD INSPECTION" means inspection of the Contractor's work by PEDB by
applying such random sampling procedures on the site as PEDB in its sole
professional discretion considers necessary to enable it to ascertain
whether the Contractor is generally carrying out the work in general
conformity with the design concepts for the Project.
1.22 "FIELD SERVICES" means the provision of personnel at the Site by PEDB to
interpret drawings and specifications, to carry out Field Inspection and to
administer and coordinate the Project.
1.23 "FINAL PAYMENT" has the meaning as defined in Section 15.3 to these General
Conditions.
1.24 "FIXED FEE" means the fixed fee, if any, which is specifically set out in
the executed part of the Agreement between the parties. If there is no
fixed fee specified in the executed part of the Agreement then the term
"Fixed Fee" wherever used shall be deemed to mean the total fee to be paid
to PEDB under the Agreement, as adjusted in accordance with the Agreement.
1.25 "FORCE MAJEURE" and "ACTS OF FORCE MAJEURE" mean acts of any national,
civil or military authority, governmental priorities, civil commotion, war,
insurrection, acts of the public enemy, riots, epidemics, sabotage, fires,
explosions, storms, floods, earthquakes, adverse weather conditions, acts
of God, embargoes, injunctions or stoppages of work pursuant to an order of
a court or other public authority which order is not issued as a result of
an act or fault of either party, inability due to causes beyond the
reasonable control of a party to obtain necessary and proper labour or
transportation, strike, lock-out or other labour disruption, or delays
beyond the reasonable control of a party of carriers and suppliers, and
similar events or conditions (excluding financial inability and financial
inability to prevent or mitigate any of the foregoing) beyond the
reasonable control of a party which delay or prevent that party's
performance of the Agreement, provided that such delay or prevention was
not caused in whole or in part by that party's wilful act or negligence.
Notwithstanding the foregoing, strikes, lock-outs and labour disputes
between NEWCO and its employees shall not constitute Force Majeure unless
they are part of an industry wide strike, lock-out or labour dispute
involving all other unionized companies in the same industry in the
jurisdiction in which the Site is located.
1.26 "GENERAL TECHNICAL SPECIFICATIONS" means the general specifications for the
Project attached as Schedule 5 to the Agreement.
1.27 "HAZARDOUS SUBSTANCES" means any contaminant, pollutant, dangerous
substance, toxic substance, nuclear material or substance, liquid waste,
industrial waste, gaseous waste, hauled liquid waste, hazardous material,
or hazardous substance as defined or identified pursuant to any federal,
provincial, state, regional or municipal statute, by-law, regulation,
ordinance, order or publication, or any other applicable law or publication
of any authority having jurisdiction, relating to the environment,
occupational health and safety, product liability or transportation and,
without limiting the generality of the foregoing, includes any soil or any
solid, liquid or gaseous substances containing any of the foregoing.
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1.28 "NUCLEAR MATERIALS" has the meaning as indicated in section 22.3 of these
General Conditions.
1.29 "MONTH" and "MONTH" means one calendar month.
1.30 "OWNER" means the person, firm or corporation that owns the property where
the Project is to be located. The Owner may be, but is not necessarily,
NEWCO.
1.31 "PLACE OF THE WORK" means the province, state or country in which the
designated Site of the Project is located.
1.32 "PROJECT" has the meaning assigned to this executed Agreement.
1.33 "PROJECT MANAGER" means the representative of PEDB designated as such by
PEDB in writing to NEWCO.
1.34 "PROJECT SCHEDULE" means initially the preliminary schedule for the Project
either attached as a separate schedule to the Agreement or specifically set
out in the Agreement, which may be amended or varied from time to time in
accordance with the Agreement. If no Project Schedule is attached or
specifically set out in the Agreement, then the Project Schedule means the
schedule for the Project prepared by PEDB to coordinate and integrate the
Services with the construction schedules for the Project.
1.35 "PURCHASE ORDER" means NEWCO's order for the provision of labour, services,
equipment, material, products, systems or other items from a Contractor or
Supplier.
1.36 "SCHEDULE FOR ENGINEERING" means the schedule specified in or attached to
the Agreement and which indicates the general time frame within which the
various parts of the Services are to be provided by PEDB. If no separate
Schedule for Engineering is included in the Agreement and if specific parts
of the Services to be provided by PEDB are clearly and separately
identified in the Project Schedule, then the Schedule for Engineering shall
be construed to mean those portions only of the Project Schedule that
clearly and separately identify the specific Services of PEDB under the
Agreement.
1.37 "SERVICES" means the services of PEDB as defined in this executed
Agreement.
1.38 "SHOP DRAWINGS" means drawings, diagrams, illustrations, schedules,
performance charts, technical brochures and other data which are provided
by the Contractors or Suppliers to illustrate details of their work.
1.39 "SITE" means the property for which the Services are performed and upon
which the Project is located or to be constructed.
1.40 "SUBCONSULTANT" means anyone engaged directly by PEDB in connection with
the Project for the provision of one or more of design services, labour,
materials, equipment, products, systems or supplies which PEDB is obligated
to provide under this Agreement, and includes subconsultants and
subcontractors of PEDB.
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1.41 "SUBCONTRACTOR" is a person, firm or corporation having a direct contract
with a Contractor to perform a part or parts of the Work or to supply
products for the Work, including but not limited to products worked to a
special design.
1.42 "SUBSTANTIAL PERFORMANCE" of the Project as a whole is as defined in the
lien legislation applicable to the Place of the Work. If such legislation
is not in force or fails to use or define such term, Substantial
Performance means when all of the Work for the Project as a whole is ready
to use or is being used for the purpose intended and is so certified by
PEDB. In connection with any particular construction Contract, Substantial
Performance of the Contract means when the work that is the subject of the
Contract is ready to use or is being used for the purpose intended and is
so certified by PEDB.
1.43 "SUPPLIER" is a person, firm or corporation contracting directly with NEWCO
for the provision of one or more of equipment, materials, products and
systems which will form a permanent part of the Work and includes Vendors.
1.44 "TAXES" means all taxes and duties, other than personal and corporate
income taxes, imposed by Canada, any province or territory thereof, or any
political subdivision of the foregoing or any foreign jurisdiction, and
includes without limitation all social services, federal goods and
services, value added, sales, use and gross receipts taxes, as well as all
import and custom duties, excise taxes and similar taxes and contributions
levied or imposed by any level of government or any authority having
jurisdiction.
1.45 "TRADE CONTRACTOR" means Subcontractor.
1.46 "VENDOR" is a person, firm or corporation contracting with NEWCO to provide
equipment to NEWCO for incorporation into the Project.
1.47 "WORK" means the totality of all labour, materials and equipment used or
incorporated into the Project by the Contractors and Suppliers pursuant to
the Contracts and Purchase Orders.
1.48 References to an article, clause or paragraph of these General Conditions
or any part of the Agreement made by reference to the term "Article",
"General Condition", "GC" or some similar designation followed by a number
shall be deemed to be a reference to the article, general condition, clause
or paragraph of this Agreement plus all clauses, paragraphs and
sub-paragraphs containing that number as a prefix.
1.49 Wherever the singular, masculine or neuter is used in this Agreement it
shall be construed as if the plural or feminine or body corporate, as the
case may be, had been used where the context or the parties so require.
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1.50 In the event of any conflict, variation, ambiguity or inconsistency between
the terms of the executed Agreement and any schedules attached to the
Agreement, the terms and conditions of the Agreement shall prevail and the
provisions of any schedules shall govern in the following order of
precedence, with the first listed taking priority over those listed after
it:
Scope of Work/Services
Compensation
Special Conditions
General Conditions
Specifications/Drawings
Project Schedule
Other Schedules
Provided, however, that where any provision in any schedule specifically
refers to another schedule or another part of the Agreement by express
reference and then expressly modifies or amends that other provision, then
such modification or amendment shall take precedence and prevail.
2. PEDB'S SERVICES
2.1 PEDB will provide the Services to NEWCO in accordance with the terms of the
Agreement.
2.2 PEDB will obtain all business permits and licenses that are required of
PEDB to perform its Services under the Agreement.
2.3 NEWCO, upon request from PEDB, will employ and pay as NEWCO's Consultants
such specialist consultants, including but not limited to geotechnical,
environmental, hydrology and other consultants, as PEDB may reasonably
require to enable PEDB to provide the Services in a manner satisfactory to
PEDB. NEWCO and NEWCO's Consultants shall be solely responsible for the
work and services of all NEWCO's Consultants.
2.4 If PEDB or anyone employed by or through PEDB is subpoenaed or otherwise
required to attend and testify before any court or in any arbitration
proceeding with regard to any matter relating to the Services, other than
with regard to a dispute solely between NEWCO and PEDB, then PEDB shall be
paid its normal charge out hourly rates for such personnel, plus all costs
and expenses, for preparing for and testifying before such court or
arbitration proceeding.
3. COST ESTIMATES
3.1 PEDB will not be responsible for overruns in estimates of Construction
Costs contained within the Construction Budget. As neither PEDB nor NEWCO
has control over the cost of labour, materials or equipment, or over the
Contractor's methods of determining bid prices, or over competitive
bidding, market or negotiating conditions, PEDB cannot and does not warrant
or represent that bids or negotiated prices will not vary from any
estimates of Construction Cost by PEDB. PEDB in any event shall not be
liable or responsible for any variance from any estimated or budgeted
Construction Cost or Project budget, whether established under the
Agreement or otherwise, and any such variance shall not constitute grounds
for NEWCO withholding fees or any other payments due to PEDB.
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3.2 If the bidding or negotiation phase for the Work to be constructed by a
Contractor has not commenced within three months after PEDB submits the
tender documents to NEWCO, the budget for the Construction Cost shall be
adjusted to reflect any change in the general level of prices in the
construction industry between the date of submission of the tender
documents to NEWCO and the date on which tenders are sought.
4. CAD DRAWINGS, COMPUTER SOFTWARE AND DATA
4.1 Unless otherwise expressly provided in the Agreement and initialled by PEDB
at the time of execution of the Agreement, the provision to NEWCO by PEDB
of any computer software, computer data, CAD drawings or computer hardware
(the "Electronic Information"), including providing same by or through
electronic media such as disk or tape or by or through electronic transfer,
shall be provided subject to the following terms and conditions and express
limitations of liability:
4.1.1Electronic Information provided by PEDB will be in the format used by
PEDB. PEDB does not warrant compatibility with any computer or any
other electronic equipment of NEWCO and PEDB shall not be required to
amend or vary the files to accommodate or take into account any
incompatibility between the files and the software or hardware used by
NEWCO.
4.1.2PEDB shall not be responsible for making the Electronic Information
compatible with any existing or future computer or electronic
equipment of NEWCO. Further, PEDB shall not be responsible nor have
any liability whatsoever to update any of the Electronic Information
in future.
4.1.3The Electronic Information is provided solely for use in the Project
and for no other use or purpose.
4.1.4All copyright and intellectual property rights in and to the
Electronic Information shall, as between NEWCO and PEDB, remain the
property of PEDB.
4.1.5PEDB is not responsible for the accuracy of the CAD files and does
not represent or warrant that the CAD files contain the latest
versions of, or revisions to, the drawings. Further, PEDB does not
represent or warrant that the CAD files contain the same information
as, or are identical to, the printed versions of the drawings issued
to NEWCO or to any Contractor. NEWCO acknowledges, understands and
agrees that there may be differences between drawings provided to
NEWCO or Contractors in print and the information contained in the CAD
files, even if they are apparently identified by the same revision
number.
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4.1.6The recipient of any Electronic Information from PEDB shall be solely
responsible for verifying that the CAD files received from PEDB
represent drawings identical to the drawings that they receive or have
received from PEDB and that the CAD files may represent different
versions or variations of the same drawings. The recipient of any
Electronic Information shall be solely responsible for ensuring all
revisions to drawings by PEDB made subsequent to the version
represented by the CAD files provided by PEDB are incorporated into
the CAD files which were received, as well as all drawings and files
that the recipient has created based on or using those original CAD
files.
4.1.7In the event of any conflict or inconsistency between any drawing
issued in print by PEDB and any CAD file, the drawing issued in print
shall govern.
4.1.8PEDB shall bear no liability whatsoever for any computer or other
electronic viruses or defects or deficiencies contained in any
Electronic Information provided by PEDB to NEWCO or anyone else.
4.2 Notwithstanding any other provision of the Agreement, the only warranty
provided with regard to any Electronic Information is that PEDB will
replace, at no charge, defective Electronic Information that is returned to
PEDB within ninety (90) days of the date it is first provided by PEDB. If
PEDB is unable to correct the defective Electronic Information and replace
it within such time period as PEDB may consider appropriate in its
discretion, then PEDB will refund the cost of the Electronic Information,
but excluding the cost of any work or services provided by PEDB with regard
to the creation, modification or provision of the Electronic Information to
NEWCO. The foregoing is in lieu of all other warranties, express or
implied, including but not limited to any and all warranties of
merchantability and fitness for purpose, whether implied pursuant to the
Agreement, by statute or otherwise. In no event shall PEDB be liable for
any Consequential Damages arising out of or relating to the use or
inability to use the Electronic Information.
4.3 The provisions of this Section 4 are in addition to all other disclaimers
and limitations of liability in the Agreement.
5. STANDARD OF SERVICES
5.1 Any design, engineering, architectural or other such professional services
required by this Agreement to be performed by or through PEDB which are
required by law or the authorities having jurisdiction to be performed by
licensed or registered professional engineers or architects will be
performed by licensed or registered professional engineers and architects.
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5.2 In the performance of its Services, PEDB and its Subconsultants will
exercise the standard of care normally exercised by licensed or registered
professional architectural, engineering, construction management and
project management personnel who perform comparable services in the
jurisdiction in which the Services are performed.
5.3 PEDB will use reasonable efforts to perform its Services expeditiously and
economically, consistent with the interests of both NEWCO and PEDB.
6. CHANGES
6.1 NEWCO, with PEDB's consent, may make Changes by adding to, deducting from
or modifying the Services and shall confirm such Changes by issuing written
Change Orders to PEDB. PEDB will not be required to proceed with any
Changes in the Services unless provided with a written Change Order signed
on behalf of NEWCO. If PEDB encounters a Change and proceeds with the
Change prior to obtaining a Change Order signed by NEWCO, then NEWCO will
promptly sign and forward to PEDB a Change Order confirming such Change.
6.2 If PEDB and NEWCO fail to agree on the amount to be paid to PEDB for any
Change, then PEDB will be paid for its time and for its reimbursable costs
based on the schedule of hourly rates and reimbursable costs, if any,
specified in the Agreement or, if none is specified, then based on PEDB's
normal rates charged for the class of personnel and disbursements involved
in the Change. Payment for any Change in accordance with the foregoing
shall be in addition to and not included within any Fixed Fee specified in
the Agreement.
6.3 If PEDB considers any direction or instruction of NEWCO to constitute a
Change but NEWCO fails to agree that the direction or instruction is a
Change, then PEDB may, but will not be required to, proceed with the
direction or instruction and the issue of whether it constitutes a Change
will be resolved in accordance with the dispute resolution provisions of
the Agreement. Further, if PEDB performs any work or services beyond that
which PEDB believes is required of PEDB under the Agreement and if PEDB and
NEWCO subsequently fail to agree on whether such work or services
constitutes a Change, then the issue of whether such work or services
constitutes a Change will also be resolved in accordance with the dispute
resolution provisions of the Agreement. In either event, if it is
subsequently determined that any additional work or services are or
constitute Changes under the Agreement then PEDB will be paid for the
Changes in the same manner and in the same amount as if they had been
authorized in writing by NEWCO as Changes prior to their performance by
PEDB.
6.4 The schedule for the performance of the Services and, if required, the
schedule for the Project as a whole shall be reasonably extended as
required by PEDB to accommodate and account for any Changes under the
Agreement.
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6.5 In an emergency endangering life or property PEDB will perform such
additional services and work as may be required to prevent or minimize
threatened damage, injury or loss. In such case, PEDB will be paid its
reasonable costs of such additional services and work based on the rates
specified in the Agreement for personnel and disbursements or, if no such
rates are specified in the Agreement then based on PEDB's normal charge out
rates for personnel and disbursements.
6.6 If a Change in the Services, including any changes to plans, drawings,
specifications or other documents prepared by PEDB, is required by any
authorities having jurisdiction over the Project or the Services, or in
relation to the manner in which the Services are or have been performed,
then PEDB will comply with the requirements of the authorities having
jurisdiction and perform such additional services and work as they may
require. In such case, PEDB will be paid additional compensation and the
schedule shall be adjusted in the same manner and to the same extent as if
a Change had been authorized and a Change Order agreed to by both NEWCO and
PEDB.
6.7 PEDB will have authority to order minor Changes in the work of the
Contracts of the Contractors and Suppliers, provided that they do not
involve an adjustment in the price of such contracts or an extension of the
Project Schedule, and provided that they are not inconsistent with the
intent of those Contracts. Such Changes in the Contracts may be effected by
field order or by other written order or direction of PEDB.
6.8 PEDB is not responsible for changes in the requirements of the authorities
having jurisdiction which were not reasonably foreseeable by PEDB at the
time any parts of the Services affected by those requirements were
performed. If such changes in requirements by the authorities having
jurisdiction require any completed work or services to be amended or
revised, PEDB shall be paid for such amendments and revisions in the same
manner as if a Change had been authorized and a Change Order agreed to by
both NEWCO and PEDB.
7. EMPLOYEES AND SUBCONSULTANTS OF PEDB
7.1 All Services required to be performed by PEDB under the Agreement will be
performed by or under the supervision of PEDB. All personnel engaged in the
performance of the Services by or through PEDB will be qualified by
education or experience to perform the work in which they are engaged and
shall have such professional qualifications and credentials as may be
required by the authorities having jurisdiction over their work.
7.2 Sufficient qualified personnel will be employed by or through PEDB to
perform the Services required of PEDB under the Agreement. Such personnel
will not be employees of or have any contractual relationship with NEWCO
and NEWCO will not, except through PEDB, directly or indirectly employ any
such personnel without the prior written consent of PEDB.
7.3 If NEWCO reasonably objects to any personnel employed by or through PEDB on
this Project, PEDB will replace or cause to be replaced such personnel with
other, similarly qualified personnel.
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7.4 PEDB may subcontract part or all of its Services under the Agreement to
Subconsultants. PEDB will notify NEWCO of any such subcontracting. PEDB
will be responsible for and liable to NEWCO for the parts of the Services
performed by its Subconsultants to the same extent as if such parts of the
Services were performed directly by PEDB.
7.5 PEDB may, at its discretion, engage directly such specialist consultants,
including but not limited to geotechnical, environmental, hydrology and
other consultants, as PEDB may reasonably require to enable PEDB to provide
the Services in a manner satisfactory to PEDB. Unless such specialist
consultants are expressly included in the Services to be provided by PEDB
in the Agreement, PEDB shall be reimbursed the cost of the specialist
consultants plus such markup for administration, overhead and profit as may
be prescribed in a schedule or elsewhere in the Agreement, or if no markup
is prescribed, then a markup of 15% percent.
8. NEWCO'S RIGHTS AND RESPONSIBILITIES
8.1 NEWCO will designate a representative of NEWCO who will be fully acquainted
with the scope of the Project and who will have full authority from NEWCO
to render decisions promptly and to furnish information expeditiously. Such
representative at all times will be available on reasonable notice in
person or by telephone.
8.2 NEWCO shall make available to PEDB all relevant information or pertinent
data as may be required by PEDB to plan and perform the Services.
8.3 NEWCO will provide and pay for all legal, accounting and insurance services
as may be necessary for the Project, including such auditing services as
NEWCO may require to verify the Contractor's applications for payment or to
ascertain how or for what purpose the monies paid by or on behalf of NEWCO
have been used.
8.4 NEWCO, upon request from PEDB, will employ and pay as NEWCO's Consultants
such specialist consultants, including but not limited to geotechnical,
environmental, hydrology and other consultants, as PEDB may reasonably
require to enable PEDB to provide the Services in a manner satisfactory to
PEDB. NEWCO and NEWCO's Consultants shall be solely responsible for the
work and services of all NEWCO's Consultants.
8.5 NEWCO will, in a timely fashion and within such time periods as may be
necessary to avoid delays, interference or additional cost to PEDB, provide
to PEDB full information regarding NEWCO's requirements for the Project,
including but not limited to NEWCO's design objectives, constraints and
criteria, spatial and functional requirements and relationships,
flexibility and expandability, special equipment and systems, budgetary
limitations, performance and design criteria, time constraints and site
requirements. If NEWCO specifies materials or equipment to be used for the
Project, or approves the selection of such materials or equipment, then
NEWCO shall be solely responsible for the applicability and suitability of
the materials or equipment.
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8.6 In connection with the design of processes and the Project, NEWCO shall
provide to PEDB accurate data, information and conceptual design criteria
as may be considered necessary by PEDB and PEDB shall be entitled to rely
upon such data and information.
8.7 NEWCO, with the assistance of PEDB, will prepare an initial Construction
Budget.
8.8 NEWCO will provide and pay for a legal description and a certified land
survey of the site and adjoining properties as necessary for the design of
the Project.
8.9 NEWCO will, in a timely fashion and within such time periods as may be
specified or necessary to avoid delays, interference or additional cost to
PEDB, given consideration to and examine all documents, information and
other materials, including sketches, drawings, specifications, tenders,
proposals and contracts, submitted by PEDB and provide PEDB with such
decisions, directions and approvals as may be considered necessary by PEDB
for PEDB to perform its Services. NEWCO shall be deemed to have approved
any documents, information and other materials submitted by PEDB unless
NEWCO rejects same in writing to PEDB within seven days of submission by
PEDB.
8.10 Except as otherwise expressly specified in the Agreement, NEWCO will make
all reasonable efforts to obtain all required consents, approvals, licenses
and permits from all authorities having jurisdiction.
8.11 NEWCO will promptly and in a timely fashion fulfil its responsibilities to
allow the orderly and economical performance and progress of the Services
by PEDB and the construction of the Project by others.
8.12 NEWCO will arrange and make provision for the entry and ready access to the
Site by PEDB and its Subconsultants as necessary to enable PEDB to perform
its Services.
8.13 NEWCO will, as required by PEDB, arrange for the handling, transportation,
storage and disposal of Hazardous Substances and other toxic substances
encountered on or under the Site.
8.14 If NEWCO becomes aware of any default or defect in the Project or any
non-conformance or non-compliance by any Contractor or Supplier with the
requirements of any Contract, or by PEDB or any of its Subconsultants,
NEWCO will immediately notify PEDB in writing.
8.15 NEWCO will furnish free of charge to PEDB electricity, water, heating oil
or gas, telephone, fax, office facilities and toilet facilities on Site.
8.16 If the Services specifically and expressly include any start-up or
commissioning responsibilities on the part of PEDB, then NEWCO will provide
and pay for all materials and all operation and maintenance personnel
required by PEDB to allow PEDB to start-up the Project on a timely basis
and in accordance with the Project Schedule. NEWCO's personnel will work
under the direction of PEDB during start-up and commissioning of the
Project.
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9. CONTRACTORS
9.1 PEDB will, on behalf of NEWCO, request and receive proposals from
Contractors and Suppliers and review same with NEWCO. Contracts with
Contractors and Suppliers will only be awarded after the proposals are
approved by NEWCO.
9.2 If NEWCO elects not to require any Contractor to provide a performance bond
and a labour and material payment bond in an amount equal to or greater
than one-half the value of the applicable Contract, then PEDB shall be
relieved of any liability that PEDB may have to NEWCO in connection with
such Contract to the extent that NEWCO's damages, costs and expenses would
have been reduced if NEWCO had required the Contractor to provide bonds in
a form generally acceptable in the industry and worded so as to include all
warranties and guarantees of the Contractor.
10. SCHEDULE, DELAYS AND SUSPENSION OF WORK
10.1 PEDB shall make every reasonable effort to complete the Services generally
in accordance with the time periods set forth in the Schedule for
Engineering included in the Agreement. Unless otherwise expressly warranted
and guaranteed the Schedule for Engineering shall be considered and deemed
approximate only.
10.2 If PEDB is delayed at any time in the progress of the Project or its
Services by any Changes in the Services, by any Changes or Change Orders in
the Contracts, by any act or neglect of NEWCO, or by any cause beyond the
reasonable control of PEDB, including but not limited to any failure of any
governmental authority to issue or any inability of NEWCO to obtain
necessary consents, grants, permits, licenses, authorizations, approvals,
variances or final zoning approvals, or environmental, construction and
operating permits, then both the Schedule for Engineering and the Project
Schedule will be extended by the amount of time PEDB is delayed by such
event(s) and PEDB will be paid additional compensation for all time and
costs associated with such delay in accordance with the charge out rates
specified in the Agreement for personnel and disbursements or, if no such
rates are specified, then in accordance with the rates normally charged by
PEDB for such personnel and disbursements. Such compensation shall be in
addition to any Fixed Fee otherwise specified in the Agreement.
10.3 NEWCO may, without cause, order PEDB to suspend, delay or interrupt the
performance of its Services or the Project in whole or in part for such
period of time as NEWCO may determine. Such suspension, delay or
interruption will be deemed to be a delay beyond the control of PEDB, in
which case:
10.3.1 both the Schedule for Engineering and the Project Schedule will be
adjusted by the amount of the delay and the impact of the delay on
such schedules;
10.3.2 NEWCO will pay PEDB the reasonable increase in cost to PEDB of
performing the Agreement as a result of such suspension, delay or
interruption by NEWCO;
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10.3.3 PEDB will make reasonable efforts to use the same personnel as
previously used in providing the Services upon resumption of the
performance of the Services and reserves the right to substitute other
personnel if the original personnel are no longer available, whether
due to other commitments of the personnel, other commitments of PEDB,
changes of employment, illness, incapacity, death or otherwise; and
10.3.4 if the period of suspension exceeds 90 days on a cumulative basis,
unless PEDB otherwise agrees in writing, the Agreement will be deemed
to be terminated effective as of the 90th day and PEDB shall then be
compensated in the same manner as if the Agreement had been terminated
pursuant to Section 19 to this Schedule effective as of that day.
10.4 If any part of the Services are provided on a "fast track" or expedited
basis, pursuant to which there is insufficient time to properly review,
co-ordinate and check all drawings, designs and specifications in detail
before proceeding with tendering and construction activities, or pursuant
to which engineering, design, drawings and specifications proceed
coincidentally with tendering and construction activities, then PEDB shall
not be responsible or liable for any errors or omissions in the performance
of the Services and, as between PEDB and NEWCO, NEWCO shall be solely
responsible for all additional costs, damages and delays incurred by PEDB,
NEWCO, the Contractors and the Suppliers.
11. FORCE MAJEURE
11.1 Neither party will be deemed to be in breach of the Agreement if its
failure to perform or if its delay in performing any obligation is due
wholly or in part to Force Majeure.
11.2 Except to the extent allowed elsewhere in the Agreement for specific acts
or events of Force Majeure, each party will be solely responsible for its
own costs and expenses suffered or incurred as a result of Force Majeure.
11.3 Each of NEWCO and PEDB will notify the other promptly of any failure to
perform or any delay in performing due to Force Majeure and will, as soon
as practicable, provide an estimate to the other party as to when the
obligation will be performed. Unless NEWCO and PEDB otherwise agree, the
time for performing the obligation shall be extended for a reasonable
period of time, which will be not less than the length of the delay
resulting from such a cause. Both NEWCO and PEDB will explore all
reasonable avenues and alternatives available to avoid or mitigate such
delays.
11.4 If the obligation of either party is delayed by a period of not less than
three consecutive months due to Force Majeure, and if NEWCO and PEDB have
not agreed upon a revised basis for performing the obligation, then either
party may upon 30 days prior written notice terminate the Agreement, in
which case PEDB will be paid in the same manner as if the Agreement was
terminated pursuant to Section 19 of this Schedule as of the 30th day after
the date written notice of termination was provided as aforesaid.
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12. WARRANTIES AND REPRESENTATIONS
12.1 PEDB represents and warrants that it is financially solvent, able to pay
its debts as they mature, possessed of sufficient working capital to
complete the Agreement and is experienced in and competent to perform the
Services contemplated by the Agreement.
12.2 NEWCO represents and warrants that it is financially solvent, able to pay
its debts as they mature, possessed of sufficient working capital and has
sufficient construction financing available to complete the Agreement and
the Project.
12.3 NEWCO represents and warrants that there are no Hazardous Substances under,
in or on the Site except as specifically disclosed on a schedule attached
to the Agreement. Unless the Agreement otherwise expressly provides to the
contrary, NEWCO shall be solely responsible for the storage, removal,
remediation or other treatment of all Hazardous Substances in accordance
with the requirements of all authorities having jurisdiction, whether or
not such Hazardous Substances are disclosed on a schedule to the Agreement
or otherwise. Further, if Hazardous Substances are discovered that are not
disclosed on an attached schedule, NEWCO will be solely responsible at its
cost for taking all necessary steps to render the Hazardous Substances
harmless and removing them from Site. The Project Schedule and schedule for
the performance of the Services will be extended and, in addition to any
compensation otherwise due to PEDB, all additional time and costs incurred
by PEDB as a result of the presence of Hazardous Substances shall be paid
to PEDB, based on the charge out rates for personnel and disbursements
specified in the Agreement or, if none are specified, then based on PEDB's
normal charge out rates for personnel and disbursements in the same manner
as pursuant to a duly authorized Change Order.
12.4 Each party represents and warrants that it has full power and authority to
enter into and perform the Agreement, that all necessary proceedings have
been taken to authorize it to enter into the Agreement, that the Agreement
has been signed by a duly authorized representative of such party, and that
upon signing such party shall thereby be validly bound. Each party
acknowledges that it has read the Agreement, understands it and agrees to
be bound by it.
13. TAXES AND DUTIES
13.1 Subject to express and specific provisions to the contrary in the executed
Agreement, NEWCO shall pay all Taxes required or imposed by law or by any
authority having jurisdiction and which may be applicable to the fees,
reimbursable costs or other amounts or compensation paid to PEDB under the
Agreement. NEWCO will make all returns or reports, or both, required in
connection with all such Taxes.
13.2 NEWCO will, as between NEWCO and PEDB, be solely responsible for paying or
ensuring the payment of all Taxes required to be paid in connection with
the Contracts of the Contractors, Subcontractors and Suppliers and the
provision of any equipment, materials, products and systems directly by
NEWCO for the Project.
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14. REIMBURSABLE COSTS
14.1 Subject to a clear and express provision to the contrary elsewhere in the
Agreement, in addition to the fee to be paid to PEDB, NEWCO shall pay those
Reimbursable Costs and flat rate charges of PEDB that are expressly set out
in the Agreement or any schedules to the Agreement as Reimbursable Costs or
flat rate charges or, if none are set out, then those which are normally
charged by other consultants for similar services in the same jurisdiction
as PEDB. PEDB's normal mark-up, not less than fifteen (15%) percent, shall
apply to all such disbursements to cover PEDB's administration, overhead
and profit.
15. PROGRESS PAYMENTS AND WITHHOLDING OF PAYMENTS
15.1 PEDB will submit its invoice for payment to NEWCO in accordance with the
payment provisions contained in the Agreement and any schedules to the
Agreement, which invoice will describe the services rendered and the
reimbursable costs incurred during the applicable invoice period. If no
payment provisions are set out elsewhere in the Agreement, invoices will be
submitted on or before the 10th day of each month. NEWCO will make payment
to PEDB within fourteen (14) days after receipt of PEDB's invoice.
15.2 NEWCO shall promptly and no later than 10 days after receipt of an invoice
from PEDB notify PEDB of any dispute over such invoice. However, failure to
notify PEDB in accordance with the foregoing and the making of payment for
such invoice shall not constitute a waiver or an estoppel of any right
NEWCO may have to dispute such invoice if such invoice contains a mistake
readily apparent on its face.
15.3 Thirty (30) days after the earlier of Substantial Performance of the
Agreement and Substantial Performance of the Project as a whole, PEDB will
submit an invoice for final payment ("Final Payment"), which will be in an
amount equal to the sum of the unpaid balance of PEDB's fee or Fixed Fee,
as applicable, plus any amounts previously withheld and the amount of any
unpaid time and reimbursable costs and expenses. NEWCO shall pay PEDB the
Final Payment within 15 days of the date of receipt of such invoice.
15.4 NEWCO may withhold from payments otherwise due to PEDB only such amounts as
are reasonable and which are expressly agreed to between NEWCO and PEDB to
be withheld for work or services still to be performed by PEDB, or which
may be required to secure NEWCO against any liens which reasonable evidence
discloses may be filed by Subconsultants of PEDB against NEWCO.
15.5 If NEWCO fails to pay PEDB any payment when due, or if PEDB has reasonable
grounds for suspecting NEWCO may be unable to make further payments to PEDB
and, if upon request from PEDB NEWCO fails to provide evidence satisfactory
to PEDB, of its financial ability to make further payments to PEDB under
the Agreement, PEDB may, at its option, elect to suspend or terminate the
Agreement, in which case all payments due to PEDB and all compensation and
termination expenses of PEDB will immediately become due, which
compensation and termination expenses shall include, but are not limited
to, the payments specified in section 19 to this Schedule.
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15.6 If NEWCO fails to make payments to PEDB as they become due under the terms
of the Agreement or pursuant to an award by arbitration or court, interest
of 18% compounded annually on such unpaid amounts shall also become due and
payable until payments are brought up to date. Such interest will be
calculated and added to any unpaid monthly invoices. If the preceding
provision contradicts or is unenforceable due to any rule or statutory
provision regarding interest on overdue accounts, the preceding provision
shall be deemed to be amended to provide for and specify a rate of interest
equivalent to the foregoing but expressed in language and on terms that
conforms to such rule or legislation.
16. DAMAGES
16.1 In consideration of the premises and of the provision of the Services by
PEDB to NEWCO under the Agreement, NEWCO agrees that any and all claims
which it has or may have against PEDB, in any way arising out of or related
to PEDB's performance or non-performance of the Agreement (hereinafter
referred to in this Section 16 as "claims" or "claim"), whether such claims
sound in contract, tort or otherwise, shall be absolutely limited to direct
damages only and shall in no circumstance exceed the lesser of:
16.1.1 ten (10%) of the total amount paid to PEDB by NEWCO for the Services
rendered under the Agreement;
16.1.2 the amount of insurance actually available to PEDB to indemnify PEDB
for such damages; or
16.1.3 fifty thousand ($50,000.00) dollars.
In no event shall PEDB be liable to NEWCO for any Consequential Damages.
16.2 PEDB will not be liable for damages, interest, costs or any other expenses
arising out of the failure of any manufactured product or equipment, or any
manufactured or factory assembled system of components, to perform in
accordance with the manufacturer's specifications, advertising, product
literature or written documentation on which PEDB relied in the performance
of the Services, including but not limited to the preparation of the
design, construction or supplementary documents, Contracts or other
documents.
16.3 PEDB will not be liable for any claim, action or suit arising out of or in
connection with the inappropriate use of the Project by NEWCO or its
agents, employees or Consultants.
16.4 Unless PEDB had actual and express knowledge of deficiencies in the Project
caused by the breaches of contract or negligent acts or omissions of the
Contractor or Suppliers at the time of such breaches of contract or
negligent acts or omissions and then failed to require the Contractor or
Supplier to remedy same, PEDB will not be responsible to NEWCO for any
deficiencies in the Work or for the acts or omissions of the Contractors,
Suppliers or any other persons not employed by or through PEDB, or for the
failure of any of them to carry out the Work in accordance with their
respective Contracts.
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16.5 PEDB will not have control, charge or supervision of, nor responsibility
for, construction means, methods, techniques, sequences, or procedures, all
of which shall be the sole responsibility of the Contractors.
16.6 NEWCO acknowledges, understands and agrees that some design changes and
changes in the Contracts of the Contractors and Suppliers inevitably occur
due to inadvertent errors or omissions caused by schedule constraints,
changes in requirements by NEWCO and authorities having jurisdiction, and
other causes beyond the control of PEDB. NEWCO acknowledges and agrees that
PEDB shall not be liable for any Changes in the Contracts or for any
additional compensation required to be paid to the Contractors or Suppliers
except to the extent that such Changes or additional compensation are
caused solely by the correction of design errors and provided further that
the cost of such corrections exceeds the original fixed, lump sum price for
such Contracts by more than fifteen (15%) percent.
16.7 PEDB's liability for all claims of NEWCO shall absolutely cease to exist
after a period of 12 months from the earlier of the date of:
16.7.1 substantial completion of the Agreement;
16.7.2 Substantial Performance of the Project;
16.7.3 suspension or abandonment of the Project;
16.7.4 termination of PEDB's Services or the Agreement; or
16.7.5 commencement of the limitation period for claims prescribed by any
statute of the province, territory or state of the Place of the Work.
17. INDEMNIFICATION
17.1 Subject to any limitations of liability in the Agreement, PEDB will at its
own cost and expense, including attorney fees, defend, indemnify and hold
harmless NEWCO and its agents and employees from and against the following:
17.1.1 all claims or liens of Subconsultants of PEDB arising out of PEDB's
failure to pay its Subconsultants in accordance with its agreements
with those Subconsultants, provided such failure is not caused by a
failure of NEWCO to make payment to PEDB;
17.1.2 all fines, penalties, assessments or other exactions imposed by any
governmental authority by reason of PEDB's failure to comply with the
Agreement; and
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17.1.3 all claims, damages, losses and expenses, including attorney fees,
arising out of or resulting from the performance of the Agreement,
provided that any such claim, damage, loss or expense:
(a) is attributable to bodily injury, sickness, disease or death, or
to injury or destruction of tangible property (other than some
part of the Project itself); and
(b) is caused solely by, or to the extent it is caused by, any
negligent act or omission of PEDB or any of its officers, agents,
employees, representatives, Subconsultants, or anyone directly or
indirectly employed by any of them.
17.2 NEWCO will at its own cost and expense, such cost and expense to include
attorney fees, defend, indemnify and hold harmless PEDB, its agents and
employees, from and against the following:
17.2.1 all claims or liens of NEWCO's Consultants and Contractors;
17.2.2 all fines, penalties, assessments or other exactions imposed by any
governmental authority by reason of NEWCO's failure to comply with the
Agreement;
17.2.3 all claims, damages, losses and expenses, including attorney fees,
arising out of or resulting from the performance of the Agreement or
the construction of the Project, provided that any such claim, damage,
loss or expense;
(a) is attributable to bodily injury, sickness, disease or death, or
to injury or destruction of tangible property (other than some
part of the Project itself); and
(b) is caused solely by, or to the extent it is caused by, any
negligent act or omission of NEWCO or any of its officers,
agents, employees, representatives, Consultants, Contractors,
Suppliers or anyone directly or indirectly employed by any of
them;
17.2.4 all claims, damages, losses and expenses incurred as a result of a
defect in title or ownership of the lands on which the Project is or
is to be located; and
17.2.5 all claims, damages, losses, expenses, fines, penalties and
assessments, including but not limited to fines, penalties,
assessments and other exactions imposed by any governmental authority
and actual legal fees and disbursements, arising out of, relating to,
resulting from or in any way connected with the actual, potential or
alleged presence, release, escape or discharge of any Hazardous
Substances on, in or under the Site howsoever caused and whether
occurring prior to or after the date of the Agreement. Without
limiting the generality of the foregoing, such indemnity extends to
claims which arise or are alleged to arise out of the actual or
threatened dispersal, discharge, escape, release or saturation
(whether sudden or gradual) of any Hazardous Substances in or into the
atmosphere, or on, upon, in or into any one or more of the surface or
subsurface soils, water, watercourses, persons, objects, structures or
any other tangible matter.
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18. INSURANCE
18.1 Unless otherwise agreed in writing, PEDB shall be responsible for obtaining
and paying for comprehensive general liability insurance in an amount of
not less than $5,000,000 each occurrence for combined bodily injury and
property damage plus property insurance covering the value of property
owned or leased by PEDB. PEDB will also ensure all vehicles used in the
performance of the Services are insured and that vehicles owned by PEDB
have limits of liability for bodily injury and property damage of not less
than $5,000,000.
18.2 The insurance coverages mentioned in section 18.1 will be obtained from
insurance companies licensed to do business in the country where the plant
is located or in such other country as PEDB deems appropriate.
18.3 If PEDB fails to provide or maintain the insurance coverage required to be
provided or maintained by PEDB by the Agreement, then NEWCO may obtain such
insurance and deduct the cost of such insurance from any payments otherwise
due to PEDB under the Agreement.
18.4 Copies of all policies, applicable endorsements and certificates of
insurance will be available for inspection by NEWCO and, upon request, will
be provided to NEWCO.
18.5 NEWCO will purchase Wrap-Up Comprehensive General Liability insurance,
Builders' All-Risk insurance and all other insurance for the Project. NEWCO
shall cause PEDB, its Subconsultants, directors, officers, employees and
agents, to be added as named insureds to such policies, and shall include
cross-liability and waiver of subrogation clauses as necessary to afford
each of the named insureds with the maximum protection and least exposure
possible. Further, to the extent that such insurance duplicates any
insurance required to be provided by PEDB under the Agreement, the
insurance required to be provided by PEDB shall be deemed to be excess
insurance and PEDB, in its discretion, may cancel its policies or parts of
policies so as to avoid such duplicate or excess coverage.
19. TERMINATION
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19.1 If PEDB is adjudged bankrupt, or if it makes a general assignment for the
benefit of its creditors, or if a receiver is appointed on account of its
insolvency, or if it disregards laws, ordinance, rules, regulations or
orders of any authority having jurisdiction in a material way, or subject
to the Agreement is otherwise in breach of a material provision of the
Agreement, then NEWCO may, without prejudice to any right or remedy and
after giving PEDB 90 days written notice, during which period PEDB fails to
cure the violation, terminate the Agreement. If it is not possible to cure
the violation within the 90 days, PEDB will be deemed to have cured the
violation if it commences to cure the violation within those 90 days and
provides NEWCO with a schedule indicating the violation will be cured
within a reasonable time. Termination by NEWCO in accordance with the
foregoing will not affect any rights or remedies NEWCO would otherwise have
under the Agreement or which may otherwise be available to NEWCO at law or
in equity, including the right to recover damages, nor will any such action
relieve PEDB from any consequences or liabilities arising from its acts or
omissions.
19.2 NEWCO may, with or without cause, terminate the Agreement upon 180 days'
prior written notice to PEDB.
19.2.1 In the event of termination of the Agreement with or without cause,
PEDB will be paid:
(a) an amount equal to PEDB's fee earned for all services and work
performed to the date of termination, as well as to such later
date as may reasonably be required by the authorities having
jurisdiction and by professional responsibilities of PEDB to
perform an orderly termination and winding up of the Agreement
and the Project, plus all reimbursable costs reasonably incurred;
and
(b) PEDB's reasonable demobilization costs and expenses, plus any
costs and expenses incurred by PEDB in the cancellation of any
contracts it has with its Subconsultants.
19.2.2 In the event of termination of the Agreement without cause PEDB will
be paid:
(a) an amount equivalent to 15% of PEDB's anticipated average return
per year for a period of two years from the date of Termination
by NEWCO, such anticipated average return to be determined by
agreement between the parties.
19.2.3 After receipt of the payments referred to in Sections 19.2.1 and
19.2.2, PEDB will execute and deliver all such papers and take all
such steps including, if requested, the legal assignment of its
contractual rights, as NEWCO may reasonably require for the purpose of
fully vesting in NEWCO the rights and benefits of PEDB under such
obligations or commitments.
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19.3 If NEWCO is adjudged bankrupt, or if it makes a general assignment for the
benefit of its creditors, or if a receiver is appointed on account of its
insolvency, or if it disregards laws, ordinance, rules, regulations or
orders of any authority having jurisdiction, or fails to make payment to
PEDB when due, or is considered by PEDB to be otherwise in breach of a
material provision of the Agreement, then PEDB may, without prejudice to
any right or remedy and after giving NEWCO 90 days written notice, during
which period NEWCO fails to cure the violation, terminate the Agreement. If
it is not possible to cure the violation within the 90 days, NEWCO will be
deemed to have cured the violation if it commences to cure the violation
within those 90 days and provides PEDB with a schedule acceptable to PEDB
indicating the violation will be cured within a reasonable time.
Termination by PEDB will not affect any of the rights or remedies of PEDB
under the Agreement or which may otherwise be available to PEDB at law or
in equity, including the right to recover damages, nor will any such action
relieve NEWCO from any consequences or liabilities arising from its acts or
omissions.
19.4 In addition to any other right of suspension or termination contained
elsewhere in these General Conditions or the Agreement, PEDB in its sole
discretion may suspend or terminate the Agreement in accordance with the
following:
19.4.1 If NEWCO fails to pay any invoice or account when due, PEDB may
suspend all Services upon 5 days written notice to NEWCO. If NEWCO
fails to make the payment within 7 days after receipt of notice, PEDB,
at is sole option, may elect to immediately terminate the Agreement or
suspend the performance of the Services for such period of time as
PEDB in its discretion may decide;
19.4.2 If NEWCO requests PEDB to provide any part of the Services contrary
to the professional judgment of PEDB or in a manner contrary to the
professional judgment of PEDB or the requirements of any authority
having jurisdiction, PEDB may terminate the Agreement immediately upon
written notice to NEWCO; and
19.4.3 If PEDB encounters a conflict in interest in the performance of the
Services, which cannot be resolved to the satisfaction of PEDB, PEDB
may suspend the Services until such conflict is resolved or may
terminate the Agreement after giving reasonable notice to NEWCO, not
to exceed 30 days.
20. DISPUTE RESOLUTION
20.1 If the parties are unable to resolve, by unanimous agreement, any matter
arising out of or relating to the terms of the Agreement, or their
interpretation, existence, validity, termination or breach, either party
may submit the matter to the president of NEWCO and to the president of
PEDB for a final determination by them.
20.2 Provided that no other party is or may become involved in a dispute with
either or both NEWCO and PEDB related to the subject matter of the dispute,
if the respective presidents of NEWCO and PEDB fail to settle the dispute
referred to them within thirty (30) days following its submittal to them,
all such disputes arising out of or in connection with the Agreement, or in
respect of any defined legal relationship associated therewith or derived
therefrom may, subject to the written agreement of the respective
presidents of TTTI or PEDB, be referred to and finally resolved by
arbitration under the rules of the Arbitration and Mediation Institute of
Canada Inc. or its successor, or if it is no longer in existence then a
suitable arbitration centre located in Ontario, Canada (collectively and
individually the "Arbitration Centre"). The appointing authority will be
the Arbitration Centre and the case will be administered by the Arbitration
Centre in accordance with its procedures for cases under its rules. The
Place of Arbitration will be Toronto, Ontario, Canada.
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20.3 The award rendered by the arbitrator(s) will be final and binding and
judgement may be entered upon it in accordance with applicable law in any
court having jurisdiction.
20.4 If either party becomes involved in litigation with another party which
involves the same disputes or the same factual or legal issues as the
dispute(s) between NEWCO and PEDB, either NEWCO or PEDB may apply to the
arbitrator or a court of competent jurisdiction for a stay of any
arbitration proceedings then in process, and the arbitrator or court may,
if it considers it to be just and convenient to do so, order a stay of the
arbitration pending the outcome of the litigation.
21. INTELLECTUAL PROPERTY
21.1 The following terms used in this Schedule will have the definitions
respectively assigned to them in this Schedule, unless the subject matter
or context otherwise requires:
21.1.1 "NEWCO's Technology" means technology, patent information, trade
secrets, confidential information and know-how of NEWCO which is not
otherwise in the public domain or which is not otherwise known by or
available to PEDB from sources independent of NEWCO and includes, but
is not limited to, the Thermo Master (TM) Technology licensed by TTTI
to NEWCO;
21.1.2 "Improvements" means any improvement to the Technology or NEWCO's
Technology, as applicable, including without limitation any
improvement or further invention whether patentable or not relating to
the Technology or NEWCO's Technology, as applicable;
21.1.3 "Patents" means all patents and patent applications owned by,
registered in the name of or licensed to PEDB, NEWCO or Thermo Tech
which have been filed or issued and which describe and cover various
aspects of the Technology; and
21.1.4 "Technology" means all technology, trade secrets, confidential
information and know-how of PEDB related to the design, manufacture,
supply, installation, commissioning, operation and maintenance of
designed plants, including without limitation: invention disclosures;
patent information; confidential information; technology; trade
secrets; test procedures and results; business, marketing, cost and
product information; processes and process descriptions; plant
designs; operating manuals; engineering data, drawings and
specifications; operating procedures and parameters; raw material
specifications; product specification; quality controls; detailed
process flow sheets and data; samples; drawings; data; techniques;
studies; knowledge of systems; ideas; models; electronically stored
information and all other technical and operational information and
any copyrights related thereto.
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21.2 Save and except NEWCO's Technology, all right, title and interest in and to
the Technology will remain the exclusive property of PEDB and any
Technology disclosed to NEWCO will be held in trust and confidence by NEWCO
on behalf of PEDB. NEWCO will have a permanent non-exclusive royalty-free
license to use any concept, product or process which is patentable, capable
of trademark or otherwise, produced by or resulting from the services
rendered by PEDB in connection with the Project, for the life of the
Project, and for no other purpose or project. NEWCO and PEDB agree that
payment of PEDB's fees and reimbursable expenses by NEWCO pursuant to the
Agreement is a condition precedent to the aforesaid license.
21.3 The parties agree that all Improvements to the Technology, not including
any Improvements to the NEWCO Technology, will be owned by PEDB. NEWCO will
inform PEDB of any Improvements in the Technology, made or obtained by
NEWCO that NEWCO reasonably considers to be important for improved
performance, serviceability or reliability of the Technology. Notice of all
such Improvements shall be provided within 90 days of the introduction of
such Improvements to NEWCO and shall be accompanied by an offer to supply
the Improvement to PEDB free of charge.
21.4 Improvements to NEWCO's Technology will be owned by NEWCO unless the
Improvements were discovered or made solely by PEDB, in which case the
Improvements will be owned by PEDB and NEWCO will have a non-exclusive
royalty-free license to use the Improvement for the Project. PEDB will have
a permanent non-exclusive royalty-free license to use any Improvements to
NEWCO's Technology, including any concept, product or process which is part
of the Improvements to NEWCO's Technology, provided that such Improvements
are developed or contributed to by PEDB during the performance of its
Services.
21.5 The Technology and all Drawings, Specifications, drawings, plans, models,
designs, specifications and other documents prepared by or through PEDB,
are instruments of service for the execution of the Project and as such are
the exclusive property of PEDB, whether the Project be executed or not, and
PEDB reserves the copyright therein and in the Project executed therefrom,
and they are not to be used on any other work or project without the prior
written agreement of and remuneration to PEDB. NEWCO is entitled to a copy
of such documents and specifications as may reasonably be required for
record, operation and maintenance purposes, but only in connection with the
Project.
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21.6 PEDB will indemnify and save NEWCO harmless from and defend NEWCO against
any and all loss, cost and damage which NEWCO may hereafter suffer or pay
out by reason of any claims or suits against NEWCO arising out of claims of
infringement of any domestic or foreign patent rights or copyrights, or use
of confidential information by PEDB in performing its obligations
hereunder. PEDB and NEWCO each will advise the other promptly in writing of
any notice of such claim or the commencement of any suit or action based
upon such claim. Upon receipt of such notice, PEDB will undertake the
defence of any such suit, action, or claim, and NEWCO will co-operate with
PEDB in such defence. PEDB will have charge and direction of the defence of
such suit, action or claim, and NEWCO will have the right to be represented
therein by advisory counsel of its own selection and at its own expense.
Neither PEDB nor NEWCO will settle or compromise any suit, action or claim
without the consent of the other party having been first obtained if the
settlement or compromise obliges such other party to make any payment or
part with any property, to assume any obligation or grant any license or
other right, or to be subject to any injunction by reason of such
settlement or compromise.
21.7 NEWCO will indemnify and save PEDB harmless from and defend PEDB against
any and all loss, cost and damage which PEDB may hereafter suffer or pay
out by reason of any claims or suits against PEDB arising out of claims of
infringement of any domestic or foreign patent rights or copyrights related
to the use of any materials, equipment, products or systems specified,
requested or required by NEWCO to be used in the Project or specified by
PEDB for use in the Project. PEDB and NEWCO each will advise the other
promptly in writing of any notice of such claim or the commencement of any
suit or action based upon such claim. Upon receipt of such notice, NEWCO
will undertake the defence of any such suit, action, or claim, and PEDB
will co-operate with NEWCO in such defence. NEWCO will have charge and
direction of the defence of such suit, action or claim, and PEDB will have
the right to be represented therein by advisory counsel of its own
selection and at its own expense. Neither PEDB nor NEWCO will settle or
compromise any suit, action or claim without the consent of the other party
having been first obtained if the settlement or compromise obliges such
other party to make any payment or part with any property, to assume any
obligation or grant any license or other right, or to be subject to any
injunction by reason of such settlement or compromise.
CONFIDENTIALITY
21.8 NEWCO will not use, manipulate or exploit any Technology, except in strict
accordance with the Project and the terms of the Agreement, nor disclose
any Technology to any person who does not strictly require the Technology
for the purpose of the Project, and then only to such employees, officers,
directors, or representatives of NEWCO as may be reasonably necessary for
the construction, operation and maintenance of the Project, provided that
NEWCO has first obtained agreements with such employees, officers,
directors and representatives to maintain the confidentiality of the
Technology.
21.9 NEWCO covenants and agrees:
21.9.1 To use its best efforts to protect PEDB's commercial interest in the
Technology and to keep all Technology disclosed to it confidential,
using a standard of care no less than the degree of care that a
careful and prudent person would be expected to employ for its own
similar business and confidential information;
-25-
<PAGE>
21.9.2 to be liable to PEDB for compliance with the terms and conditions of
this General Condition by those employees, consultants, agents,
officers, directors or other representatives of NEWCO to whom any
Technology is disclosed; and
21.9.3 to require all Consultants of NEWCO and all employees, officers,
directors and agents of NEWCO and its Consultants to agree not to
compete with PEDB in the provision of any of the Services by PEDB to
others, or to assist any other party in competing with PEDB by using
and/or revealing some or all of the Technology, provided, however,
that the foregoing is not intended to limit NEWCO's or Consultants'
right to seek employment or otherwise engage in activities in the
fields of the design, manufacture, supply, construction or
commissioning of oriented strand board plants if such employment or
activities do not involve use of the Technology of PEDB in any way,
manner or form whatsoever.
21.10Due to the commercially valuable and proprietary nature of the Technology
to PEDB and the commercial and trade relationship of the Technology to the
nature of PEDB's business operations and potential commercial
opportunities, and due to the limited and restricted market for the
Technology, the obligations of confidentiality assumed by NEWCO hereunder
will apply throughout both North America and all countries in which any
part of the Services are performed, for a period of five (5) years from the
date the Agreement has been completed and will survive any termination
hereof for any reason whatsoever. NEWCO acknowledges and agrees that the
foregoing limitations on NEWCO's confidentiality obligations are entirely
reasonable and necessary in order to protect the legitimate commercial,
trade, business and technical interests of PEDB.
21.11If, prior to disclosure of any part of NEWCO's Technology to PEDB, NEWCO
instructs PEDB in writing to keep and maintain that part of NEWCO's
Technology in confidence, then PEDB shall not disclose that part of NEWCO's
Technology to any person who does not strictly require it for the Project,
and then only to such employees, Subconsultants, officers, directors, or
representatives of PEDB as may be reasonably necessary for the provision by
PEDB of the Services.
21.12PEDB will not, without the prior agreement of NEWCO, divulge information
concerning NEWCO and this Project to anyone except as may be required by
the terms of the Agreement for the proper performance by PEDB of its
Services or by compulsion of law. PEDB will obtain a similar agreement from
its Subconsultants. This requirement will survive the termination of the
Agreement.
21.13The confidentiality obligations of the parties under the Agreement will
not apply to that part of the Technology or to NEWCO's Technology:
21.13.1 which, at the time of disclosure, is within the public domain, or
which, after disclosure by one of the parties to the other, becomes
readily and lawfully available to the industry or the public, other
than by a breach of the Agreement;
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<PAGE>
21.13.2 which was independently developed by the party, other than by a
breach of the Agreement; and
21.13.3 which the party is by law compelled to disclose, provided that the
party has forthwith notified the other of any such compelled
disclosure.
22. HAZARDOUS SUBSTANCES
22.1 At no time shall title to any Hazardous Substances pass or be transferred
to PEDB and the Agreement shall not be interpreted in any manner that makes
PEDB a "generator", "transporter", or "treatment, storage or disposal
facility" under any provincial, federal or state law or provision of any
authority having jurisdiction.
22.2 In no event shall PEDB be liable for the actual, potential or alleged
presence, release, escape or discharge of any Hazardous Substances on, in
or under the Site howsoever caused and whether occurring prior to or after
the date of the Agreement, including but not limited to any actual or
threatened dispersal, discharge, escape, release or saturation (whether
sudden or gradual) of any Hazardous Substances in or into the atmosphere,
or on, upon, in or into any one or more of the surface or subsurface soils,
water, watercourses, persons, objects, structures or any other tangible
matter, or any damages resulting therefrom, and no provision of the
Agreement shall impose any such liability on PEDB unless such provision
specifically makes express refers to this clause by its General Condition
and clause number and further expressly states that this provision does not
apply.
22.3 If the Services include the provision or use on Site of any nuclear
materials or substances, or any measuring, testing or other equipment
containing any nuclear materials or substances (all of the foregoing
referred to herein as "Nuclear Materials"):
22.3.1 PEDB shall not be responsible for any delays to either the Schedule
for Engineering or the Project Schedule related to delays in obtaining
permits and approvals for the transportation, delivery or use of any
Nuclear Materials;
22.3.2 NEWCO shall be responsible for obtaining all permits for the
transportation, delivery and use of any Nuclear Materials from all
authorities having jurisdiction;
22.3.3 NEWCO represents, acknowledges and agrees that it is aware of all
potential difficulties and problems associated with the
transportation, storage and use of the Nuclear Materials and that
NEWCO shall provide adequate and safe storage for such Nuclear
Materials on Site and shall provide sufficient training of its
personnel in the proper and safe storage, transportation and use of
such Nuclear Materials; and
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<PAGE>
22.3.4 NEWCO will be responsible for all additional costs and expenses
associated with the provision, transportation, storage, training and
use of the Nuclear Materials.
23. SAFETY AND WORKERS COMPENSATION
23.1 In addition to complying with the safety rules and regulations of all
authorities having jurisdiction, PEDB will comply with internal safety
rules and regulations of NEWCO governing the conduct or welfare of all
persons on the Site and provided to PEDB by NEWCO prior to the execution of
the Agreement.
23.2 PEDB and NEWCO will comply with the workers' compensation legislation in
the jurisdiction in which the Site is located. Upon request from either
party, the other party will provide evidence of any required registration
by that party in accordance with such legislation and, in addition,
evidence of compliance by that party with any requirements to make payments
and assessments pursuant to such legislation.
23.3 NEWCO will comply with the requirements of the law of the jurisdiction in
which the Plant is to be located with regard to the system for the
labelling and warning of Hazardous Substances used in the workplace for all
Hazardous Substances brought onto, or existing at, the workplace, other
than those brought onto the workplace by PEDB. NEWCO shall provide proper
and sufficient training of all personnel of PEDB with regard to handling,
storage and use of Hazardous Substances existing on Site or brought onto
the workplace by anyone other than PEDB and, unless the costs of such
training are expressly specified to be included in the Fixed Fee or any
other lump sum compensation under the Agreement, such costs shall
constitute an additional service for which PEDB shall be entitled to be
paid additional compensation based on the charge out rates specified in the
Agreement for personnel and disbursements or, if no such rates are
specified, then based on the rates normally charged by PEDB for such
personnel and disbursements.
23.4 PEDB will comply with the requirements of the applicable authorities having
jurisdiction with regard to any Hazardous Substances brought onto the
workplace by PEDB.
24. COMPLIANCE WITH APPLICABLE LAWS
24.1 If either party determines or discovers that any of the provisions of the
Agreement or the Contracts are at variance in any respect with any
applicable law or requirement of any authority having jurisdiction, it will
promptly notify the other in writing.
25. WAIVER
25.1 No failure or delay on the part of any party in 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.
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<PAGE>
26. INDEPENDENT CONTRACTOR
26.1 PEDB and NEWCO are independent contractors, maintaining independent control
over their respective employees and operations. Neither party, nor anyone
employed directly or indirectly by either of them, shall be deemed to be a
servant, employee or agent of the other party.
27. LAW AND LANGUAGE OF THE CONTRACT
27.1 The Agreement and the obligations of the parties under the Agreement shall
be interpreted, construed and enforced in accordance with the laws of the
Province of Ontario, Canada and the parties irrevocably attorn to the
jurisdiction of the courts of Ontario, Canada.
27.2 The Agreement is drawn in English at the request of all parties.
28. SUCCESSION
28.1 The Agreement shall enure to the benefit of and be binding upon the parties
and their respective successors and permitted assigns.
29. ASSIGNMENT
29.1 Neither party may assign this Agreement without the prior consent in
writing of the other.
30. SEVERABILITY
30.1 If one or more provisions of the Agreement are for any reason held to be
illegal, invalid or unenforceable, then such invalidity, illegality or
unenforceability shall not affect any other provision thereof, and the
Agreement shall be construed and enforced as if such invalid, illegal or
unenforceable provision or provisions had never been contained therein.
31. ENTIRE CONTRACT
31.1 The Agreement constitutes the entire agreement and understanding between
the parties and cancels and supersedes all prior proposals, agreements,
understandings, representations, conditions, warranties, negotiations,
discussions and communications, whether oral or written, statutory or
otherwise, and whether express or implied, between the parties with respect
to the subject matter of the Agreement, save and except to the extent as
expressly incorporated in writing into the Agreement. The Agreement may
only be amended by instrument signed by all parties to the Agreement.
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<PAGE>
31.2 Headings and captions used in the Agreement are inserted for convenience of
reference only and in no way define, limit or describe the scope or the
intent of the Agreement or any part thereof.
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<PAGE>
SCHEDULE 4
SPECIAL CONDITIONS
------------------
<PAGE>
SCHEDULE 5
PROJECT SCHEDULE
----------------
<PAGE>
SCHEDULE 6
DRAWINGS
--------
<PAGE>
SCHEDULE B
COMMISSIONING AND TRAINING AGREEMENT
------------------------------------
THIS AGREEMENT made as of the _______ day of ____________, 2000.
BETWEEN:
PLANET EARTH MANAGEMENT INC., a company duly incorporated pursuant to
the laws of the Yukon 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:
NEWCO BIO CONVERSION INC., a corporation incorporated pursuant to the
laws of:
________________________________________________,
and having its registered office at:
________________________________________________
(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);
<PAGE>
D. NEWCO wants PEM to provide the Services on the terms and conditions
hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
promises as set out below, the parties hereto agree as follows:
1. INTERPRETATION
1.1 Definitions. In this Commissioning and Training Agreement and in 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 in __________________;
(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
2.1 Right to Supervise. NEWCO shall have the right, at its own 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
3.1 Notice to PEM. NEWCO shall utilize the services of PEM to provide 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").
-2-
<PAGE>
3.2 Covenants of PEM. PEM hereby covenants and agrees with NEWCO as
------------------
follows:
(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;
(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
4.1 Personnel Selection. PEM will advise NEWCO, within 3 months of the
--------------------
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
-------------------
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 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
-----------------------
services in regard to operational personnel.
5. ADMINISTRATIVE PROCEDURES AND TRAINING
5.1 Personnel Selection. PEM will advise NEWCO of all personnel 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.
-3-
<PAGE>
5.2 Personnel Training. PEM will fully train the personnel selected to
-------------------
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
-----------------
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
-----------------------
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
6.1 Additional Services. PEM agrees to provide a management oversight
--------------------
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
7.1 Compensation. NEWCO shall pay to PEM 110% of PEM's cost in 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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<PAGE>
8.1 Conduct of Business. PEM agrees that it shall conduct its 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.
9. TERM AND TERMINATION
9.1 Commencement Date. This Commissioning and Training shall be deemed 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, 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
----------------------
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.
-5-
<PAGE>
9.5 Results of Termination. Upon the termination of this Commissioning 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;
(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
-----------------------
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
-------------
compensation, loss or damage arising from the termination of this Commissioning
and Training Agreement in accordance with its terms.
10. FORCE MAJEURE
10.1 Obligations Suspended. If the parties fail to meet their 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.
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<PAGE>
11. GENERAL PROVISIONS
11.1 Law of Ontario. This Commissioning and Training Agreement shall 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.
11.2 Entire Agreement. This Commissioning and Training Agreement
-----------------
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
----------
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 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
------------
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
------
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.
-7-
<PAGE>
Without limiting the generality of the foregoing notice may be given
to:
Newco Bio Conversion Inc.
___________________________
___________________________
___________________________
Attention: ________________________
Telephone: (_____) _________________
Facsimile: (_____) _________________
Planet Earth Commissioning, Operating and
Preventative Maintenance Inc.
54 Mill Street West
Milverton, Ontario N0K 1M0
Attention: Perry Smith
Telephone: (519) 595-4933
Facsimile: (519) 595-8770
11.7 Headings. The headings in this Commissioning and Training 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 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 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 this
----------
Commissioning and Training Agreement without restriction.
-8-
<PAGE>
11.11 Enurement. This Commissioning and Training Agreement shall be 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:____________________________________________
Authorized Signatory
NEWCO BIO CONVERSION INC.
Per:______________________________________________
Authorized Signatory
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<PAGE>
SCHEDULE C
MAINTENANCE SERVICES AGREEMENT
------------------------------
THIS AGREEMENT is made as of the _____ day of __________ 2000.
BETWEEN:
PLANET EARTH MANAGEMENT INC., a company incorporated under the laws of
the Yukon 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:
NEWCO BIO CONVERSION INC., a company duly incorporated pursuant to the
laws of (Province/State)____________________and having its principal
place of business located at: _______________________________
______________________________________________________
(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 either as the "Process");
B. PEM has significant know-how concerning the operation and maintenance of
industrial process plants that utilize the Process, hereinafter referred to as
"Plants".
C. NEWCO intends to utilize the license referred to in Recital A above, to
construct and operate a Plant that uses the Process. NEWCO requires technical
support for operating and maintaining the Process and Plant.
D. PEM wishes to provide NEWCO with ongoing preventative maintenance, repair
and operations support for operating the Plant.
<PAGE>
NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto agree each with
the other as follows:
1. DEFINITIONS
Where used herein or in any amendments or Schedules hereto, the following terms
shall have the following meanings:
(a) "MAINTENANCE SERVICES AGREEMENT" means this agreement to be entered
into between NEWCO and PEM for the preventative maintenance and repair
of Plants.
(b) "NEWCO" means any new company incorporated for the purpose of
constructing and operating a Plant that is licensed for this purpose;
(c) "PROCESS" means the patented Thermo Master(TM) Process as described in
patent number US 5810903 and CDN Patent Application number 2184044
(d) "PLANT" means a plant designed and built for the recycling of organic
waste into either animal feed or fertilizer ingredients to be
constructed using Thermo Tech(TM) Technologies Inc.'s Process;
(e) "WORK" means the scope of services, materials and other things
provided by PEM to NEWCO.
2. SCOPE OF WORK
2.1 Scope of Supply by PEM
2.1.1 Preventative Maintenance and Repair Services
PEM will provide management, administration and ongoing services for
the overall maintenance of fixed and mobile equipment, buildings,
building mechanical and electrical systems, process piping systems,
conveying systems, process electrical and control systems and other
facilities associated with the Plant, including:
(a) to provide properly trained personnel for continuous 24 hour per
day, 365 days per year on-call services for consulting,
coordination and supervision of maintenance, preventative
maintenance and repairs for the Plant. The personnel will be
based at PEM's offices. Calls will be made by NEWCO to PEM using
mutually agreed methods, which may include: cellular telephone,
paging service, duty roster with home telephone numbers for
on-call supervisors;
(b) to provide at least one properly trained person available on site
at the Plant 365 days per year to provide continuous maintenance
and advice respecting such facility;
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(c) to have at least one properly trained person to be available 24
hours per day, 365 days per year in an "on call" capacity for the
Plant to provide emergency maintenance to the Plant;
(d) to provide designated personnel at the Plant to be responsible
for and to ensure operation maintenance issues and repairs are
dealt with efficiently and to, as much as reasonably possible,
prevent failure of the Plant systems and to reduce "down time"
for any particular facility or system;
(e) to provide the required tools, equipment, supplies and consumable
items to maintain the proper operation of any relevant process
the Plant is used for and to install, test and maintain NEWCO's
equipment as is existing and to be installed during the term of
the Maintenance Services Agreement; and
(f) to provide daily, weekly, monthly and annual reports highlighting
the work completed in the period, the costs incurred, areas of
concern and recommendations for improving the reliability and
cost of operating and maintaining the Plant.
2.1.2 Training for Equipment Operation
PEM will provide personnel that are trained in the operation of all of
the equipment at the NEWCO Plant. Where PEM personnel are replaced and
are not familiar with the equipment at the Plant, PEM will provide
them with adequate training to ensure that they are knowledgeable.
(a) The PEM personnel will ensure that the equipment at the Plant
operated by NEWCO's personnel is operated properly to avoid
damage to the equipment and to produce an acceptable product
quality, meet the environmental and safety requirements of the
Plant.
(b) Where they find that NEWCO's personnel are not sufficiently
familiar with the equipment, they will provide hands-on training
to the NEWCO personnel; and
(c) Where PEM finds that NEWCO's personnel are damaging equipment
through lack of skill or knowledge, or carelessness this will be
reported to the NEWCO management immediately.
2.1.3 Quality Assurance
PEM will participate in routine (internal) audits and reports on
quality assurance programs in Plant.
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2.1.4 Review of Plant Financial Performance
(a) PEM will review accounting and financial reports prepared by
NEWCO on a regular basis to familiarize themselves with the costs
for maintaining and operating the plant.
(b) PEM will make recommendations for the improvement of operations
and reporting.
2.2 Scope of Supply by NEWCO
NEWCO will provide the following facilities and services to PEM free of
charge for PEM's use in providing the maintenance services:
2.2.1at least one heated and airconditioned office with locks on the doors
and keys for such locks to the personnel engaged by PEM and stationed
on site at the Plant. Each office will be equipped with at least one
desk, a telephone, facsimile machine and computer;
2.2.2access to photocopier or any other related electronic equipment
required by PEM, all of sufficient quality to produce documents,
diagrams and pictures as may reasonably be required for PEM's work;
2.2.3 a digital or other camera;
2.2.4reasonable access, washroom facilities and parking spaces necessary
for PEM personnel provided at the Plant;
2.2.5adequate and convenient storage space for materials and supplies
reasonably required by PEM and its personnel, such space shall be
locked or secured;
2.2.6payment to PEM for all services, equipment rentals and materials
provided pursuant to this Maintenance Services Agreement; and
2.2.7reasonable assurances that all NEWCO personnel will cooperate with
and communicate with PEM personnel throughout the term of this
Maintenance Services Agreement and any renewal of it.
3. PERFORMANCE OF THE WORK
3.1 PEM will perform the Work in a workman like manner in accordance to the
normal standards of skill and competence employed by management
consultants, in the waste industry. The Work will be performed diligently
and continuously with the required complement of competent personnel so as
to achieve the required schedule for the Work.
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3.2 Reasonable Notice
NEWCO will, as far as possible, provide adequate notice to PEM of any
special requirements or schedules for Services or meetings at the Plant.
Failure to provide adequate notice will be an acceptable reason for PEM not
meeting NEWCO requirements.
3.3 Information Supplied to PEM
PEM will be entitled to rely on information provided by NEWCO, unless the
contrary is specifically stated in writing when the information is
provided. Where NEWCO has information that is required by PEM for the Work,
this will be provided in a suitable form to PEM without undue delay.
3.4 Conflicts of Interest
PEM, its agents, employees or Subcontractors will take all steps to ensure
avoidance of all conflicts of interest between any of their individual
interests and those of NEWCO.
3.5 Subcontractors
Subject to the approval of NEWCO, which shall not be unreasonably withheld,
PEM will have the right to have any of the Work accomplished by a properly
trained Subcontractor or service company. PEM will negotiate and issue
subcontracts for the Subcontractors' services that include all necessary
requirements for secrecy, protection of proprietary knowledge, insurance
and other requirements specified by NEWCO.
3.6 Force Majeure
3.6.1PEM's performance of any of the obligations hereunder, other than
financial, may be delayed or suspended while, but only so long as PEM
is prevented from performance by any cause, except lack of funds,
beyond its reasonable control ("Force Majeure Cause"). For the
purposes of this Section, a labour dispute is beyond the reasonable
control of PEM if, in their judgement, settlement of the dispute would
not be compatible with its best interests. PEM will immediately advise
NEWCO if it becomes aware of any labour demands, labour disputes,
labour trends, pending or ongoing labour negotiations or any other
problems relating to labour that may affect the Work and its
performance.
3.6.2PEM will give NEWCO notice within 24 hours after the occurrence of
any force majeure cause in respect of which PEM intends to claim
entitlement to either a suspension in performance or delay in
completion of any of the Work. PEM will promptly give notice to NEWCO
on conclusion of the force majeure cause.
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3.7 Independent Contractor
PEM is an independent Contractor with respect to all the Work.
Notwithstanding NEWCO's rights of consent or approval as provided in this
Maintenance Services Agreement, PEM has the complete control, supervision
and direction of the method and manner of obtaining the required results
for any project or Work.
4. COMPENSATION
4.1 Payment for the services, equipment rentals and materials to be provided by
PEM to NEWCO will be made by NEWCO to PEM during the term of the
Maintenance Services Agreement, in accordance with the following:
4.1.1All labour, equipment rentals and materials are to be paid for at the
rates or in the manner set out in the Schedule A hereto;
4.1.2Except as expressly stated otherwise, all amounts owing by NEWCO to
PEM under this Maintenance Services Agreement will be paid by NEWCO
within 15 days of the date of invoice. If payment has not been made
within the said 15 days, PEM will have the option to suspend all work
in progress upon 5 days written notice from the date NEWCO received
the invoice until payment is made or satisfactory arrangements for
payment are provided and agreed to by PEM;
4.1.3Invoices may be issued by PEM on the date that such service or
material is provided or any time after that;
4.1.4PEM will be given full payment in advance for any materials to be
used in the facilities of NEWCO where the cost of such materials are,
or are likely to be in excess of $1,000 and PEM will be under no
obligation to undertake any work that would require materials in
excess of $1,000 unless, or until NEWCO has paid any requested deposit
towards such materials;
4.1.5A service charge will be charged to NEWCO of 1.5% per month calculated
monthly on the total outstanding for each month or part month for
which any payment required to be paid to PEM by NEWCO is overdue;
4.1.6 All equipment rentals are to be paid by NEWCO.
4.1.7Timesheets will be provided with PEM invoices to substantiate the
invoiced amounts and services provided.
4.2 Rate Adjustments
Rates and other costs included in this section may, at PEM's option, be
adjusted upward on an annual basis to reflect increases in the local cost
of living index in _______________.
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5. TERM OF MAINTENANCE SERVICES AGREEMENT
The term of the Maintenance Services Agreement is five (5) years from the
date of execution of this Maintenance Services Agreement. The Maintenance
Services Agreement can be extended for a further five (5) years by mutual
consent of the Parties.
6. TERMINATION
6.1 Termination by NEWCO with Cause
If PEM is adjudged bankrupt, or if it makes a general assignment for the
benefit of its creditors, or if a receiver is appointed on account of its
insolvency, or if it disregards laws, ordinance, rules, regulations or
orders of any authority having jurisdiction in a material way, or subject
to the Maintenance Services Agreement is otherwise in breach of a material
provision of the Maintenance Services Agreement, then NEWCO may, without
prejudice to any right or remedy and after giving PEM 90 days written
notice, during which PEM fails to cure the violation, terminate the
Maintenance Services Agreement. If it is not possible to cure the violation
within the 90 days, PEM will be deemed to have cured the violation if it
commences to cure the violation within those 90 days and provides NEWCO
with a schedule indicating the violation will be cured within a reasonable
time. Termination by NEWCO in accordance with the foregoing will not affect
any rights or remedies NEWCO would otherwise have under the Maintenance
Services Agreement or which may otherwise be available to NEWCO at law or
in equity, including the right to recover damages, nor will any such action
relieve PEM from any consequences or liabilities arising from its acts or
omissions.
6.2 Termination by NEWCO without Cause
6.2.1NEWCO may, without cause, terminate the Maintenance Services Agreement
upon 180 days' prior written notice to PEM.
6.2.2In the event of termination of the Maintenance Services Agreement
with or without cause, PEM will be paid:
(a) an amount equal to PEM's fee earned for all Work performed to the
date of termination, as well as to such later date as may
reasonably be required by the authorities having jurisdiction and
by professional responsibilities of PEM to perform an orderly
termination and winding up of the Maintenance Services Agreement
and the Project, plus all reimbursable costs reasonably incurred;
and
(b) PEM's reasonable demobilization costs and expenses, plus any
costs and expenses incurred by PEM in the cancellation of any
contracts it has with its Subcontractors.
6.2.3In the event of termination of the Maintenance Services Agreement
without cause, PERI will be paid:
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(a) 15% of the average yearly return PEM expects to earn over the
term of the Agreement for a period of 2 years after termination
by NEWCO.
6.2.4After receipt of the foregoing payments, PEM will execute and deliver
all such papers and take all such steps including, if requested, the
legal assignment of its contractual rights, as NEWCO may reasonably
require for the purpose of fully vesting in NEWCO the rights and
benefits of PEM under such obligations or commitments.
6.3 Termination by PEM with Cause
If NEWCO is adjudged bankrupt, or if it makes a general assignment for the
benefit of its creditors, or if a receiver is appointed on account of its
insolvency, or if it disregards laws, ordinance, rules, regulations or
orders of any authority having jurisdiction, or fails to make payment to
PEM when due, or is considered by PEM to be otherwise in breach of a
material provision of the Maintenance Services Agreement, then PEM may,
without prejudice to any right or remedy and after giving NEWCO 90 days
written notice, during which NEWCO fails to cure the violation, terminate
the Maintenance Services Agreement. If it is not possible to cure the
violation within the 90 days, NEWCO will be deemed to have cured the
violation if it commences to cure the violation within those 90 days and
provides PEM with a schedule acceptable to PEM indicating the violation
will be cured within a reasonable time. Termination by PEM will not affect
any of the rights or remedies of PEM under the Maintenance Services
Agreement or which may otherwise be available to PEM at law or in equity,
including the right to recover damages, nor will any such action relieve
NEWCO from any consequences or liabilities arising from its acts or
omissions.
In addition to any other right of suspension or termination contained
elsewhere in this Maintenance Services Agreement, PEM in its sole
discretion may suspend or terminate the Maintenance Services Agreement in
accordance with the following:
6.3.1If PEM elects to suspend performance of the work after providing
notice according to the requirements of subsection 4.1.2 and if NEWCO
fails to make the payment within 7 days after the expiry of the notice
period referred to in subsection 4.1.2, PEM may elect to immediately
terminate the Maintenance Services Agreement or continue to suspend
the performance of the Work for such period of time as PEM may decide;
6.3.2If NEWCO requests PEM to provide any part of the Work contrary to the
professional judgement of PEM or in a manner contrary to the
professional judgement of PEM or the requirements of any authority
having jurisdiction, PEM may terminate the Maintenance Services
Agreement immediately upon written notice to NEWCO; and
6.3.3If PEM encounters a conflict in interest in the performance of the
Work, which cannot be resolved to the satisfaction of PEM, PEM may
suspend the Work until such conflict is resolved or may terminate the
Maintenance Services Agreement after giving reasonable notice to
NEWCO, not to exceed 30 days.
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7. INDEMNIFICATION
7.1 Subject to any limitations of liability in the Maintenance Services
Agreement, PEM will at its own cost and expense, including attorney fees,
defend, indemnify and hold harmless the NEWCO and its agents and employees
from and against the following:
7.1.1all claims or liens of Subcontractors of PEM arising out of PEM's
failure to pay its Subcontractors in accordance with its agreements
with those Subcontractors, provided such failure is not caused by a
failure of NEWCO to make payment to PEM;
7.1.2all fines, penalties, assessments or other exactions imposed by any
governmental authority by reason of PEM's failure to comply with the
Maintenance Services Agreement;
7.1.3all claims, damages, losses and expenses, including attorney fees,
arising out of or resulting from the performance of the Maintenance
Services Agreement, provided that any such claim, damage, loss or
expense;
(a) is attributable to bodily injury, sickness, disease or death, or
to injury or destruction of tangible property (other than some
part of the Project itself); and
(b) is caused solely by, or to the extent it is caused by, any
negligent act or omission of PEM or any of its officers, agents,
employees, representatives, Subcontractors, or anyone directly or
indirectly employed by any of them.
7.2 NEWCO will at its own cost and expense (including attorney fees), defend,
indemnify and hold harmless PEM, its agents and employees, from and against
the following:
7.2.1 all claims or liens of NEWCO's Consultants and Contractors;
7.2.2all fines, penalties, assessments or other financial charges imposed
by any governmental authority by reason of NEWCO's failure to comply
with the Maintenance Services Agreement;
7.2.3all claims, damages, losses and expenses, including attorney fees,
arising out of or resulting from the performance of the Maintenance
Services Agreement or the construction of the Project, provided that
any such claim, damage, loss or expense
(a) is attributable to bodily injury, sickness, disease or death, or
to injury or destruction of tangible property (other than some
part of the Work itself);
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(b) is caused solely by, or to the extent it is caused by, any
negligent act or omission of NEWCO or any of its officers,
agents, employees, representatives, Consultants, Contractors,
Suppliers or anyone directly or indirectly employed by any of
them;
7.2.4all claims, damages, losses and expenses incurred as a result of a
defect in title or ownership of the lands on which the Project is or
is to be located; and
7.2.5all claims, damages, losses, expenses, fines, penalties and
assessments, including but not limited to fines, penalties,
assessments and other exactions imposed by any governmental authority
and actual legal fees and disbursements, arising out of, relating to,
resulting from or in any way connected with the actual, potential or
alleged presence, release, escape or discharge of any Hazardous
Substances on, in or under the Site howsoever caused and whether
occurring prior to or after the date of the Maintenance Services
Agreement. Without limiting the generality of the foregoing, such
indemnity extends to claims which arise or are alleged to arise out of
the actual or threatened dispersal, discharge, escape, release or
saturation (whether sudden or gradual) of any Hazardous Substances in
or into the atmosphere, or on, upon, in or into any one or more of the
surface or subsurface soils, water, watercourses, persons, objects,
structures or any other tangible matter.
8. INSURANCE
8.1 PEM will provide, maintain and pay for the insurance coverages specified in
this Section 8. Unless specified otherwise in this Section, the duration of
each insurance policy shall be from the date of commencement of the Work
until the termination of the Maintenance Services Agreement.
8.2 PEM will be responsible for deductible amounts under the policies.
8.3 Automobile Public Liability and Property Damage Insurance
PEM will provide Automobile Public Liability and Property Damage insurance
coverage for all vehicles owned or leased, operated and/or licensed by the
Contractor or its Subcontractors with a single combined limit of
$5,000,000.00 (FIVE MILLION DOLLARS) for each occurrence involving bodily
injury, death or property damage. PEM will provide NEWCO with not less than
15 days notice in writing in advance of cancellation, change or amendment
restricting coverage.
8.4 General Comprehensive Liability Insurance
8.4.1PEM will provide General Comprehensive Liability insurance coverage in
the joint names of PEM and NEWCO, including insurance for non-owned
automotive units used in performing the work. The value of the
insurance, covering products and completed operations and contractual
liability, will have a combined limit of not less than $5,000,000.00
(FIVE MILLION DOLLARS)for each occurrence involving bodily injury,
death or property damage. The General Comprehensive Liability
Insurance Policy will have a property damage deductible not exceeding
$2,500.00. The loss in the amount of the deductible will be PEM's
responsibility. The insurance will be in effect from the time the work
commences until the final completion date plus twelve (12) months
thereafter for completed operations thereunder.
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8.4.2The General Comprehensive Liability Insurance Policy will be endorsed
to provide NEWCO with not less than 30 days notice in writing in
advance of any cancellation, and of change or amendment restricting
coverage.
8.5 Workers Compensation
PEM will comply with the Workers Compensation Act (Ontario) or its
equivalent in the Province or State where the Plant is located.
8.6 Certificates of Insurance
Before starting the Work, both PEM and NEWCO will provide certificates of
insurance as evidence that each has obtained the required insurance.
Before permitting any Subcontractors or Subcontractors to perform any of
the Work, PEM will obtain certificates of insurance from each of the
Subcontractors and Subcontractors as evidence that each has obtained the
required insurance.
9. DISPUTE RESOLUTION
9.1 If the parties are unable to resolve, by unanimous agreement, any matter
arising out of or relating to the terms of the Maintenance Services
Agreement, or their interpretation, existence, validity, termination or
breach, either party may submit the matter to the president of NEWCO and to
the president of PEM for a final determination by them.
9.2 Provided that no other party is or may become involved in a dispute with
either or both NEWCO and PEM related to the subject matter of the dispute,
if the respective presidents of NEWCO and PEM fail to settle the dispute
referred to them within thirty (30) days following its submittal to them,
all such disputes arising out of or in connection with the Maintenance
Services Agreement, or in respect of any defined legal relationship
associated therewith or derived therefrom, may, subject to the written
agreement of the respective presidents, be referred to and finally resolved
by arbitration under the rules of the Arbitration and Mediation Institute
of Canada or its successor, or if it is no longer in existence then a
suitable arbitration centre located in Ontario, Canada (collectively and
individually the "Arbitration Centre"). The appointing authority will be
the Arbitration Centre and the case will be administered by the Arbitration
Centre in accordance with its procedures for cases under its rules. The
Place of Arbitration will be Toronto, Ontario, Canada.
9.3 The award rendered by the arbitrator(s) will be final and binding and
judgement may be entered upon it in accordance with applicable law in any
court having jurisdiction.
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9.4 If either party becomes involved in litigation with another party which
involves the same disputes or the same factual or legal issues as the
dispute(s) between NEWCO and PEM, either NEWCO or PEM may apply to the
arbitrator or a court of competent jurisdiction for a stay of any
arbitration proceedings then in process, and the arbitrator or court may,
if it considers it to be just and convenient to do so, order a stay of the
arbitration pending the outcome of the litigation.
10. GENERAL PROVISIONS
10.1 Time shall be of the essence of this Maintenance Services Agreement.
10.2 The section headings are for the purpose of convenience of reference only
and shall not be construed as interpretation of the text.
10.3 Except as contemplated herein, this Maintenance Services Agreement contains
the whole agreement between the parties hereto in respect of the
construction of the Thermo Master Plant and there are no warranties,
representations, terms, conditions or collateral agreements expressed,
implied or statutory, other than as expressly set forth in this agreement.
10.4 This Maintenance Services Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective successors and
permitted assigns.
10.5 No failure or delay on the part of any party in 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.
10.6 Any notice to be given under this Maintenance Services Agreement shall be
duly and properly given if made in writing and by delivering or telecopying
the same to the addressee at the address as follows:
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Newco Bio Conversion Inc.
__________________________
__________________________
__________________________
Attention: __________________________
Telephone: (______) ____________________
Facsimile: (______) ____________________
Planet Earth Management Inc.
54 Mill Street West
Milverton, Ontario N0K 1M0
Attention: Perry Smith
Telephone: (519) 595-4933
Facsimile: (519) 595-8770
Any notice given as aforesaid shall be deemed to have been given or made
on, if delivered, the date on which it was delivered or, if telecopied, on
the next business day after it was telecopied. Any party hereto may change
it address for notice from time to time by notice given to the other
parties hereto in accordance with the foregoing.
10.7 This Maintenance Services Agreement may be executed in one or more
counter-parts, each of which so executed shall constitute an original and
all of which together shall constitute on and the same agreement.
10.8 This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the Province of
Ontario, and each of the parties hereto attorns to the jurisdiction of the
Courts of the Province of Ontario.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day
and year first above written.
PLANET EARTH MANAGEMENT INC.
Per:
Authorized Signatory
NEWCO BIO CONVERSION INC.
Per:
Authorized Signatory
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<TABLE>
<CAPTION>
SCHEDULE "A"
RATES FOR
LABOUR AND MATERIALS
Regular Time Overtime
<S> <C> <C>
Supervisory Foreperson(s) $ ____/hr $ ____/hr
All Additional Personnel $ ____/hr $ ____/hr
Senior Operational Consultant $ ____/hr $ ____/hr
Professional Engineer Consultant $ ____/hr $ ____/hr
Consumable Materials Cost plus 15 %
Subcontractors Cost Cost plus 15 %
Accommodations, Meals and Travel Expenses Cost plus 15 %
</TABLE>
<PAGE>
SCHEDULE D
TECHNICAL SERVICES AGREEMENT
----------------------------
THIS AGREEMENT is made as of the _____ day of __________2000
BETWEEN:
PLANET EARTH MANAGEMENT INC., a corporation duly incorporated pursuant
to the laws of the Yukon having its principle place of business at 54
Mill Street West, Milverton, Ontario N0K 1M0
(hereinafter referred to as "PEM")
OF THE FIRST PART
AND:
NEWCO BIO CONVERSION INC., a company duly incorporated pursuant to the
laws of (Province/State)____________________and having its principal
place of business located at _______________________________
______________________________________________________
(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 either as the "Process");
B. PEM has significant know-how concerning the design, construction,
operation and maintenance of industrial process plants that utilize the Process,
hereinafter referred to as "Plants". PEM also has know-how concerning the
procurement and contracting for organic waste supplies for the Plants;
C. NEWCO intends to utilize the license referred to in Recital A and to
construct and operate a Plant that uses the Process. NEWCO requires technical
support for operating the Process and Plant;
<PAGE>
D. PEM wishes to provide NEWCO with ongoing technical and operations support
for operating the Plant;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
exchange of promises as set out below the parties agree hereto as follows:
1. DEFINITIONS
Where used herein or in any amendments or Schedules hereto, the following
terms shall have the following meanings:
"END PRODUCT PURCHASERS" means the legally contracted direct purchaser of
products (feed or fertilizer base materials) from the Plant;
"FORCE MAJEURE CAUSE" has the meaning as defined in Section 3.5.1 to this
Agreement;
"NEWCO" has the meaning as defined on the first page of this Agreement;
"PROCESS" means the patented Thermo Master(TM) Process as described in
Patent numbers US 5810903 and CDN Patent Application Number 2184044;
"PERSONNEL MANUAL" means the manual setting out policies and procedures for
the staff of the Plant, including matters specifically related to the Plant
and its proper function and locally mandated policies or regulations
related to the jurisdiction in which the Plant is located;
"PLANT" means a plant designed and built for the recycling of organic waste
into either animal feed or fertilizer ingredients to be constructed using
TTTI's Process;
"QUALITY ASSURANCE MANUAL" means a manual of information and procedures to
be followed within the Plant to monitor and ensure the proper function of
systems and the production of end product according to specified standards;
"SERVICES" means services described in Section 2 of this Agreement;
"WORK" means the scope of services, materials and other things provided by
PEM to NEWCO under this Agreement.
2. SCOPE OF WORK
2.1 Ongoing Operations Services
2.1.1 Review Plant Operation Reports
PEM will perform the following Work related to the review of plant
operation reports:
(a) Provide bi-weekly review of operating reports and quality control
records for incoming and processed materials;
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(b) Monthly reviews of accounts to ensure the proper and effective
operation of the accounting system; and
(c) Monthly reports to NEWCO on the Plant operations that highlight
operational, administrative and financial performance of the
Plant.
2.1.2 Regular Plant Inspections
PEM will perform the following Work related to regular plant
inspections:
(a) Visit to Plant on a monthly basis for onsite review;
(b) Inspect plant conditions and observe operation of the Plant;
(c) Review quality of incoming waste and outgoing product;
(d) Assess capability and knowledge of Plant staff; and
(e) Prepare report with findings of inspection and observations.
2.1.3 Process Optimization
PEM will assist NEWCO to optimize operating revenues and costs of
operation, such assistance to include:
(a) Optimize Product Revenue
(b) Optimize Tipping Fee Revenue
(c) Optimize Utilities Costs
(d) Optimize Environmental Disposal Costs
(e) Optimize Labour Costs
(f) Optimize Off-spec Product Claims
2.1.4 Process and Equipment Operation Problems
PEM will provide the following services related to process and
equipment operation problems:
(a) Trouble shooting assistance to Plant administrators;
(b) Trouble shooting assistance to Plant operators;
(c) For minor problems, provide problem diagnosis and advice over the
telephone; and
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(d) For major problems, provide onsite problem review and advice.
2.2 Engineering Assistance
2.2.1 Process and Equipment Operation Problems
PEM will provide the following services relating to process and
equipment operation problems:
(a) Provide technical evaluation of problems, including onsite
measurements and testing as required; and
(b) Prepare report on problems with recommendations for correction.
2.2.2 Technical Assistance for Minor Plant Design Changes
PEM will provide the following services related to technical
assistance for minor plant design changes:
(a) Review suggested plant design changes with Plant;
(b) Gather information on proposed changes and prepare technical
report evaluating the changes proposed; and
(c) Assist Plant with engineering design for making the changes.
2.3 Training
2.3.1 General Training
PEM will provide the following services related to general training:
(a) Assess capability and knowledge of Plant staff;
(b) Provide refresher training for plant supervisors, such refresher
training to include, as required:
- How to supervise employees;
- Maintaining employee records;
- How to train employees;
- Plant process knowledge;
- Plant equipment operations knowledge;
- Biological process knowledge; and
- Quality control practices.
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2.3.2 Operation Manuals
PEM will provide the following services related to operation manuals:
(a) Review and recommend changes to operating manuals for the Plant;
and
(b) Update process schematics and layout drawings for the Plant, as
required.
2.4 Personnel Manual
PEM will review and recommend changes to the Personnel Manual for Plant to
suit local conditions.
2.5 Quality Assurance
PEM will perform the following services related to quality assurance:
2.5.1Perform routine (internal) audits and prepare reports on any quality
assurance program undertaken in the Plant;
2.5.2Review and recommend revisions to Plant's Quality Assurance Manual as
required;
2.5.3 Review correspondence and complaints from End Product Purchasers;
2.5.4 Identify potential problem areas based on reports received; and
2.5.5 Prepare recommendations for corrective action.
2.6 Review of Financial Performance
PEM will perform the following services related to review of financial
performance:
2.6.1 Review of accounting and financial reports prepared by Plant;
2.6.2Make recommendations concerning the preparations of these reports;
and
2.6.3Make recommendations concerning the administration and management of
the Plant.
3. PERFORMANCE OF THE WORK
PEM will perform the Work in a workman like manner in accordance to the
normal standards of skill and competence employed by management
consultants, in the waste industry. The Work will be performed diligently
and continuously with the required complement of competent personnel so as
to achieve the required schedule for the Work.
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3.1 Reasonable Notice
NEWCO will, as far as possible, provide adequate notice to PEM of any
special requirements or schedules for Services or meetings at the Plant.
Failure to provide adequate notice will be an acceptable reason for PEM not
meeting NEWCO requirements.
3.2 Information Supplied to PEM
PEM will be entitled to rely on information provided by NEWCO, unless the
contrary is specifically stated in writing when such information is
provided. Where NEWCO has information that is required by PEM for the Work,
such information will be provided in a suitable form to PEM without undue
delay.
3.3 Conflicts of Interest
PEM, its agents, employees or Subconsultants will take all steps to ensure
avoidance of all conflicts of interest between any of their individual
interests and those of NEWCO.
3.4 Subconsultants
3.4.1PERI is at liberty to employ sub-consultants and any others necessary
to discharge its obligations under this Agreement. PEM will be
permitted to employ Local Subconsultants, including but not limited to
engineers, accountants, operating specialists, training specialists,
environmental consultants, security consultants and similar
consultants.
3.4.2PEM will negotiate and issue subcontracts for the Subconsultants'
services that include all necessary requirements for secrecy,
protection of proprietary knowledge, insurance and other requirements
specified by NEWCO.
3.5 Force Majeure
3.5.1PEM's performance of any of the obligations hereunder, other than
financial, may be delayed or suspended while, but only so long as PEM
is prevented from performance by any cause, except lack of funds,
beyond its reasonable control ("Force Majeure Cause"). For the
purposes of this paragraph, a labour dispute is beyond the reasonable
control of PEM if, in their judgement, settlement of the dispute would
not be compatible with its best interests. PEM will immediately report
to NEWCO any information relating to any labour demands, labour
disputes, labour trends, pending or ongoing labour negotiations or any
other problems that may affect the Work and its performance.
3.5.2PEM will give NEWCO notice of any Force Majeure Cause within 24 hours
after the occurrence of any Force Majeure Cause in respect of which
PEM intends to claim entitlement to either a suspension in performance
or delay in completion of any of the Work. PEM will promptly give
notice to NEWCO on conclusion of the force majeure cause.
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3.6 Independent Contractor
PEM is an independent Contractor with respect to all the Work.
Notwithstanding NEWCO's rights of consent or approval as provided in this
Agreement, PEM has the complete control, supervision and direction of the
method and manner of obtaining the required results for any project or
Work.
4. COMPENSATION
4.1 Monthly Fee for Basic Services
NEWCO will pay PEM a fixed monthly fee of $10,000.00 (TEN THOUSAND DOLLARS)
for providing the Services.
4.2 Reimbursable Costs and Flat Rate Charges for Extra Work
Where additional services are requested beyond PEM's normal scope of work,
NEWCO will pay PEM for all such additional Services based on PEM's hourly
rates and will pay PEM for all reimbursable costs and flat rate charges,
including, but not limited to the following:
4.2.1 Services by PEM Employees
NEWCO will reimburse PEM as and when invoiced for:
Technical and other services will be charged at:
(a) hourly calculated according to the following formula:
Hourly Rate = Gross Annual Salary 2000 x 2
(b) timesheets will be provided by PEM with PEM's invoices to
substantiate the invoiced amounts and services provided;
4.2.2 Services by PEM Contract Employees
NEWCO will reimburse PEM as and when invoiced for:
Where contract employees are employed by PEM for the Work and their
normal place of work is in PEM's offices, PEM will invoice NEWCO for
the services performed by the contract employees at a rate that is
equivalent to the hourly rate charged for an existing staff member
with similar qualifications and experience. If there are no similar
staff members to draw a comparison against, contract employees will be
charged out at the hourly rate paid to the contract employee by PEM
plus a 30% mark-up.
Timesheets will be provided with PEM's invoices to substantiate the
invoiced amounts and services provided.
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4.2.3 Reimbursable Subcontracts
NEWCO will reimburse PEM as and when invoiced for:
(a) The cost of Local Subconsultants and Specialist Subconsultants
for feasibility studies and special technical advisory services;
(b) The cost of graphic artists services, special photography,
typesetting and advertising incidental to the Work;
(c) In addition to the costs and flat rate charges for Subcontractors
and Subconsultants, PEM shall be entitled to and paid a mark-up
of 15% on such reimbursable costs and flat rate charges to
compensate PEM for office services, administration, handling and
carrying costs; and
(d) Copies of invoices will be provided with PEM's invoices to
substantiate the invoiced amounts and scope.
4.2.4 Reimbursable Expenses
NEWCO will pay PEM for all out of pocket costs for providing the extra
work, including:
(a) The cost of reproduction and delivery of information, drawings,
specifications and other documents necessary for the feasibility
studies, including but not limited to plans, drawings,
specifications, contracts and purchase orders;
(b) The expense of long distance telephone calls, telegrams and telex
beyond the agreed monthly budget for these items;
(c) The expense of reproduction and delivery of information,
drawings, specifications and other documents necessary to the
Project, and fees paid for securing approvals, permits or
licenses from regulatory agencies having jurisdiction over the
Project; and
(d) The expense of transport, subsistence and lodging in connection
with the Work beyond the agreed monthly budget for these items.
Car expenses shall be charged at $0.35 per kilometre, and other
means of travel at cost plus 15%.
4.2.5 Other Reimbursable Items
NEWCO will reimburse at the time of execution of the Agreement; PEM as
and when invoiced for:
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(a) Charges levied by authorities having jurisdiction over the Work
which were not reasonably foreseeable
(b) Costs incurred due to emergencies affecting the safety of persons
or property;
(c) Legal costs incurred by PEM, arising out of the performance of
the Agreement provided that such do not arise out of any
negligence or failure to perform the Agreement in accordance with
its provisions; and
(d) All other costs reasonably incurred by PEM in the performance of
the Work.
4.2.6 Rates and Mark-up Charges
(a) All reimbursable costs specified in the immediately preceding
sections that are internal costs to PEM shall be reimbursed at
the prevailing rates charge by other consultants in the same
jurisdiction as PEM for such costs. Items for which there are no
prevailing rates shall be reimbursed at a rate to reflect PEM's
reasonable internal cost; and
(b) In addition to the above reimbursable costs and flat rate
charges, PEM shall be entitled to and paid a markup of 15% on
such reimbursable costs and flat rate charges to compensate PEM
for office services, administration, handling and carrying costs.
4.2.7 Rate Adjustments
Billing rates and in-house costs included in this section may, at
PEM's option, be adjusted upward on an annual basis to reflect
increases in the local Consumer Price Index as prepared by Statistics
Canada.
5. INVOICES AND PAYMENT
5.1.1 PEM will submit invoices to NEWCO on a monthly basis.
5.1.2 NEWCO will pay the invoices within 15 days of presentation by PEM.
5.1.3Any amounts on the invoice that are disputed by NEWCO will be
deducted from the invoice and the balance of undisputed charges will
be paid promptly. NEWCO will promptly notify PEM of disputed items on
the invoices within 7 days of receipt of the invoice. PEM will
promptly adjust, correct or provide substantiation of the disputed
items contained within the invoice.
5.1.4If NEWCO does not make the required payment within 15 days, PEM will
have the option of suspending all Work upon 5 days written notice from
the date the invoice was received by NEWCO until payment is made or
satisfactory arrangements for payment are provided and agreed upon to
by PEM.
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5.1.5NEWCO will pay PEM interest on invoiced amounts that remain unpaid
after 15 days after receipt of the invoice in the case of undisputed
items and 15 days after resolution of the dispute in the case of
disputed items. Interest will not begin to accrue until the respective
15 day period has elapsed. Interest on the amount outstanding will be
charged at a rate of 1.5% per month (18% per annum). Interest amounts
will be invoiced on a monthly basis.
6. TERM OF AGREEMENT
The term of the Technical Services Agreement is five (5) years from the
date of this Agreement. The Agreement can be extended for a further five
(5) years by mutual consent of the Parties.
7. TERMINATION
7.1 Termination by NEWCO with Cause
If PEM is adjudged bankrupt, or if it makes a general assignment for the
benefit of its creditors, or if a receiver is appointed on account of its
insolvency, or if it disregards laws, ordinance, rules, regulations or
orders of any authority having jurisdiction in a material way, or subject
to the Agreement is otherwise in breach of a material provision of the
Agreement, then NEWCO may, without prejudice to any right or remedy and
after giving PEM 90 days written notice, during which period PEM fails to
cure the violation, terminate the Agreement. If it is not possible to cure
the violation within the 90 days, PEM will be deemed to have cured the
violation if it commences to cure the violation within those 90 days and
provides NEWCO with a schedule indicating the violation will be cured
within a reasonable time. Termination by NEWCO in accordance with the
foregoing will not affect any rights or remedies NEWCO would otherwise have
under the Agreement or which may otherwise be available to NEWCO at law or
in equity, including the right to recover damages, nor will any such action
relieve PEM from any consequences or liabilities arising from its acts or
omissions.
7.2 Termination by NEWCO without Cause
7.2.1NEWCO may, without cause, terminate the Agreement upon 180 days' prior
written notice to PEM.
7.2.2In the event of termination of the Agreement with or without cause,
PEM will be paid:
(a) An amount equal to PEM's fee earned for all Work performed to the
date of termination, as well as to such later date as may
reasonably be required by the authorities having jurisdiction and
by professional responsibilities of PEM to perform an orderly
termination and winding up of the Agreement and the Project, plus
all reimbursable costs reasonably incurred; and
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(b) PEM's reasonable demobilization costs and expenses, plus any
costs and expenses incurred by PEM in the cancellation of any
contracts it has with its Subconsultants.
7.2.3In the event of termination of the Agreement without cause, PEM will
be paid:
(a) 15% of the average yearly return PEM expects to earn over the
term of the Agreement for a period of two years after Termination
by NEWCO.
7.2.4After receipt of the payments referred to in subsection 7.2.2 and
7.2.3 of this Agreement, PEM will execute and deliver all such papers
and take all such steps including, if requested, the legal assignment
of its contractual rights, as NEWCO may reasonably require for the
purpose of fully vesting in NEWCO the rights and benefits of PEM under
such obligations or commitments
7.3 Termination by PEM with Cause
7.3.1If NEWCO is adjudged bankrupt, or if it makes a general assignment for
the benefit of its creditors, or if a receiver is appointed on account
of its insolvency, or if it disregards laws, ordinance, rules,
regulations or orders of any authority having jurisdiction, or fails
to make payment to PEM when due, or is considered by PEM to be
otherwise in breach of a material provision of the Agreement, then PEM
may, without prejudice to any right or remedy and after giving NEWCO
90 days written notice, during which period NEWCO fails to cure the
violation, terminate the Agreement. If it is not possible to cure the
violation within the 90 days, NEWCO will be deemed to have cured the
violation if it commences to cure the violation within those 90 days
and provides PEM with a schedule acceptable to PEM indicating the
violation will be cured within a reasonable time. Termination by PEM
will not affect any of the rights or remedies of PEM under the
Agreement or which may otherwise be available to PEM at law or in
equity, including the right to recover damages, nor will any such
action relieve NEWCO from any consequences or liabilities arising from
its acts or omissions.
7.3.2In addition to any other right of suspension or termination contained
elsewhere in the Agreement, PEM in its sole discretion may suspend or
terminate the Agreement in accordance with the following:
(a) If PEM elects to suspend performance of the Work according to the
requirements of subsection 5.1.4 and if NEWCO fails to make the
payment within 7 days after the expiry of the notice period
referred to in subsection 5.1.4, PEM may elect to immediately
terminate the Agreement or continue to suspend the performance of
the Work for such period of time as PEM may decide.
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(b) If NEWCO requests that PEM perform any part of the Work contrary
to the professional judgement of PEM or in a manner contrary to
the professional judgement of PEM or the requirements of any
authority having jurisdiction, PEM may terminate the Agreement
immediately upon written notice to NEWCO.
(c) If PEM encounters a conflict in interest in the performance of
the Work, which cannot be resolved to the satisfaction of PEM,
PEM may suspend the Work until such conflict is resolved or may
terminate the Agreement after giving reasonable notice to NEWCO,
not to exceed 30 days.
8. INDEMNIFICATION
8.1 Subject to any limitations of liability in the Agreement, PEM will at its
own cost and expense, including attorney fees, defend, indemnify and hold
harmless the NEWCO and its agents and employees from and against the
following:
8.1.1all claims or liens of Subconsultants of PEM arising out of PEM's
failure to pay its Subconsultants in accordance with its agreements
with those Subconsultants, provided such failure is not caused by a
failure of NEWCO to make payment to PEM;
8.1.2all fines, penalties, assessments or other exactions imposed by any
governmental authority by reason of PEM's failure to comply with the
Agreement;
8.1.3all claims, damages, losses and expenses, including attorney fees,
arising out of or resulting from the performance of the Agreement,
provided that any such claim, damage, loss or expense;
(a) is attributable to bodily injury, sickness, disease or death, or
to injury or destruction of tangible property (other than some
part of the Project itself); and
(b) is caused solely by, or to the extent it is caused by, any
negligent act or omission of PEM or any of its officers, agents,
employees, representatives, Subconsultants, or anyone directly or
indirectly employed by any of them;
8.2 NEWCO will at its own cost and expense, (including attorney fees), defend,
indemnify and hold harmless PEM, its agents and employees, from and against
the following:
8.2.1 all claims or liens of NEWCO's Consultants and Contractors;
8.2.2all fines, penalties, assessments or other financial charges imposed
by any governmental authority by reason of NEWCO's failure to comply
with the Agreement;
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8.2.3all claims, damages, losses and expenses, including attorney fees,
arising out of or resulting from the performance of the Agreement or
the construction of the Project, provided that any such claim, damage,
loss or expense;
(a) is attributable to bodily injury, sickness, disease or death, or
to injury or destruction of tangible property (other than some
part of the WORK itself);
(b) is caused solely by, or to the extent it is caused by, any
negligent act or omission of NEWCO or any of its officers,
agents, employees, representatives, Consultants, Contractors,
Suppliers or anyone directly or indirectly employed by any of
them;
8.2.4all claims, damages, losses and expenses incurred as a result of a
defect in title or ownership of the lands on which the Project is or
is to be located; and
8.2.5all claims, damages, losses, expenses, fines, penalties and
assessments, including but not limited to fines, penalties,
assessments and other exactions imposed by any governmental authority
and actual legal fees and disbursements, arising out of, relating to,
resulting from or in any way connected with the actual, potential or
alleged presence, release, escape or discharge of any Hazardous
Substances on, in or under the Site howsoever caused and whether
occurring prior to or after the date of the Agreement. Without
limiting the generality of the foregoing, such indemnity extends to
claims which arise or are alleged to arise out of the actual or
threatened dispersal, discharge, escape, release or saturation
(whether sudden or gradual) of any Hazardous Substances in or into the
atmosphere, or on, upon, in or into any one or more of the surface or
subsurface soils, water, watercourses, persons, objects, structures or
any other tangible matter.
9. INSURANCE
9.1.1PEM will provide, maintain and pay for the insurance coverages
specified in this Section 9. Unless specified otherwise in Section 9,
the duration of each insurance policy shall be from the date of
commencement of the Work until the termination of the Agreement.
9.1.2PEM will be responsible for deductible amounts under the policies
referred to in Section 9 of this Agreement.
9.2 Automobile Public Liability and Property Damage Insurance
9.2.1PEM will provide Automobile Public Liability and Property Damage
insurance coverage for all vehicles owned or leased, operated and/or
licensed by the Contractor or its Subcontractors with a single
combined limit of $5,000,000.00 (FIVE MILLION DOLLARS) for each
occurrence involving bodily injury, death or property damage. PEM will
provide NEWCO with not less than 15 days notice in writing in advance
of cancellation, change or amendment restricting coverage.
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9.3 General Comprehensive Liability Insurance
9.3.1General Comprehensive Liability insurance coverage will be provided by
PEM in the joint names of PEM and NEWCO, including insurance for
non-owned automotive units used in performing the work. The value of
the insurance, covering products and completed operations and
contractual liability, will have a combined limit of not less than
$5,000,000.00 (FIVE MILLION DOLLARS) for each occurrence involving
bodily injury, death or property damage. The policy will have a
property damage deductible not exceeding $2,500.00. The loss in the
amount of the deductible will be PEM's responsibility. The insurance
will be in effect from the time the work commences until the final
completion date plus twelve (12) months thereafter for completed
operations thereunder.
9.3.2Policies mentioned in 9.3.1 above will be endorsed to provide NEWCO
with not less than 30 days notice in writing in advance of any
cancellation, and of change or amendment restricting coverage.
9.4 Workers Compensation
9.4.1PEM will comply with the Workers Compensation Act or equivalent in the
Province or State of the site and the rules and regulations of the
local jurisdiction.
9.5 Certificates of Insurance
9.5.1Before starting the Work, both PEM and NEWCO will provide certificates
of insurance as evidence that each has obtained the required
insurance.
9.5.2Before permitting any Subcontractors or Subconsultants to perform any
of the Work, PEM will obtain certificates of insurance from each of
the Subcontractors and Subconsultants as evidence that each has
obtained the required insurance.
10. DISPUTE RESOLUTION
10.1 If the parties are unable to resolve, by unanimous agreement, any matter
arising out of or relating to the terms of the Agreement, or their
interpretation, existence, validity, termination or breach, either party
may submit the matter to the president of NEWCO and to the president of PEM
for a final determination by them.
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10.2 Provided that no other party is or may become involved in a dispute with
either or both NEWCO and PEM related to the subject matter of the dispute,
if the respective presidents of NEWCO and PEM fail to settle the dispute
referred to them within thirty (30) days following its submittal to them,
all such disputes arising out of or in connection with the Agreement, or in
respect of any defined legal relationship associated therewith or derived
therefrom, subject to the written agreement of the respective Presidents,
may be referred to and finally resolved by arbitration under the rules of
the Arbitration and Mediation Institute of Canada or its successor, or if
it is no longer in existence then a suitable arbitration centre located in
Ontario, Canada (collectively and individually the "Arbitration Centre").
The appointing authority will be the Arbitration Centre and the case will
be administered by the Arbitration Centre in accordance with its procedures
for cases under its rules. The Place of Arbitration will be Toronto,
Ontario, Canada.
10.2.1 The award rendered by the arbitrator(s) will be final and binding
and judgement may be entered upon it in accordance with applicable law
in any court having jurisdiction.
10.2.2 If either party becomes involved in litigation with another party
which involves the same disputes or the same factual or legal issues
as the dispute(s) between NEWCO and PEM, either NEWCO or PEM may apply
to the arbitrator or a court of competent jurisdiction for a stay of
any arbitration proceedings then in process, and the arbitrator or
court may, if it considers it to be just and convenient to do so,
order a stay of the arbitration pending the outcome of the litigation.
11. GENERAL PROVISIONS
11.1 Time shall be of the essence of this Agreement.
11.2 The section headings are for the purpose of convenience of reference only
and shall not be construed as interpretation of the text.
11.3 Except as contemplated herein, this Agreement contains the whole agreement
between the parties hereto in respect of the construction of the Thermo
Master Plant and there are no warranties, representations, terms,
conditions or collateral agreements expressed, implied or statutory, other
than as expressly set forth in this agreement.
11.4 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
11.5 Any notice to be given under this Agreement shall be duly and properly
given if made in writing and by delivering or telecopying the same to the
addressee at the address as follows:
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Newco Bio Conversion Inc.
____________________________
____________________________
____________________________
Attention: ____________________________
(President)
Telephone: (______) ______________________
Facsimile: (______) ______________________
Planet Earth Management Inc.
54 Mill Street West
Milverton, Ontario
N0K 1M0
Attention: Perry Smith
(President)
Telephone: (519) 595-4993
Facsimile: (519) 595-8770
11.6 Any notice given as aforesaid shall be deemed to have been given or made
on, if delivered, the date on which it was delivered or, if telecopied, on
the next business day after it was telecopied. Any party hereto may change
it address for notice from time to time by notice given to the other
parties hereto in accordance with the foregoing.
11.7 This Agreement may be executed in one or more counter-parts, each of which
so executed shall constitute an original and all of which together shall
constitute on and the same agreement.
11.8 No failure or delay on the part of any party in 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.
11.9 This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the Province of
Ontario, Canada and each of the parties hereto attorns to the jurisdiction
of the Courts of the Province of Ontario, Canada.
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IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day
and year first above written.
PLANET EARTH MANAGEMENT INC.
---------------------------------------------
Authorized Signatory
---------------------------------------------
Authorized Signatory
NEWCO BIO CONVERSION INC.
---------------------------------------------
Authorized Signatory
---------------------------------------------
Authorized Signatory
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SCHEDULE E
WASTE SUPPLY AGREEMENT
----------------------
THIS AGREEMENT is made as of the _____ day of _____________, 2000.
BETWEEN:
EARTH ALLIANCE SYSTEMS INC., a company incorporated pursuant to the
laws of the Yukon having its principal place of business located at 54
Mill Street West, Milverton, Ontario, N0K 1M0
(hereinafter referred to as "EAS")
AND:
NEWCO BIO CONVERSION INC., a company incorporated pursuant to the laws
of ____________________and having an office at
________________________________
(hereinafter referred to as "NEWCO")
WHEREAS:
A. NEWCO intends to construct and operate a waste processing facility (a
"Plant") at _______________. The Plant is intended to process raw organic waste
( the "Waste") using a patented thermophilic digestion technology (the
"Technology") that will either owned or licensed by NEWCO.
B. EAS is in the business of collecting and sorting waste materials that
include Waste that can be processed by the Technology.
C. NEWCO requires a stable and regular supply of Waste and EAS requires a
means of disposing of such Waste.
D. EAS desires to supply Waste to NEWCO and NEWCO desires to accept Waste
for disposal/recycling in exchange for payment.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
promises set out below, the parties hereto agree as follows:
1. CONDITIONS PRECEDENT
This is Agreement is subject to the following conditions:
1.1 The construction by EAS of a Plant that is in operating order and is
prepared to accept Waste.
<PAGE>
1.2 Receipt by EAS from NEWCO of a minimum of 30 days notice (the "Notice") in
writing, of a date acceptable to EAS (the "In Service Date") on which NEWCO
will be ready to accept Waste at the Plant.
2. PRELIMINARY WASTE SUPPLY
2.1 NEWCO requires varying amounts of waste (the "Preliminary Waste") prior to
the In Service Date for the purpose of testing its equipment and processes
and, generally, to complete the commissioning of the plant.
2.2 EAS shall make all reasonable efforts to provide Preliminary Waste during
the period of time between the formation of this Agreement and the In
Service Date (the "Commissioning Period") in the quantities required by EAS
upon receipt of notice from NEWCO of their need for Preliminary Waste.
2.3 EAS shall not be liable for any loss or damage suffered by NEWCO for its
inability to supply Preliminary Waste subject to EAS making reasonable
efforts to do so.
2.4 NEWCO understands that EAS requires as much advance notice as possible of
the date on which NEWCO will require the Preliminary Waste.
2.5 EAS shall pay NEWCO ____________ ($_______) for each ton of Preliminary
Waste delivered during the Commissioning Period and terms relating to the
method of invoicing and the time for payment shall be the same as those set
out below for the supply of Waste during the In Service period.
3. TERM
3.1 This Agreement will commence on the In Service Date, or earlier as agreed
among the Parties and will continue for twelve (12) years, ending on the
last day of the calendar month in which the In Service Date occurs.
4. SUPPLY OF WASTE
EAS will supply Waste to NEWCO for the duration of this Agreement and
according to the following terms:
4.1 SECURE SUPPLY OF WASTE
4.1.1NEWCO estimates that the Plant when operating at its optimal effective
capacity, will consume an estimated___________________ (______) tons
of Waste per week (the "Optimum Utilization Rate").
4.1.2NEWCO projects that there may be periods when the Plant is not able
to process Waste at the Optimum Utilization Rate. In particular, it is
projected that during the first year of the Term of this Agreement,
the plant may only be able to process Waste at a rate equal to
________ percent (_____%) of the Optimum Utilization Rate (the
"Projected Utilization Rate"). NEWCO projects that the Projected
Utilization Rate will increase to __________ percent (_____%) of the
Optimum Utilization Rate in the second year of the Term of this
Agreement and _____________percent (______%) in each year of the Term
thereafter. The Parties will use Projected Utilization Rate to
determine the amount of penalties payable when the other Party fails
to supply or consume, as appropriate, Waste during each quarter of the
Term.
-2-
<PAGE>
4.1.3NEWCO may notify EAS that it is not able to accept Waste for a
stipulated number of days (each of those days known as a "Down Day"
and successive days as "Down Days"). NEWCO will not be obligated to
receive Waste during the Down Day(s), the first Down Day to commence
no earlier than the day following the date on which notice is received
by EAS. Notice under this section may be given by fax, and will be
given during regular business hours and will be deemed received on the
day it is effectively transmitted. NEWCO is entitled to give
successive daily notice of Down Days.
4.1.4NEWCO intends to maintain a buffer facility (the "Buffer Facility")
for the storage of the Waste prior to processing of the Waste, the
capacity of which is intended to be limited to approximately
________________ (_____) tons of waste. The Buffer Facility is
intended to provide the respective Parties with flexibility in daily
rates of Waste delivery and Waste processing. However, if:
(a) Notice of a Down Day has not been given; and
(b) EAS arrives at the processing facility with suitable Waste for
delivery; and
(c) NEWCO declines to weigh and accept the Waste and issue a scale
ticket; and
(d) The total amount of Waste that EAS proposes to deliver on that
day is less than _____________(____) tons;
then that day will also be considered a Down Day. Sundays and
Statutory Holidays will not be included in any calculation of
Down Days.
4.2 TIPPING CHARGES
4.2.1Subject to Price Adjustment EAS will pay to NEWCO the sum of
_______________ ($_____) for each ton of Waste received at the Plant.
4.2.2 PRICE ADJUSTMENT
Any charges will be automatically adjusted on the anniversary date of
the In Service Date based on changes to the Consumer Price Index, as
published by Statistics Canada.
-3-
<PAGE>
4.2.3 STATEMENTS
NEWCO will provide to EAS, within fifteen (15) days of the end of each
calendar month during the Term, a statement showing the previous
month's total volume of Waste accepted by it for processing as well as
Tipping Charges and any Supply Deficiency Penalties. EAS will pay the
invoiced amount within forty-five (45) days of the last day of the
month covered by that statement.
4.2.4The Parties acknowledge that it is their mutual intention to process
increasing amounts of Waste under the provisions of this Agreement. It
is recognized that this may be achieved by EAS granting favourable
tipping fees or other disposal prices to primary, high volume
generators of organic waste. Therefore, the Parties recognize the
possibility that charges or penalties under this agreement may be
adjusted by mutual agreement, without creating any obligations to do
so, if Waste is supplied in amounts in excess of ____________ (_____)
tons per day, on average.
4.3 MINIMUM SUPPLY RATE
4.3.1EAS will pay a penalty (the "Supply Deficiency Penalty")at the end of
each successive three month period (each "Quarter")during the Term if
it is unable to supply less than the stipulated amount of Waste (the
"Minimum Supply Rate") for that particular Quarter. The Minimum Supply
Rate is the lesser of the rates determined by the following two
calculations:
(a) The number of days in the Quarter, including Saturdays and
Sundays less the number of Down Days in that period multiplied by
_____________ (____) tons.
(b) The Projected Utilization Rate per day at that time multiplied by
the number of days in the Quarter, including Saturdays and
Sundays [AND THE RESULT SHALL BE MULTIPLIED BY _____________
(____) TONS (?)].
The Supply Deficiency Penalty will be equal to ______________
($______) per ton (subject to the Price Adjustment as set out in
Section 4.2.2) multiplied by the difference between the number of tons
of Waste required by the Minimum Supply Rate and the number of tons of
Waste actually supplied for that Quarter. The first Quarter of the
Term shall consist of the sum of the number of days between the In
Service Date and the end of that calendar month and the number of days
in next three months.
4.3.2At the end of each Quarter NEWCO will provide to EAS a statement, in
the form as shown at Schedule B to this Agreement, showing the Minimum
Supply Rate, the amount of Waste actually supplied and the amount of
any Supply Deficiency Penalty. This statement will be provided with
NEWCO's regular monthly statement (referred to in Section 4.2.3)
issued at the end of the relevant Quarter. The Supply Deficiency
Penalty will be paid by EAS to NEWCO at the same time as the relevant
regular monthly payment.
-4-
<PAGE>
4.4 Minimum Consumption Rate:
--------------------------
4.4.1NEWCO will pay a penalty ("Consumption Deficiency Penalty") to EAS at
the end of each Quarter if it is unable to receive less than a
stipulated amount of Waste (the "Minimum Consumption Rate") for that
particular Quarter.
4.4.2The Minimum Consumption Rate is equivalent to the Project Utilization
Rate per day at that time multiplied by the number of days in the
Quarter, including Saturdays and Sundays [AND THE RESULT SHALL BE
MULTIPLIED BY _____________ (____) TON (?)].
4.4.3The Consumption Deficiency Penalty will be equal to the tipping fees
EAS is required to pay for disposal of the excess Waste by other
means. [CONFIRM]
4.4.4At the end of each Quarter EAS shall provide a statement to NEWCO
showing the amount of any Consumption Deficiency Penalty together with
copies of scale tickets or other satisfactory evidence of tipping fees
paid by EAS for disposal of the excess Waste at other waste processing
facilities.
4.4.5At the end of each Quarter NEWCO will provide to EAS a statement, in
the form as shown at Schedule C to this Agreement, showing the Minimum
Consumption Rate, the amount of Waste NEWCO was actually able to
receive and the amount of any Consumption Deficiency Penalty. This
statement will be provided with NEWCO's regular monthly statement
(referred to in Section 4.2.3) issued at the end of the relevant
Quarter. Any Consumption Deficiency Penalty will be credited against
EAS's regular monthly payment.
5. QUALITY OF PRODUCT
5.1 The Parties accept that the process by which organic waste is digested is
only effective on waste which meets strict requirements as to its organic
nature and as to its moisture, chemical, mineral and metal content. These
requirements reflect the similar restrictions that NEWCO must comply with
in connection with the ultimate sale of products from the processing of
this waste (the "End Products").
5.2 NEWCO will not be obligated in any way to accept waste from EAS unless such
waste meets the Quality Criteria specified in Schedule "A" of this
Agreement ("the Quality Criteria").
5.3 NEWCO has the right to make reasonable changes to the Quality Criteria from
time to time on not less than sixty (60) days written notice to EAS. Any
changes necessary to make certain that the End Products are fit for animal
consumption or application to soils as a fertilizer product shall be deemed
reasonable for the purposes of this Agreement. Any change to the Quality
Criteria which are the result of required changes to the content of the End
Products shall be deemed to be reasonable for the purpose of this
Agreement. Such required changes shall include changes to the requirements
imposed by following organizations, laws and regulations or to equivalent
organizational rules or statutes in other jurisdictions, as appropriate:
-5-
<PAGE>
5.3.1 The Association of American Feed Control Officials Incorporated;
5.3.2 The Canadian Feed Act and its Regulations;
5.3.3 The Canadian Fertilizer Act and its Regulations;
5.3.4The Environmental Protection Agency of the United States,
Environmental Canada, equivalent Provincial bodies or other equivalent
governmental bodies;
5.3.5The Environmental Protection Act of _________ and its regulations or
equivalent, applicable legislation elsewhere; and
5.3.6Any other government body or jurisdictional authority dealing with
the environment or environmental issues in the country, state or
province where the Plant is located);
6. DELIVERY AND WEIGHT
6.1 EAS will deliver the Waste to the Plant in the City of __________________.
The Waste will be dumped into a receiving area provided and located on the
site by NEWCO.
6.2 NEWCO will weigh the Waste over the full deck truck scales located at the
Plant. Such scales shall be inspected at regular intervals and have the
appropriate government seal affixed certifying that they are legal for
trade. Scale weights shall be recorded on a printed scale ticket that shall
be delivered to the driver of the delivery vehicle.
6.3 In order to facilitate the continuity of the processing of the waste and
the safety of their employees, the Parties may make reasonable rules for
the timing of deliveries and the movement of delivery vehicles.
7. TERMINATION
7.1 Notwithstanding anything herein contained, a Party may terminate this
Agreement by notice in writing to the other Party on the occurrence of any
one or more of the following events:
7.1.1If a Party is in breach of a material term of this Agreement and such
breach is not cured within thirty days of that Party receiving written
notice from the Terminating Party specifying the breach in reasonable
detail.
7.1.2 NEWCO decides to close the Plant;
7.1.3A Party makes a voluntary assignment for the benefit of its
creditors, is declared bankrupt, or otherwise takes advantage of
provisions of for relief under the Bankruptcy Act, the Companies
Creditors Arrangement Act or similar legislation in any jurisdiction.
-6-
<PAGE>
7.1.4A Receiver is appointed for a Party and that Party has not appealed
the Order appointing the Receiver within the appeal period or, in the
event the Receiver was not appointed by Order, initiated a proceeding
to have the receivership terminated;
7.1.5If any legislation, regulations, policy ruling or decision of a
Federal, Provincial, State or Municipal government or of any agency
thereof is implemented, repealed or altered in such a way as to
significantly prevent either party from lawfully exercising its rights
or performing its obligations hereunder.
For the purpose of this Section, any action of a Party which leads to
the payment of a penalty shall not be a considered a material breach
Agreement so long as the penalty is paid within the time specified.
8. TRANSFER OF TITLE AND RISK
8.1 Ownership of the Waste and all risk associated therewith shall pass to
NEWCO at the time such Waste is dumped into the receiving area at the
processing facility referred to above.
9. MUTUAL INDEMNITY
9.1 Each of the Parties will indemnify and save harmless the other against and
from any and all actions, proceedings, demands, claims, liability, damages,
losses and expenses and costs (including lawyer's fees on a solicitor and
his own client basis) suffered or incurred by such Party as a result of any
breach of this Agreement by the other Party or by reason of any negligent
act or neglect of itself, its servants, employees, agents, invitees, or
licensees including liability for injury or damage to any person or
property.
10. INSURANCE
10.1 EAS and NEWCO shall each provide and keep in force for themselves,
comprehensive general liability insurance in respect of personal injury,
death or property damage with generally accepted insurance carriers are
customary for risks of this nature and with minimum amounts of FIVE MILLION
DOLLARS ($5,000,000.00) per occurrence and each party will provide to the
other proof of such insurance and renewal thereof, upon request.
11. NON-WAIVER
11.1 Any waiver or condoning by one Party of any breach of this Agreement by the
other Party shall not operate as a waiver or condoning of any subsequent
breach of this Agreement by the other Party.
12. EXCLUSIVITY
12.1 It is agreed that during the term of this Agreement, EAS will be the
exclusive supplier of Waste to NEWCO and that NEWCO will not permit any
other person, firm, partnership, syndicate, corporation or entity other
than EAS, or parties authorized by EAS in writing and in advance, to supply
organic waste to NEWCO. NEWCO shall refer all potential suppliers of
organic waste to EAS.
-7-
<PAGE>
13. CONFIDENTIALITY
13.1 EAS acknowledges that, by reason of this Agreement, it will become privy to
confidential information belonging to NEWCO concerning the thermophilic
digestion technology used in processing Waste. EAS will not, without the
prior written consent of NEWCO; disclose to any third party, or use for its
own benefit, any such confidential information, either during the Term of
this Agreement or thereafter.
14. DISPUTE RESOLUTION
14.1 If the parties are unable to resolve between themselves, any disputes
arising out of or relating to the terms of this Agreement, or their
interpretation, existence, validity, or related to the termination or
breach of this Agreement, the matter may be submitted by either Party to
the respective presidents of NEWCO and EAS for resolution by them.
14.2 Provided that no other party is or may become involved in any dispute with
either or both of NEWCO and EAS, if the respective presidents of NEWCO and
EAS fail to settle the dispute referred to them within thirty (30) days
following its submission to them, all such disputes arising out of or in
connection with this Agreement, or in respect of any defined legal
relationship associated herewith or derived therefrom, may, subject to the
written agreement of the respective president, be referred to and finally
resolved by arbitration under the rules of the Arbitration and Mediation
Institute of Canada or its successor, or if it is no longer in existence
then a suitable arbitration centre located in _________(collectively and
individually the "Arbitration Centre"). The appointing authority will be
the Arbitration Centre and the dispute will be administered by the
Arbitration Centre in accordance with its procedures. The Place of
Arbitration will be ______________, ____________.
14.3 The award rendered by the Arbitrator(s) will be final and binding and
judgement may be entered upon it in accordance with applicable law in any
court having jurisdiction.
-8-
<PAGE>
14.4 If either Parties commences court proceedings concerning a dispute
currently being dealt with by an Arbitrator either Party may apply to the
Arbitrator or the relevant court, at their discretion, for a stay of the
arbitration proceedings then in progress pending the outcome of the
litigation.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day and year first above written.
EARTH ALLIANCE SYSTEMS INC.
_____________________________________
Authorized Signatory
NEW CO BIO CONVERSION INC.
_____________________________________
Authorized Signatory
-9-
<PAGE>
SCHEDULE "A"
------------
RAW MATERIALS FOR PROCESSING
AT THE THERMO MASTER(TM) PLANT
(End product as Fertilizer Component or Soil Amendment)
The patented Thermo Master(TM) Process employs aerobic thermophilic fermentation
to convert organic waste materials to valuable end products. Following is a
list of waste materials suitable for processing to fertilizer type end products.
Wastewater Treatment Residuals (Bio-Solids) Including Thickened Sludges:
-----------------------------------------------------------------------------
- seepage from collection systems including septic tanks
- primarily treatment sludges from municipal sewage treatment facilities
- secondary or tertiary treatment sludges from municipal sewage
treatment facilities
Miscellaneous Organic Processing Sludges Including Residues From Lagoons or
--------------------------------------------------------------------------------
Collection Pits:
----------------
- modern tannery sludges
- animal manures (although a dedicated on-farm closed loop Thermo
Master(TM) Process treatment system is preferred)
Some source of specific waste materials:
--------------------------------------------
- city, municipal and regional wastewater treatment facilities
- septic waste haulers
- tanneries
- farms and feed lots
Nature of waste materials:
----------------------------
- organic sludges and wastes
- mixed origin (very broad based)
*A given Thermo Master(TM) Plant will process any one or a combination of these
wastes.
Summary. The preceding list describes the NATURE of waste materials which are
-------
processed in the Thermo Master(TM) Plant when the end product is to be used in
the fertilizer and soil enrichment industry. IT IS NOT LIMITING AND DOES NOT
DESCRIBE ALL RAW MATERIALS SUITABLE FOR CONVERSION TO FERTILIZER PRODUCTS.
<PAGE>
Thermo Master(TM) Plants are equipped to receive and process a broad range of
materials, including those that contain paper, rags or other such material. In
fact, paper and paper based material is organic and is processed without
difficulty.
Application of treated waste materials to land in the form of dry or liquid
fertilizer products is regulated be designated authorities in the United States,
Canada and in other countries around the world. The fertilizer ingredient
manufactured in Thermo Master(TM) Plants meets or exceeds the requirements of
these regulations.
Many advantages are found in Thermo Master(TM) fertilizer ingredients:
-----------------------------------------------------------------------------
- Organic fertilizer with high nitrogen content
- Phosphorus is held in the organic solids fraction and available for
plant nutrition
- Destruction of pathogenic microbes, insect eggs and larvae, parasites
and weed seeds which allows extensive use of finished products
- Attractive nutrient profile which allows for effective blending
- Can be used in liquid or dry pellet forms
- Odor free
- Good soil dispersion when applied to soils.
RAW MATERIALS FOR PROCESSING
AT THE THERMO MASTER(TM) PLANT
(End Product as Animal Feed Ingredient)
The Thermo Master(TM) Process employs aerobic thermophilic digestion to convert
non-hazardous food and food related wastes to end product suitable for
registration and use as animal feed and feed ingredients. Following is an
extensive list of waste materials. The Thermo Master(TM) Plant can process any
one of these raw materials, all of them or any combination of them.
Waste from plant origin:
--------------------------
- Fruits
- whole fruits of any description, including all familiar fruits such as
apples, oranges, bananas, grapefruit, melons, berries as well as more
exotic tropical fruits
- fruit peels and trim from all of the above
- fruit pomace (dejuiced solids) from juice extraction, including
apples, grapes, oranges, berries, etc.
- fruit juice and/or concentrate including out of date consumer product
- fermentation residues from wine production
-2-
<PAGE>
- Vegetables
- whole vegetables of any description including carrots, celery,
lettuce, cabbage, oriental vegetables such as bok choy, mushrooms,
potatoes, rutabaga, squash etc.
- vegetable peels and trim waste from all of the above
- vegetable juices and/or concentrates either from out of date consumer
product or from food processing operations
- vegetable purees from processors and/or from out of date consumer
product, including tomato puree, tomato ketchup, pumpkin, tomato based
sauces such as salsa and spaghetti sauce
- vegetable pomace (dejuiced solids) from juice extraction
- pickles and relishes
- Edible grains, legumes and pulses, including such things as oats, wheat,
rice, barley, corn, canola seed, cotton seed, flax, dry beans, soy beans,
and lentils, etc -
- flours, flakes and dry products made from these sources
- bran, hulls and fines from milling or processing any of these
materials
- doughs made from the associated flours
- fermentation residues such as distillers or brewers grains
- fresh and dry pasta products
- cereal waste from breakfast food production
- edible vegetable oils and fats coming from corn, soy, canola and other
such sources
- spent frying oils from restaurants and food processing operations
- Wastes of miscellaneous or mixed origin:
Bakery wastes
- breads, buns, biscuits
- cakes, cookies, donuts
- pies, sweet goods and pastries
-3-
<PAGE>
Manufactured goods (may involve depacking)
- Beer, soft drinks, juice drinks, novelties
- Prepared dinners such as frozen or TV dinners, frozen prepared foods
such as pyrogi, tortillas, cabbage rolls, etc
- Sauces and condiments of various descriptions including salad
dressings dry and moist toppings
- Fillings and dry mixes such as diet products, pudding cake mixes, soup
mixes
- Baby formula in wet or dry form
- Waste from animal origin:
Meats and products
- meat trim from consumer product in grocery outlets, restaurants and
delis
- meat processing wastes from processing plants
- poultry trim and processing wastes from poultry processors
- meat emulsions such as wiener and bologna batters or other sausage and
other processed meats
- out dated consumer meat products
Fish and fish products
- fish processing waste from fresh and canned fish processors
- fish trims from commercial and consumer based sources
- trash species from sorting of catch
- whole fish, in frozen or fresh form
- processed and prepared fish products (including breading, etc)
Dairy wastes and products
- fermented milk products including cheese yoghurt, sour cream, cottage
cheese etc.
- over-date milk products from dairies and retail outlets
- milk including flavored milks and creams
- ice-cream and ice-cream mixes as well as milkshake mixes and other
frozen dairy treats like creamsicles, fudgesicles, ice-cream bars and
the like
- cheese whey resulting from cheese manufacture
-4-
<PAGE>
- Sources of specific waste materials:
- food service section of insulations
- restaurants (all categories)
- food wholesale and retail outlets
- food processing operations
- feed related operations such as feed mills
- Nature of waste materials:
- cull produce and products
- trimming and preparation wastes
- post-consumer wastes (e.g. restaurants)
- depackaged, out of date or specification products
Summary. The preceding list describes the nature of waste materials which are
-------
processed in the Thermo Master(TM) Plant when the end product is used in the
animal feeding industry. All raw materials of this type are suitable for
conversion to feed products.
Raw materials originate from food processing or handling sectors. Food wastes
are free from dangerous or toxic substances because of their origin in the human
food chain. Discard materials which are destined for destruction because they
do not meet product specification require a declaration from the generator that
they do not contain hazardous materials which may have accidentally become
incorporated in the food product, and that this is not the reason for disposal.
Organic food waste materials destined for processing in a Thermo Master(TM)
Plants are equipped to receive raw materials containing non-organic
"contaminants". The first stage of receiving in the tipping bay requires visual
inspection and separation of non-organics, if needed. Paper can be accepted as
it is organic and suitable for processing. Plastic and metals pose no problem
within the Thermo Master(TM) Plant receiving area, with the systems and
procedures that are in place. Up to 6 tons, or 1% of plastics can be received
in a 600 ton per day plant. In practice, this has never been seen. Normally,
the presence of non-organic materials such as plastic garbage bags, containers,
styrofoam etc is less than 1000lb per day and small debris is removed by
mechanical systems designed for this purpose.
-5-
<PAGE>
SCHEDULE "B"
------------
STATEMENT OF MINIMUM SUPPLY RATE AND PENALTY (IF ANY)
-----------------------------------------------------
Date Statement Prepared:
This Statement Applies to Months of:
Number of Days in Those Months:
Number of Down Days in the Same Period:
Applicable Projected Utilization Rate:
Minimum Supply Rate is the lesser of:
(i) 70 X ___ =
(ii) 80 X No. Days =
Therefore,
Minimum Supply Rate =
Amount of Waste Actually Delivered =
Shortfall Y ton
-
Penalty to be paid = YX $_______ = $80,000
---
by EARTH ALLIANCE SYSTEMS INC.
<PAGE>
SCHEDULE "C"
------------
STATEMENT OF MINIMUM CONSUMPTION RATE AND PENALTY (IF ANY)
----------------------------------------------------------
Date Statement Prepared:
This Statement Applied to Months of:
Number of Days in Those Months:
Applicable Project Utlilization Rate:
Minimum Supply Rate in this Period:
Minimum Consumption Rate = Projected Utilization Rate X Days = tons
Amount of Waste Actually Delivered = tons
Oversupply tons
Penalty to be paid by NEWCO - actual cost of diverting Y ton (Oversupply) to
----
landfill which exceed $ A/ ton
-------
If disposal costs (transportation and disposal are $ B/ton)
-----
Penalty would be $1B - A X Y tons = __________
<PAGE>
SCHEDULE F
END PRODUCT PURCHASE AGREEMENT
THIS AGREEMENT is dated as at the day of , 200.
BETWEEN:
(hereinafter referred to as the "Buyer")
OF THE FIRST PART
AND:
(hereinafter referred to as the "Seller")
OF THE SECOND PART
WHEREAS:
A. The Seller will operate a waste processing facility at , (the
"Plant") utilizing patented thermophilic digestion technology (the "Process")
owned or under license to the Seller;
B. The Seller wishes to sell and the Buyer wishes to purchase all
end products produced by the Plant on the terms and conditions as set out
herein.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the mutual
promises as set out below the parties hereto agree as follows:
ARTICLE 1
TERM
1.1 The initial term (the "Initial Term") of this Agreement will commence on
the date on which the Plant is operational (the "In-service Date") and will
continue for twelve years unless terminated earlier in accordance with the
terms of this Agreement.
1.2 The term of this Agreement will automatically renew for further one-year
periods unless notice is given by either party not less than six (6)months
prior to the expiration of the Initial Term of any such additional term or
terms.
1.3 Either party may terminate this Agreement at the end of the third, sixth or
ninth year of the Initial Term upon ninety (90) days written notice to the
other party.
<PAGE>
ARTICLE 2
PURCHASE
2.1 Subject to the terms of this Agreement, the Buyer will purchase and the
Seller will sell all end products produced by the Plant which conform to
the specifications set out in Appendix A to this Agreement (the
"Products").
2.2 The Seller will provide the Buyer, on each Friday during the term of this
Agreement, an estimate of its production expectations for the next seven
(7) days. This Production estimate will contain as much detail as to the
expected type and volume of Products to be purchased as is practical in the
circumstances.
2.3 The Buyer will pay the Seller one hundred and forty dollars ($140) per
tonne of Product (the "Price"). The parties agree that the Price may be
adjusted every third anniversary date of this Agreement during the Initial
Term and on each anniversary date thereafter.
2.4 Beginning on the second month of the Initial Term the Buyer will provide to
the Seller no later than fifteen (15) days after the end of each calendar
month during the term of this Agreement, a statement (the "Statement")
showing the previous month's total tonnage of Products received and re-sold
by the Buyer.
2.5 At the same time that the Statement is provided by the Buyer the Buyer will
pay the Seller an amount equal to the Price multiplied by the number of
tons of product re-sold by the Buyer for which the Buyer has been paid
during the period covered by that Statement and not the volume of Products
delivered to the Buyer. Payment shall be made by way of cheque delivered by
the Buyer to the Seller unless otherwise agreed to by the parties.
2.6 Any late payments shall bear interest at the rate of 1.5% per month.
ARTICLE 3
QUALITY OF PRODUCT
3.1 The Seller warrants and represents to the Buyer as follows:
(a) The Products delivered to the Buyer will contain only quality
ingredients and shall be in accordance with the specifications set out
in Appendix A;
(b) The Products delivered to the Buyer as animal feed (the "Animal Feed
Products") will conform with the requirements for such Products as set
out by the Association of American Feed Control Officials Incorporated
and as set out in the Canadian Feed Act and Regulations, as published
and amended from time to time;
(c) Animal Feed Products will not contain any material or contaminants
which would make the Animal Feed Products harmful as animal feed;
(d) The Products will have a maximum twelve (12%) percent moisture
content.
-2-
<PAGE>
3.2 The Seller will maintain current and accurate logs of the raw materials
being utilized by the Plant.
3.3 Upon reasonable notice the Seller will provide the Buyer with access to the
Plant to inspect any and all raw materials or Products.
3.4 The Buyer will assist the Seller in creating Product specifications and
formulations to ensure Product is marketable within the applicable
district. Furthermore, upon reasonable notice, the Seller agrees to permit
the Buyer to enter the Plant during normal business hours for the purpose
of Product testing.
3.5 If additional ingredients are required by the Buyer for Product blending
purposes, the Seller will purchase such ingredients from an authorized
agent of the Buyer provided that such ingredients are competitively priced
and the resulting end product is economically viable to the parties. [THE
BUYER WILL REIMBURSE THE SELLER FOR ALL INCREASED COSTS RESULTING FROM
REQUIREMENTS TO PURCHASE SUCH ADDITIONAL INGREDIENTS.]
3.6 If the Seller intends to introduce any non waste food products into its
processing, it will promptly notify Buyer prior to doing so.
ARTICLE 4
PACKAGING
4.1 The Seller will ensure that the Products are blended and packaged in the
manner specified from time to time by the Buyer acting reasonably.
ARTICLE 5
DELIVERY
5.1 The Seller covenants and agrees with the Buyer with respect to delivery of
the Product that the Seller will:
(a) at its sole risk and expense deliver the Products FOB at the Plant, in
accordance with the delivery and packaging instructions of the Buyer;
(b) notify the Buyer without delay when the Products are ready for
pick-up;
(c) maintain at its own cost adequate storage to facilitate delivery of
the Products;
(d) provide an maintain at its own cost suitable load-out facilities for
the Products at the Plant;
(e) bear all costs and risks associated with the Products until such time
as the Products are delivered to the Buyer or the Buyer's
representative in accordance with section 5.1(a) herein;
(f) provide and maintain at its own cost all equipment necessary to load
the Products in the Buyer's or the Buyer's representative truck at the
Plant; and
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(g) collect and provide to the Buyer or its representative, samples from
each shipment of Product delivered.
5.2 The Seller will provide the Buyer and the Buyer's authorized employees,
agents and contractors with free and reasonably unrestricted and undelayed
access to the loading area at the Plant in order to allow the Buyer to meet
its Product's removal obligations in an efficient and expeditious manner.
5.3 The Seller will be responsible for truck demurrage time in excess of one
(1) hour and will reimburse the Buyer for such truck demurrage at the rate
such cost is incurred, plus ten (10%) percent administrative penalty. Such
truck demurrage time shall not exceed three (3) hours per incident unless
greed to in advance by the Seller.
5.4 The Buyer will advise the Seller when the Buyer has encountered any
material non-performance of any obligation of the Seller pursuant to this
Article 5 and the Seller will have a reasonable time to cure any such
non-performance. The Seller will notify the Buyer within twenty-four (24)
hours of receiving such notice from the Buyer of the Seller's remedy for
the non-performance indicated by the Buyer.
5.5 The Buyer covenants and agrees with the Seller with respect to the delivery
of Products that the Buyer will:
(a) promptly remove Products from the Plant so as to avoid any
interruption in the operator's regular plant operations; and
(b) pick-up at regular intervals the samples of the Products collected by
the Seller pursuant to Section 5.1(g) herein.
5.6 Should the Buyer fail for any reason to promptly take delivery of and
remove the Products from the Plant, the Seller may send written notice to
the Buyer by personal delivery or facsimile to the Buyer's office of the
Buyer's failure to do so. If the Buyer fails to take delivery within
twenty-four (24) hours of receipt of such notice, then the Seller will be
free to remove and sell such Products to other buyers at its discretion.
5.7 If Product does not meet the standards as set out in Schedule A, the Seller
may request the Buyer's assistance in disposing of such Product. If Buyer
agrees to dispose of such Product in advance or if subsequent to acceptance
of Product by the Buyer the Product is found not to meet the required
standard, the Buyer will use its reasonable efforts to dispose of such
Product in a cost efficient way at the best available market price. If
Buyer is able to sell such Product, it will evenly divide the net proceeds
with the Seller (after accounting for its costs). If the Buyer is not able
to sell such Product, the Seller will re-take the Product at its expense,
and in any event Buyer will be entitled to setoff its reasonable costs with
notice to Seller against any other sums owed to Seller.
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ARTICLE 6
TRANSFER OF TITLE AND RISK
6.1 The Seller and the Buyer agree that the title to the Products and all risks
will transfer from the Seller to the Buyer when the Seller has delivered
the Products to the Buyer accordance with Section 5.1(a) herein.
ARTICLE 7
WEIGHT
7.1 All Products will be weighed over the Seller's full deck truck scales. Such
scales will be inspected at regular intervals, have the appropriate seal
affixed by the appropriate government regulatory agency and shall be legal
for trade. Scale weights shall be accompanied by a printed scale ticket.
The Seller agrees to permit the Buyer to re-sell Products using scales
other than the Seller's, provided that such scales conform to the
applicable regulatory requirements. The Buyer agrees that use of alternate
scales will only occur on an exception basis to facilitate a sale and only
when to the benefit of both parties.
ARTICLE 8
MUTUAL INDEMNITY
8.1 Each of the parties hereto will indemnify and hold harmless the other party
from and against any all liability, damages, losses and costs (including
legal fees on a solicitor and his own client basis) suffered or incurred by
such party as a result of any breach of this Agreement by the other party
or as a result of any negligent act or neglect of the other party, its
servants, employees, agents, invitees, or licensees, including liability
for injury or damage to any person or property.
ARTICLE 9
INSURANCE
9.1 The Buyer and the Seller shall each provide and keep in force for the
other, comprehensive general liability insurance in respect of personal
injury, death or property damage with generally accepted insurance carriers
as are customary for risks of this nature and for a minimum of $5,000,000
per occurrence and each party will provide to the other, proof of such
insurance renewal thereof, upon request. The Buyer shall be named as an
insured third party on the Seller's insurance.
ARTICLE 10
NON-WAIVER
10.1 Any waiver or condoning by one party of any breach of this Agreement by the
other party shall not operate as a waiver or condoning of any subsequent
breach of this agreement by the other party.
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ARTICLE 11
EXCLUSIVITY
11.1 During the term of this Agreement, subject to Section 5.6, the Buyer will
be the exclusive agent for purposes of marketing, distributing and sale of
the Products. The Seller will not sell, deliver or otherwise dispose of any
of the Products to any person, firm, partnership, syndicate, corporation,
or other entity other than the Buyer or parties authorized in writing in
advance by the Buyer. The Seller will refer all potential Product purchases
to the Buyer and the Buyer will ensure that it deals with all such
referrals on a prompt and courteous basis.
11.2 The Seller may retain minor portions of the Product for internal testing or
other such uses by itself or other affiliated corporations.
ARTICLE 12
CONFIDENTIALITY
12.1 The Seller acknowledges that, by reason of the Agreement, it will become
privy to confidential information belonging to the Buyer, including the
identity of the Buyer's and Buyer's agent's customers and pricing
information. The Seller will not, without the prior written consent of the
Buyer, disclose to any third party or use for its own benefit, any such
confidential information either during the term of the Agreement or
thereafter.
12.2 The Buyer acknowledges and agrees with the Seller that all information
connected with the Plant, the Process or the Products is confidential, and
the Buyer will use its best efforts to protect the confidentiality of such
information and will not disclose such information or any part thereof to
any other person except to its consultants, subcontractors and employees as
may be necessary to carry out its rights and obligations under this
Agreement, and except as may be required for the Buyer's financial
reporting, income tax or regulatory purposes. The Buyer will require each
and every one of its employees, consultants, or sub-contractors who are
provided with any information in respect of the Products or related
knowledge to sign confidentiality agreements with the Buyer and the Seller,
such agreements to be in a form acceptable to the Seller.
ARTICLE 13
TERMINATION
13.1 Notwithstanding anything herein contained, either party may terminate this
Agreement upon written notice [ REASONABLE?] to the other party in the
event that:
(a) such other party commits a material breach of any provision of this
Agreement and fails to cure that breach within fifteen (15) days
following receipt of a notice of such breach by the other party (which
notice must specify in reasonable detail the breach or breaches
complained of);
(b) the Seller decide to close the Plant;
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(c) either party becomes the subject of any bankruptcy, insolvency or
similar proceedings; or
(d) any legislation, regulations, policy ruling or decision of a Federal,
Provincial State or Municipal government or of any agency thereof is
implemented, repealed or altered in such a way as to significantly
prevent either party from lawfully exercising its rights or performing
its obligations hereunder.
ARTICLE 14
GENERAL
14.1 If any term, covenant or condition of this Agreement or the application
thereof to any party or circumstance shall be invalid or unenforceable to
any extent, the remainder of this agreement or application of such term,
covenant or condition to a party of circumstances other than those to which
it is held invalid or unenforceable shall not be affected thereby and each
remaining term, covenant or condition of this Agreement shall be valid and
shall be enforceable to the fullest extent permitted by law.
14.2 This Agreement constitutes the entire agreement between the parties hereto
relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussion,
whether oral or written, of the parties and there are not general or
specific warranties, representations or other agreements by or among the
parties in connection with the entering into of this Agreement or the
subject matter hereof except as specifically set forth herein.
14.3 The parties hereto and each of them do hereby covenant and agree to do such
things and execute such further documents, agreements and assurances as may
be necessary or advisable from time to time in order to carry out the true
intent and purposes of this Agreement fully and effectively.
14.4 This Agreement may be altered or amended in any of its provisions when any
such changes are reduced to writing and signed by the parties hereto but
not otherwise.
14.5 Unless otherwise indicated any notice required to be given under this
Agreement shall be in writing and addressed to the parties as hereinbefore
set out and may be delivered or telecopied. Any notice given as aforesaid
shall be deemed to have been received, if delivered, when delivered or, if
telecopied on the business day after the date of telecopying.
14.6 Wherever the singular, plural, masculine, feminine or neuter is used
throughout this Agreement, the same shall be construed as meaning the
singular, plural, masculine, feminine, neuter, body politic or body
corporate where the fact or context so requires and the provisions hereof.
14.7 This Agreement shall be governed by and construed in accordance with the
laws of _____________ and the parties hereto submit to the jurisdiction of
the Courts in _____________. The parties agree that any litigation between
the parties which arises pursuant to or in connection with the Agreement,
or any of its provisions, shall be referred to the Courts in
_______________ and shall not be referred to the Courts of any other
jurisdiction.
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14.8 Time shall be of the essence of this Agreement and of every part hereof.
14.9 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
14.10If either party fails to meet its obligation hereunder within the time
prescribed and such failure is caused or materially contributed to by force
majeure (and for the purposes of this Agreement, force majeure shall mean
any act of God, strike, lockout, or other industrial disturbances,
sabotage, war, blockages, insurrections, riots, epidemics, lightning,
earthquakes, floods, storms, fires, washouts, nuclear and radiation
activity or fallout, arrests and distraints of rules and people, civil
disturbances, explosion, breakage or accident to machinery or stoppage
thereof for necessary maintenance or repairs, inability to obtain labor,
materials or equipment, any legislative, administrative or judicial action
which has been resisted in good faith by all reasonable means, any act,
omission, or event whether of the kind herein enumerated or otherwise not
within the control of such party, and which by the exercise of due
diligence such party could not have prevented, but lack of funds on the
part of such party or parties shall be deemed not to be a force majeure)
such failure shall be deemed not to be a breach of the obligations of that
party if the respective party uses its best efforts to put itself in a
position to carry out its obligations hereunder.
14.11This Agreement is assignable by the Buyer upon reasonable written notice
to the Seller. This Agreement is not assignable by the Seller. Upon
completion of an assignment by the Buyer, the Buyer will have no further
obligations to the Seller under this Agreement.
WITNESS WHEREOF the parties hereto have hereunto executed this Agreement as of
the day and year first above written.
By:_______________________________
Title:____________________________
By:_______________________________
Title:____________________________
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APPENDIX "A"
PRODUCT SPECIFICATIONS
Animal Feed
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The Product, Thermophilic Dehydrated Food Waste, shall consist of a mixture of
food waste products that have been separated from non-edible packaging material,
and is further processed by heat treatment and dehydration. The material may be
obtained from food processing and food servicing establishments other than those
at international ports of entry. It may contain grains, millfeed or oilseed
meal as a carrier. The waste product shall be picked up daily or sufficiently
often that no decomposition is evident. If an antioxidant(s) is used, the
common name or names shall be indicated on the label. It shall be labelled for
guarantees for minimum crude protein, minimum crude fat, minimum and maximum
calcium and minimum and maximum phosphorus, maximum salt, maximum crude fibre
and maximum moisture and minimum antioxidant, if added.
In addition to meeting the above definition, registration entails that the
following conditions are met:
1. The following lists of ingredients only are approved within the above
definition. Any additions to this list must be approved by the office of
Food Inspection Directorate, Plant Products Division prior to their
addition into the Product, Thermophilic Dehydrated Food Waste.
Restaurant and Kitchen By-Products
- Pre-Consumer
- Post-Consumer
Processed Food and Beverage Products
- To include bakery wastes and manufactured goods
- Outdated products
- Off-spec products
- Improperly packaged products
- Unused portions
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Edible Grains, Legumes, Pulses
- Flours from these sources
- Hulls and fines
- Dough
- Pasta products fresh and dry
- Distillers and brewers grain fermentation by-products
- Cereal by-products
- Edible vegetable oils and fats
Fruit and Vegetable Material
- To include juices and pomace
- Outdated retail or wholesale stocks
Mean and Meat Products*
- To include meat trim, meat processing wastes, poultry
by-products, sausages and other processed meats
*Meat processing products may not include the product obtained by the
flocculation of the processing waste and water stream.
Dairy Products
- Outdated ice cream
- Outdated cheese products
- outdated milk, cream and yogurt
- Cheese whey
- Improperly packaged products
Pet Food
- Outdated or off-spec
2. Antioxidants such as ethoxyquin may be added in an amount not to exceed
0.015% of the total diet of the animal. This can be calculated based on the
inclusion rate of your product. A label statement must indicate if an
antioxidant is added in the future.
3. If modifications to the described process are made, and the Food Inspection
Directorate, Plant Products Division shall be notified immediately.
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4. If changes to the reported quality control procedures used to assure
uniformity of the mix and the lack of contamination of subsequent lots of
feed are made, and the Food Inspection Directorate, Plant Product Division
shall be notified immediately.
5. The feed is approved only for use in swine and broiler rations at a rate of
up to ten (10%) percent of the ration. (This feed is not approved for use
in ruminant rations in Canada.)
Specific Product specifications for Thermophilic Dehydrated Food Waste shall be
as follows:
Moisture, maximum 12.0%
Crude Protein, minimum 18.0%
Crude Fiber, maximum 30.0%
Fat, minimum 12.0%
Calcium, minimum 1.0%
Calcium, maximum 1.5%
Phosphorous, minimum 0.2%
Phosphorous, maximum 0.6%
Salt, maximum 0.6%
Expiry Date 60 days from manufacture date
The parties hereby agree to the foregoing appendix.
By:_______________________________
Title:____________________________
By:_______________________________
Title:____________________________
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