Exhibit 10.8
WASTE SUPPLY AGREEMENT
----------------------
THIS AGREEMENT is made as of the 2 day of October, 2000.
BETWEEN:
EARTH ALLIANCE SYSTEMS INC., a company incorporated pursuant to
the laws of Yukon Territory having its principal place of
business located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇
(hereinafter referred to as "EAS")
AND:
HAMILTON BIO CONVERSION INC., a corporation incorporated pursuant
to the laws of Ontario 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 or about ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. 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.
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 Blank
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 agreed upon terms.
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
organizations' rules or statutes in other jurisdictions, as appropriate:
5.3.1 The Association of American Feed Control Officials Incorporated;
5.3.2 The Canadian Feed Act and its Regulations;
-2-
5.3.3 The Canadian Fertilizer Act and its Regulations;
5.3.4The Environmental Protection Agency of the United States, Environment
Canada, equivalent Provincial bodies or other equivalent governmental
bodies;
5.3.5The Waste Management Act, Waste Management Amendment Act or
Environmental Protection Act of British Columbia 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 Richmon, British
Columbia. 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.
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;
-3-
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.
-4-
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 Toronto, Ontario
(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 Toronto, Ontario.
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.
-5-
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.
/S/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Authorized Signatory
HAMILTON BIO CONVERSION INC.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Authorized Signatory
-6-
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.
-7-
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
-8-
- 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,
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
-9-
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
-10-
- 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
- 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 ▇▇▇▇▇
- 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 feed 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.
-11-
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 = Y X $ = $80,000
------ -----
by EARTH ALLIANCE SYSTEMS INC.
-12-
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 = __________
-13-
