AGREEMENT
THIS AGEEMENT is made and entered into this & day of 1999, by and between
Consortium Service Management Group, Inc., a Texas corporation, hereinafter
referred to as "CSMG" and Xxxxxxx Dairy, hereinafter referred to as "Customer."
WITNESSETH:
WHEREAS, CSMG has secured the exclusive worldwide rights to an anaerobic
animal waste treatment plant, hereinafter referred to as the "Plant," that
processes animal waste into methane, water for flushing and washing up to the
level of drinking water purity, if so elected by a customer, removes harmful
pathogens, processes the waste to a level that the processed end product is not
harmful to the environment, animals or humans and eliminates the need for an
animal waste lagoon, hereinafter referred to the "Process;" and
WHEREAS, the Plant requires and includes buildings, methane powered electric
generator, digesters, water treatment equipment, preheaters and other equipment
for the processing of the animal waste; and
WHEREAS, Customer has determined that the Process would be beneficial to
Customer's processing of animal waste generated by Customer's dairy; and
WHEREAS, it is the purpose of this Agreement to set forth the terms and
conditions pursuant to which CSMG agrees to construct and operate a Plant for
the processing of animal waste generated by Customer's dairy on Customer's real
property and for Customer to compensate CSMG for the processing of animal waste
generated by Customer's dairy;
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, CSMG, for itself, its sub-contractors, successors and assigns, and
Customer, for itself, its successors and assigns do hereby agree as follows:
1. Escrow Deposit. Customer, contemporaneously with the execution of this
Agreement, shall deposit and pay into escrow with LAND TITLE AND ESCROW, 000 X.
Xxxxxxx, Xxxxxx, Xxxxx the sum of FIFTY THOUSAND AND 00/100 DOLLARS
($50,000.00). Said FIFTY THOUSAND AND 00/100 DOLLARS ($50,000.00) or portions
thereof shall be returned to Customer or disbursed to CSMG as hereinafter
provided. Customer and CSMG agree that the cost of said escrow shall be shared
and paid equally.
2. CSMG Financing. Upon the execution of this Agreement by the parties
hereto, CSMG shall forthwith seek and use its good faith best efforts to obtain
the necessary funding from or through a leasing or financing company for the
capital expenditures, costs and expenses to be incurred and paid by it to
fulfill its duties and obligations pursuant to and under this Agreement.
Customer hereby agrees to cooperate with CSMG in its efforts to obtain said
necessary financing. Customer's cooperation shall include responding to
reasonable requests from CSMG for the leasing and financing companies; provided,
however, Customer shall have no obligation hereunder to prepare or cause to be
prepared financial statements or financial documentation relative to its dairy
AGREEMENT -Page I -
Exhibit 10.7
Page 1 of 9 Pages
operation that does not exist as of the date hereof CSMG hereby agrees that any
and all financial statements and information disclosed by Customer to either
CSMG or the leasing or financing companies shall be held strictly confidential
and is not to be released, disclosed or otherwise disseminated without the
express consent of Customer. In the event CSMG is unable to secure said
necessary financing within fifteen (15) business days from the date of CSMG's
receipt of all requested financial information, this Agreement may be terminated
and cancelled by Customer, and Customer shall have returned to it the FIFTY
THOUSAND AND 00/100 DOLLARS ($50,000.00) deposited and paid into escrow with
LAND TITLE AND ESCROW, 237 N. Xxxxxxx, Xxxxxx, Idaho. In such event, CSMG hereby
agrees to release or otherwise cause the release of the FIFTY THOUSAND AND
00/100 DOLLARS ($50,000.00) to Customer.
3. Construction of Plant. Upon CSMG securing the necessary financing for the
capital expenditures, costs and expenses to be incurred and paid by it to
fulfill its duties and obligations pursuant to and under this Agreement, CSMG
agrees to construct the Plant on Customer's real property, including, but not
limited to providing any and all materials and labor needed for and to construct
the Plant, securing any and all necessary governmental permits and complying
with any and all applicable Federal, State, County and Municipal fire, safety,
zoning, building and environmental codes and regulations and any other
applicable laws, statutes, ordinances and regulations as follows.
a. Within four (4) weeks from the date of financing approval, CSMG shall
transport or cause to be transported to Customer's location its necessary
agents, engineers, specialists, or employees to begin the development of a site
specific plan and specifications for the Plant at Customer's location. Within an
additional four (4) weeks thereafter, CSMG shall prepare and present to Customer
written definite and firm plans and specifications for the Plant at Customer's
location. Said written definite and firm plans and specifications shall include
the specific location of and area for the Plant on Customer's real property, the
specific benefits to be realized by Customer from the operation of the Plant and
the Process, the capacity of the Plant with regard to the Process, the monthly
fee to be charged by CSMG to Customer for the Process, and the point of
construction of the Plant that constitutes the completion of one-half (1/2) of
the construction of the Plant.
b. Within five (5) working days, after review and consideration by Customer of
said written definite plans and specifications, Customer must elect to either
cancel and terminate this Agreement or proceed with the construction of the
Plant.
(i) In the event Customer elects to terminate this Agreement, TEN
THOUSAND AND 00/100 DOLLARS ($10,000.00) of the FIFTY THOUSAND AND 00/100
DOLLARS ($50,000.00) deposited and paid into escrow with LAND TITLE AND ESCROW,
000 X. Xxxxxxx, Xxxxxx, Xxxxx shall, within five (5) working days of Customer's
election to terminate, be released and paid to CSMG, and the remaining FORTY
THOUSAND AND 00/100 DOLLARS ($40,000.00) shall be released and returned to
Customer. In such event, CSMG and Customer hereby agree to release or otherwise
cause the release of said sums to the party entitled thereto.
AGREEMENT - Page 2.
Exhibit 10.7
Page 2 of 9 Pages
(ii) In the event Customer elects to proceed with the construction of the Plant,
within five (5) working days of Customer's election to proceed, TWENTY FIVE
THOUSAND AND 00/ 100 DOLLARS ($25,000. 00) of the FIFTY THOUSAND AND 00/100
DOLLARS ($50,000.00) deposited and paid into escrow with LAND TITLE AND ESCROW,
000 X. Xxxxxxx, Xxxxxx, Xxxxx shall be released and paid to CSMG, and the
remaining TWENTY FIVE THOUSAND AND 00/100 DOLLARS ($25,000.00) shall remain in
escrow. In such event, Customer hereby agrees to release or otherwise cause the
release of said sum to CSMG.
(c) In the event Customer elects to proceed with the construction of the Plant,
CSMG
shall forthwith proceed with securing all necessary governmental permits and
construction of the Plant on Customer's designated real property. Subject to
delays caused by strikes, wars, or acts of God CSMG shall complete construction
of the Plant on Customer's designated real property on or before eleven (11)
months from the date of Customer's election to proceed. At such time that the
construction of the Plant is one-half (1/2) completed the remaining TWENTY FIVE
THOUSAND AND 00/100 ($25,000.00) held in escrow at LAND TITLE AND ESCROW, 000 X.
Xxxxxxx, Xxxxxx, Xxxxx shall be released and paid to CSMG. One-half (1/2)
completion of the construction of the plant shall meari that point of
construction of the Plant identified in the written definite and firm plans and
specifications for the Plant at Customer's location as constituting the
completion of one-half (1/2) of the construction of the Plant.
(d) Customer hereby agrees to cooperate with CSMG in its efforts to obtain and
secure the necessary governmental permits and approval for the construction of
the Plant and operation of the Process, including providing to CSMG information
reasonably necessary to secure said permits and approval.
4. Location of Plant on Customer's Real Property. As part of Customer's review
and consideration of the definite plans and specifications for the Plant and
subject to termination and cancellation of this Agreement by Customer as
provided herein, CSMG and Customer shall mutually agree upon the specific
location of and area for the Plant on Customer's real property. The mutually
agreed upon location of and area for the Plant is hereinafter referred to as the
"Designated Property." Customer agrees to lease the Designated Property to CSMG
for ONE DOLLAR AND 00/100 ($1.00) per year for the entire term of this
Agreement, and for the term of any renewals hereof. As part of said lease of the
Designated Property to CSMG, CSMG shall possess the right of ingress and egress
for CSMG to remove the solid waste by-products generated by the Plant and the
Process. CSMG shall not permit any lien or encumbrance to attach to, against or
upon the Designated Property. Customer shall warrant, and subject to termination
and cancellation of this Agreement by Customer as provided herein does hereby
warrant unto CSMG full and free ingress and egress to the Designated Property
for purpose of the operation of the Plant and the Process. Customer shall
warrant, and subject to termination and cancellation of this Agreement by
Customer as provided herein does hereby warrant unto CSMG that the Designated
Property shall be free and clew of any and all liens or encumbrances that
interfere with the operation of the Plant or the Process.
AGREEMENT - Page 3.
Exhibit 10.7
Page 3 of 9 Pages
5. Taxes. Assessments and Utilities. Customer shall be responsible for and shall
pay all property taxes that-may be imposed against or upon the Designated
Property during the term of this Agreement. CSMG shall be responsible for and
shall pay any and all municipal, county and state taxes assessed during the term
of this Agreement against any leasehold interest or any personal property of any
nature or kind, owned by or placed in, upon or about the Designated Property by
CSMG, and shall also pay any and all taxes of every nature which may be imposed
with respect to the operation of the Plant by CSMG in or fro. the Designated
Property. CSMG shall be responsible for and shall pay all utility expenses and
charges of every nature accruing by reason of C SMG's use and occupancy of the
Designated Property and the operation of the Plant, including, but not limited
to, water, sewer, trash, telephone, electricity and heating.
6. Monthly Fee Charged to Customer. As part of Customer's review and
consideration of the written definite plans and specifications for the Plant in
accordance with subparagraph 3.b. hereinabove, and subject to termination and
cancellation of this Agreement by Customer as provided herein, CSMG and Customer
shall mutually agree upon the monthly fee to be charged to Customer for the
Process. Upon CSMG and Customer mutually agreeing upon the monthly fee to be
charged to Customer for the Process, they shall enter into an addendum to this
Agreement memorializing the monthly fee to be charged to Customer during the
term of this Agreement.
7. Repayment of $50,000.00 Deposited into Escrow. Upon full funding of the
necessary funding from or through a leasing or financing company for the capital
expenditures, costs and expenses to be incurred and paid by CSMG to fulfill its
duties and obligations pursuant to and under this Agreement, Customer shall have
the option of either full reimbursement from CSMG of the FIFTY THOUSAND AND
00/100 DOLLARS ($50,000.00) paid and deposited into escrow or application and
credit of said amount toward the monthly fee to be charged Customer by CSMG for
the Process.
8. Warranties of Plant and Process. Upon complete construction of the Plant at
the Designated Property, CSMG shall fully and adequately test the Plant in order
to be able to warrant to Customer that the Plant is free from defect in
material, design or workmanship, and the Process is fully operational in
accordance with the written definite and firm plans and specifications for the
Plant. Upon completion of said test and certification from engineers that the
plant is free from defects in material, design, and workmanship, and the Process
is fully operational in accordance with the written definite and firm plans and
specifications for the Plant, CSMG shall hereby warrant -to Customer that the
Plant is free from defect in material, design or workmanship, and the Process is
fully operational in accordance with the written definite and firm plans and
specifications for the Plant.
9. Operation of Plant. CSMG agrees to operate the Plant on Customer's real
property, and to keep the Plant in good working order and repair, and to
maintain the Process as fully operational in accordance with the written
definite and firm plans and specifications for the Plant, subject to mechanical
failures or breakdowns occasioned from the normal operation of the Plant,
strikes, wars, acts of God and occurrences not within the control of CSMG.
Customer agrees to cooperate fully in good faith with CSMG in dealing with any
disruption of the Process at the Plant and to take all reasonable action as
requested by CSMG in the resolution of such disruptions as may be necessary on
the part of Customer. CSMG shall use its best efforts to install upgrades to the
Plant
AGREEMENT - Page 4.
Exhibit 10.7
Page 4 of 9 Pages
and the Process' from CSMG designers, engineers, and scientists and as they
become available from they are mutually agreed to by Customer and CSMG.
10. Animal Waste. When the Plant is certified by engineers as being in
compliance with all necessary government permits, plans, and specifications as
well as being in good working order, and the Process is fully operational in
accordance with the written definite and firm plans and specifications for the
Plant, Customer agrees to furnish to CSMG not more than all of the animal wastes
of the number of animals for which the plant was designed to process, but in no
event more than the total amount of animal wastes produced by Customer's dairy
operation for which the CSMG and Customer agree the Plant is to service. All
solid by-products generated by the Plant and the Process waste treatment
facility shall be the property of CSMG, and Customer does hereby grant to CSMG
the right to all such solid by-products, compost, or other solid materials
generated by such plant. Customer shall have all rights to any non-solid
by-products such as liquid or gas results of the Process but only in excess of
that necessary to operate the plant. CSMG hereby agrees to properly remove such
solid waste by-products on a regular basis but not less than every THIRTY (30)
days.
11. Payment of Monthly Fee, Commencing on the first day of the month following
the Plant being certified by engineers as being in compliance with all necessary
government permits, plans, and specifications as well as being in good working
order, and the Process is fully operational in accordance with the written
definite and firm plans and specifications for the Plant, Customer agrees to pay
to CSMG the monthly fee to be charged to Customer for the Process, to which
Customer and CSMG have mutually agreed in accordance with paragraph 6,
hereinabove. Said monthly payments shall be made by Customer on or before the
first day of each month during the term of this Agreement.
12. Ter.. This Agreement shall be for a term of TEN (10) years, commencing as of
the first day of the month following the Plant's certification by engineers as
being in compliance with all government permits, plans, and specifications as
well as being in good working order, and the Process is fully operational in
accordance with the written definite and firm plans and specifications for the
Plant.
Following the initial TEN (10) year term of this Agreement or any renewal
thereof, Customer may either purchase the Plant at a sales price negotiated and
agreed upon by CSMG and Customer or, at Customers option, renew this Agreement
for successive terms of TEN (10) yews.
13. Default by Customer. In the event Customer defaults in any of its monthly
payments or other obligations as set forth herein, then CSMG may immediately
cease operation of the Process and CSMG shall be entitled to dismantle and
remove the Plant from the Designated Property; provided, however, prior to
dismantle and removal of the Plant from the Designated Property CSMG shall first
give Customer thirty (30) days written notice of the matters in which it is in
default and the opportunity to cure such default within said notice period. Such
notice shall be given in writing, prepared by CSMG or CSMG's agents, and
delivered to Customer. Such delivery of the said written notice shall be by
personal service, by mailing to Customer via Certified Mail, or by facsimile
transmission with said notice being mailed to Customer via Certified Mail. CSMG
shall have the right of full access to the Designated Property as is necessary
to effectuate such dismantlement and removal of the Plant.
AGREEMENT - Page 5.
Exhibit 10.7
Page 5 of 9 Pages
14. Default by CSMG. In the event the Process ceases for a period in excess of
twenty four (24) consecutive hours, Customer may immediately cease making the
monthly payments to CSMG and Customer's monthly payments or prorated portion
thereof shall xxxxx. Customer's obligation to make the monthly payments to CSMG
shall resume upon the restart of the Process.
in the event CSMG fails to restart the Process within a period of thirty (30)
consecutive days from the cessation of the Process, the Customer shall have the
right to declare CSMG in default of this Agreement and have CSMG dismantle and
remove the Plant from the Designated Property; provided, however, prior to
Customer exercising its right to have CSMG dismantle and remove the Plant from
the Designated Property Customer shall give CSMG thirty (30) days written notice
of the default and the opportunity to cure the default within thirty (30) days
of receipt of said notice. Such notice shall be given in writing, prepared by
Customer or Customer's agents, and delivered to CSMG. Such delivery of the said
written notice shall be by personal service, by mail to CSMG via Certified Mail,
or by facsimile transmission with said notice being mailed to CSMG via Certified
Mail.
In the event CSMG defaults in any of its obligations as set forth herein, other
than cessation of the Process, Customer shall first give CSMG thirty (30) days
written notice of the matters in which it is in default and the opportunity to
cure such default within thirty (3 0) days of receipt of said notice. Such
notice shall be given in writing, prepared by Customer or Customer's agents, and
delivered to CSMG. Such delivery of the said written notice shall be by personal
service, by mail to CSMG via Certified Mail, or by facsimile transmission with
said notice being mailed to CSMG via Certified Mail.
15. Termination of Agreement. At the end of the initial term or any renewed term
of this Agreement, CSMG shall, unless the Plant is sold to Customer, within
thirty (30) days thereafter begin to dismantle and remove the Plant from the
Designated Property. CSMG shall have the full right of access to the Designated
Property as is necessary to effectuate such dismantlement and removal.
16. Risk of Loss. CSMG agrees that the risk of loss due to loss by fire or other
casualty to the Plant, its equipment or otherwise property shall remain with
CSMG during the term of this Agreement.
17. Indemnification. CSMG agrees to indemnify, save and hold harmless Customer
its officers, directors, partners, employees and agents, and its successors,
heirs and assigns, from and against any and all claims, liability, damage,
judgment, penalty, fine, cost, loss or expenses, including reasonable attorney
fees and costs, all of which arise from or relate to the Plant, the Process, its
occupation and use of the Designated Property, and its failure to comply with
any and all applicable and governing Federal, State, County, and Municipal
statutes, regulations and otherwise laws by reason of CSMG's operation of the
Plant, the Process or occupation and use of the Designated Property including,
but not limited to fire, safety, zoning, building codes and regulations, and
environmental laws, statutes and regulations.
Customer agrees to indemnify, save and hold harmless CSMG, its officers,
directors, employees and agents, and their successors, heirs and assigns, from
and against any and all claims, liability, damage, judgment, penalty, fine,
cost, loss or expenses, including reasonable attorney fees and costs, all of
which are caused directly and proximately from Customer's, its officers,
directors, partners, employees and agents negligence.
AGREEMENT - Page 6.
Exhibit 10.7
Page 6 of 9 Pages
18. Resolution of Disputes. The parties shall use their best endeavors to settle
my dispute or controversy or claim arising out of or relating to this Agreement.
To this effect, the parties shall consult and negotiate with each other, in good
faith and understanding of their mutual interests, to reach a just and equitable
solution satisfactory to both parties. If the parties cannot reach a solution
within a period of thirty (30) days, then the dispute shall be finally settled
by arbitration in accordance with the rules of the American Arbitration
Association. The Arbitration Tribunal shall be formed of one arbitrator to be
selected by CSMG and one arbitrator to be selected by Customer with the two
selected arbitrators selecting a third arbitrator among themselves. The
arbitration shall take place in a mutually agreeable location in the state of
Idaho. Judgment entered upon the award rendered may be entered into any court
having jurisdiction or application may be made to such court for a judicial
recognition of the award or an order of enforcement thereof as the case may be.
This paragraph provides the sole recourse for the settlement of any dispute,
controversy, or claim arising out of or relating to this Agreement.
19. Assignment of Agreement. CSMG shall possess the right to assign this
Agreement to a third party leasing or financing company, its subsidiary animal
waste company and/or local operating management company; provided, however, such
assignee is qualified to operate the Plant. Notwithstanding the assignment of
this Agreement, CSMG shall remain liable to Customer for the duties and
obligations herein.
20. No Agency Relationship Created. This Agreement does not make either party
the employee, agent, or legal representative of the other for any purpose
whatsoever. Neither party is granted my right or authority to assume or to
create any obligation or responsibility, express or implied, on behalf of or in
the name of the other party. Neither party shall act or represent itself or
suffer or allow anyone else to hold themselves out as an agent or employee of
the party. Neither party shall have authority, express or implied, to make any
representations or statements on behalf of the other party .
21. Notice. For purposes of notification pursuant to this Agreement, all notice
requests, consents, demands, waivers, or other communications hereunder shall be
in writing and shall be mailed via Certified Mail, or sent by facsimile
transmission with said notice being mailed via Certified Mail to the respective
parties hereto at the following address and/or facsimile numbers, or otherwise
personally delivered:
Notices to CSMG shall be delivered to:
Consortium Services Management Group 000 X. Xxxxxxxxx, 000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000 Facsimile (000) 000-0000
With a copy to:
F. Xxxxxx Xxxxxx
Xxxxxx Xxxxxx & Associates
AGREEMENT -Page 7.
Exhibit 10.7
Page 7 of 9 Pages
000 X. Xxxxxxxxx, Xxx. 0 000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 00000-0000 Facsimile
(000) 000-0000
All notices to Customer shall be delivered to:
Xxxxxxx Dairy c/o Xxxxxx X. Xxxxxxx 000 Xxxx 000 Xxxxx Xxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
The parties may at any time designate by like notice hereunder other addresses
to which notices and other communications should be transmitted.
22. Time. Time is agreed to be of the essence of this Agreement.
23. Severabilily. In the event that any of the terms of this Agreement are in
conflict with any rule of law or statutory provision or are otherwise
unenforceable -der the laws or regulations of any government or subdivision
thereof, such terms shall be deemed stricken from this Agreement, and such
invalidity or unenforceability shall not invalidate this Agreement or any of the
other terms of this Agreement, and this Agreement shall continue in full force
and effect, -less the invalidity or unenforceability of any such provisions
hereof adversely affect the receipt of any material benefit of either party
hereunder, does substantial violence to, or where the invalid or unenforceable
provisions comprise an integral part of, or are otherwise inseparable from, the
remainder of this Agreement.
24. Counterparts to Agreement. This Agreement may be executed in counterparts
and each such counterpart shall be deemed an original hereof.
25. No Waiver. No failure by either party to take any action or assert any right
hereunder shall be deemed to be a waiver of such right in the event of the
continuation or repetition of the circumstances giving rise to such right.
26. Fees and Costs. In the event that CSMG or Customer shall be required to
secure legal services or advice to enforce any of their respective rights,
duties or obligations hereunder, with or without litigation, the successful
party with respect to such enforcement shall be entitled to recover, in addition
to all other remedies, reasonable attorney fees and costs.
27. Binding Effect. The provisions of this Agreement shall bind and inure to the
benefit of the heirs, successors, executors, administrators and assigns of the
parties hereto.
28. Entire Agreement. This agreement contains the entire agreement of the
parties hereto with respect to the matters contained herein, and no prior
agreement, or understanding pertaining to any such matter, shall be effective
for any purpose. No provision of the Agreement
AGREEMENT - Page 8.
Exhibit 10.7
Page 8 of 9 Pages
may be amended or added to, except by an agreement in writing signed by the
parties hereto, or their respective successors-in-interest.
29. Construction of Agreement. All portions of this Agreement shall be construed
under the laws of the state of Idaho
IN WITNESS WHEREOF, the parties hereto have set their hands the day and year
first above written.
CONSORTIUM SERVICE MANAGEMENT Xxxxxxx Dairy GROUP, INC. By By Xxxxxx Xxxxxxx
Xxxxxx X. Xxxxxxx Its President
AGREEMENT - Page 9.
Exhibit 10.7
Page 9 of 9 Pages
