ALLIANCE AGREEMENT
Between
DYNAMOTIVE ENERGY SYSTEMS CORPORATION
And
ECO SECURITIES INC.
TABLE OF CONTENTS
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Page
PART 1 DEFINITIONS AND INTERPRETATION................................. 1
Definitions......................................................... 1
Interpretation...................................................... 4
Schedules........................................................... 5
PART 2 TERM........................................................... 6
Term of Agreement................................................... 6
PART 3 PROJECT MANAGEMENT COMMITTEE................................... 6
Project Management Committee........................................ 6
Duties of the Project Management Committee.......................... 6
Meetings of the Project Management Committee........................ 7
Notices of Project Management Committee Meetings.................... 7
Quorum of the Project Management Committee.......................... 7
Decisions of the Project Management Committee....................... 7
Exchange of Information for Project Management Committee............ 7
PART 4 TECHNICAL SUPPORT, CONSULTING, RESEARCH & PERSONNEL............ 8
Technical Support................................................... 8
Personnel........................................................... 9
Replacement Rights of DynaMotive.................................... 9
Additional Personnel................................................ 9
ESI Partners........................................................ 9
Consulting.......................................................... 9
Research by ESI..................................................... 10
Use of Research Information......................................... 10
Disclosure of Research Information.................................. 10
Disclosure of Research Results...................................... 10
Establishment of Facilities......................................... 10
PART 5 SERVICES....................................................... 10
Services............................................................ 10
Right of First Refusal-Exclusivity as Provider...................... 10
Marketing........................................................... 12
Fees for Services................................................... 12
Incentives.......................................................... 13
Fees for Services to Licensees...................................... 13
Expenses............................................................ 13
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PART 6 INFORMATION, ASSISTANCE AND COOPERATION........................... 13
Provision by DynaMotive of the Technology.............................. 13
Provision of Technical Assistance and Information to DynaMotive........ 13
Non-Solicitation of Employees.......................................... 13
PART 7 TRADEMARKS AND PATENTS............................................ 14
Trademark/Brand Use.................................................... 14
Action by Parties to Protect Intellectual Property from Infringement... 14
PART 8 NON-COMPETITION................................................... 14
Non-Competition by ESI................................................. 14
Proceedings............................................................ 14
PART 9 INTELLECTUAL PROPERTY & CONFIDENTIALITY........................... 14
Intellectual Property Ownership........................................ 14
Retention of Materials................................................. 15
Disclosure............................................................. 15
Assistance............................................................. 15
Confidentiality Obligations............................................ 16
Publicity.............................................................. 16
Treatment of Confidential Information.................................. 16
Actions to Protect Confidential Information............................ 16
No Waiver By Virtue of Non-Exercise of Rights.......................... 17
Confidentiality Provisions Effective on Effective Date................. 17
PART 10 WARRANTIES & LIMITED LIABILITY................................... 17
Warranty............................................................... 17
Limited Liability...................................................... 17
Indemnity.............................................................. 17
PART 11 TERMINATION...................................................... 18
Termination Without Cause.............................................. 18
Termination for Cause.................................................. 18
Notice of Fundamental Breach........................................... 19
Curing of Fundamental Breach........................................... 19
Termination on Failure to Cure Fundamental Breach...................... 19
Termination of Service Schedules....................................... 19
No Limitation of Remedies.............................................. 19
PART 12 DISPUTE RESOLUTION AND APPLICABLE LAW............................ 20
Dispute Resolution..................................................... 20
Applicable Law......................................................... 21
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PART 13 GENERAL....................................................... 21
Modifications, Approvals and Consents............................... 21
Further Assurances.................................................. 21
Entire Agreement.................................................... 21
Expenses............................................................ 21
Notices............................................................. 21
Deemed Receipt...................................................... 22
Change of Address................................................... 22
Force Majeure....................................................... 22
Time Limits Extended................................................ 22
Elimination of Intervening Event.................................... 23
Continuation of Intervening Event................................... 23
Enurement........................................................... 23
Severability........................................................ 23
Survivability....................................................... 24
Cooperation......................................................... 24
Deemed Term of Agreement............................................ 24
Time of the Essence................................................. 24
Counterparts........................................................ 24
No Partnership or Unincorporated Joint Venture...................... 24
NEW ALLIANCE AGREEMENT
THIS AGREEMENT is dated for reference October 1, 2001
AMONG:
DYNAMOTIVE ENERGY SYSTEMS CORPORATION, a
corporation having an office at 105-1700 West 75th Avenue,
Vancouver, British Columbia, Canada V6P 6G2
("DynaMotive")
AND:
EcoSecurities, a corporation having an office at 206 West Bonita,
Claremont, CA 91711, USA, a wholly owned subsidiary of
EcoSecurities Ltd.(ESL)
("ESI")
(DynaMotive and ESI are collectively referred to herein as the
"Parties"and individually as a "Party")
WHEREAS:
(A) DynaMotive owns technology for production of a clean fuel alternative known
as "Bio-Oil" through a pyrolysis process (the "Technology") and wishes to
develop and commercially exploit the Technology;
(B) ESI is an environmental finance solution company that provides consulting,
policy analysis, technical support, emissions trading and capital raising
services; and
(C) DynaMotive wishes to engage ESI to provide a variety of support services to
assist in the commercial exploitation of the Technology;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT the Parties mutually covenant and
agree as follows: (Scheme B starts here)
PART 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement, including the recitals, except as otherwise expressly
provided or unless the context otherwise requires,
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"Affiliate" of, or a Person "Affiliated" with, a particular Person, means a
Person that, directly or indirectly, controls, is under common control with
or is controlled by the specified Person;
"Bio Oil" means the fuel oil produced from biomass using the Technology;
"Breaching Party" has the meaning ascribed to that term in Section 11.2;
"Business Day" means a day that is not a Saturday or a Sunday or a Canadian
federal or a British Columbia provincial statutory holiday;
"Canadian Dollar" or "Cdn.$" means a Canadian dollar or the basic unit of
Canadian legal tender commonly used in Canada;
"Confidential Information" means any confidential oral, written or
electronic data and information now or hereafter existing during the
currency of this Agreement, clearly identified as confidential, relating to
the business and management of either Party, to which access is granted or
obtained by the other Party;
"Control" of a corporation, limited liability company, other body corporate
or other entity by a Person only occurs, for the purposes of this
Agreement,if
securities of the corporation, limited liability company, other body
corporate or other entity to which are attached more than 50% of the
votes that may be cast to elect directors of the corporation, limited
liability company, other body corporate or other entity (or other
members of the governing body of the corporation, limited liability
company, other body corporate or other entity, if it has no board of
directors) or other rights to elect a majority of directors or such
other members are held, other than by way of security or pledge only,
by or for the benefit of that Person, and
the votes attached to those securities are sufficient, or such rights
are sufficient, if exercised, to elect a majority of the directors (or
other members of the governing body of the corporation, limited
liability company, other body corporate or other entity, if it has no
board of directors) of the corporation, limited liability company,
other body corporate or other entity;
"DynaMotive Business" means the business of researching, developing,
designing, manufacturing, assembling, installing, distributing, marketing
and commercial exploitation of the Technology and related technology;
"Effective Date" means the date on which this Agreement is executed by the
parties hereto;
"Encumbrance" means any mortgage, charge, pledge, hypothecation, lien,
easement, right-of-way, encroachment, security interest, covenant,
condition, right of re-entry, right of possession, lease, license,
assignment, option, claim or other title defect, encumbrance
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or charge, whether or not registered or registrable and whether or not
consensual or arising by law, statutory or otherwise;
"Existing Affiliate", at any particular time, means any entity defined as
an affiliate of either Party as at the Effective Date;
"Fundamental Breach" has the meaning ascribed to that term in Section 11.2;
"GAAP" means, with respect to the determination of any accounting issue
relating to a financial statement or record or any component thereof for
any corporation, limited liability company or body corporate the generally
accepted accounting principles applicable in Canada;
"Governmental Authority" means, the government of Canada, the government of
a Canadian province or territory and the government of any other applicable
country or state, and each ministry, department, commission, board, bureau
or other agency of, or municipality, regional district or other local
governing body established by, any such government, or other political
subdivision thereof, and includes any Person exercising executive,
legislative, judicial, regulatory or administrative functions of, or
pertaining to, any such government;
"Improvements" means all updates, modifications, enhancements, improvements
and derivations related to Intellectual Property Rights or Know-How;
"Intellectual Property Rights" or "IPRs" of a Person means that Person's
rights to all inventions, designs, trade secrets, ideas, work, technology,
innovations, creations, concepts, moral rights, development drawings,
research, analysis, experiments, copyrights, data, formulas, methods,
procedures, processes, systems and techniques whether or not a registration
or record as a patent, industrial design or similar proprietary right has
been obtained or applied for, including any Improvements thereto;
"Intervening Event" has the meaning ascribed to that term in Section 13.8;
"Know-How" of a Person means that Person's rights to all inventions,
designs, trade secrets, ideas, work, technology, know-how, innovations,
creations, concepts, moral rights, development drawings, research,
analysis, experiments, copyrights, data, formulas, methods, procedures,
processes, systems and techniques for which no registration or record as a
patent, industrial design or similar proprietary right has been obtained or
applied for, but does not include trademarks or trade names;
"Liabilities" in respect of a Person means collectively, all liabilities,
indebtedness, capitalized lease obligations, advances, debts, duties,
endorsements, guarantees, obligations, responsibilities and undertakings of
such Person assumed, created, incurred, or made, or to which such Person is
bound or subject, whether voluntary or involuntary, however arising,
whether due or not due, absolute, inchoate or contingent, liquidated or
unliquidated, determined or undetermined, direct or indirect, express or
implied, and whether in respect of which such Person is liable individually
or jointly with others;
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"Non-Breaching Party" has the meaning ascribed to that term in Section
11.2;
"Notice" has the meaning ascribed to that term in Section 13.5;
"Notice of Fundamental Breach" has the meaning ascribed to that term in
Section 11.3;
"Notice of Termination" has the meaning ascribed to that term in Section
11.5;
"Person" means an individual, corporation, body corporate, firm, limited
liability company, partnership, syndicate, joint venture, society,
association, trust or unincorporated organization or Governmental Authority
or trustee, executor, administrator or other legal representative;
"Personal Property" means all right, title and interest of a Person in and
to property and assets, other than rights under contracts or agreements
(except Intellectual Property Rights and rights in respect of Know-How),
land and buildings;
"Project Management Committee" means the management committee to be formed
by DynaMotive and ESI pursuant to Section 3.1;
"Services" means the technical support, consulting, research, personnel and
other services to be provided by ESI under this Agreement;
"ESI Partner" means external consultant contracted by ESI;
"Technology" has the meaning ascribed to it in Recital (A) and includes
Improvements and related Intellectual Property Rights;
"Technology License" has the meaning ascribed to it in Section 7.1;
"Term" has the meaning ascribed to it in Section 2.1;
"Third Party" in relation to a Party means an individual, corporation or
other entity with which that Party deals at arm's length and that is not an
Affiliate of that Party; and
"United States Dollar" or "Dollar" or "US$" or "$" means a United States of
America dollar or the basic unit of legal tender commonly used in the
United States of America.
Interpretation
1.2 In this Agreement, except as otherwise expressly provided or unless the
context otherwise requires,
"this Agreement" means this New Alliance Agreement, including the Schedule
hereto and the New Reference Deed, as from time to time supplemented or
amended by one or more agreements entered into pursuant to the applicable
provisions hereof;
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the headings in this Agreement are inserted for convenience only and do not
form a part of this Agreement and are not intended to interpret, define or
limit the scope, extent or intent of this Agreement or any provision
hereof;
the word "including", when following any general statement or term, is not
to be construed as limiting the general statement or term to the specific
items or matters set forth or to similar items or matters, but rather as
permitting the general statement or term to refer to all other items or
matters that could reasonably fall within its broadest possible scope;
all accounting terms not otherwise defined herein have the meanings
assigned to them, and all calculations to be made hereunder are to be made,
in accordance with GAAP applied on a consistent basis;
words, phrases and acronyms not expressly defined herein that have meaning
commonly understood by persons knowledgeable in the business of process or
project engineering will have that meaning herein;
a reference to a statute includes all regulations made thereunder, all
amendments to the statute or regulations in force from time to time, and
any statute or regulation that supplements or supersedes such statute or
regulations;
a reference to an entity includes any successor to that entity;
words importing the masculine gender include the feminine or neuter, words
in the singular include the plural, words importing a corporate entity
include individuals, and vice versa;
a reference to "approval", "authorization" or "consent" means written
approval, authorization or consent;
a reference to a Part is to a Part of this Agreement or to a Part of a
Schedule hereto and the symbol Section followed by a number or some
combination of numbers and letters refers to the section, paragraph,
subparagraph, clause or subclause of this Agreement so designated;
except as otherwise expressly provided, a reference to currency herein
means United States Dollars and all amounts payable hereunder will be paid
in United Stated dollars; and
any currency conversions required under this Agreement will be converted at
the Exchange Rate for the day on which such conversion is required.
Schedules
1.3 Schedule A - Terms and conditions for ESI Services to be provided by ESL
attached hereto is incorporated in this Agreement by reference and is deemed to
form a part hereof: If there is any conflict or inconsistency between the terms
and conditions of the main
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body of this Agreement and the terms and conditions of Schedule A, the terms and
conditions of the main body of this Agreement will govern.
PART 2
TERM
Term of Agreement
2.1 This Agreement will commence on the Effective Date and continue for three
years (the "Term").
2.2 Except as provided in Part 11, this Agreement may not be terminated by
either Party before the first anniversary of the Effective Date. After the first
anniversary of the Effective Date, this Agreement may be terminated by either
Party by providing six months written notice to the other Party. Any notice of
termination given by either Party before the first anniversary of the Effective
Date shall be deemed to have been received on the day following the anniversary
of the Effective Date and shall be effective from that date.
PART 3
MANAGEMENT COMMITTEE
Project Management Committee
3.1 DynaMotive and ESI will form a committee to review objectives, develop,
present to DynaMotive's Board and implement (subject to DynaMotive's board
approval) strategies for the effective positioning of DynaMotive's technology
within the spectrum of environmental technologies. The Management Committee will
be comprised of up to three member of each company. The management committee
initially will be comprised by two members from each company and expanded to its
maximum number of members as and when required.
Duties of the Project Management Committee
3.2 The Project Management Committee will provide advice and assistance to
DynaMotive and ESI and in particular, will
Evaluate the opportunities for implementing the technology in different
jurisdictions where DynaMotive is considering its options;
Develop financing options for the technology appropriate to particular
jurisdictions
Exchange cost and technical information related to the Technology and the
emission reduction and green certificate opportunities around it,
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subject to the confidentiality provisions contained herein.
Meetings of the Project Management Committee
3.3 The Project Management Committee will meet, in person or by teleconference
or video conference, no less frequently than once a month unless otherwise
agreed.
Notices of Project Management Committee Meetings
3.4 At least 10 days' notice of a meeting of the Project Management Committee
given by any member thereof, specifying the purpose, time, date and location of
such meeting in Vancouver, Canada, or such other location agreed to among the
Parties represented on the Project Management Committee, will be deemed to be
sufficient notice of such meeting.
Quorum of the Project Management Committee
3.5 Participation by at least 50% of the members of the Project Management
Committee, including at least two representatives of DynaMotive on the Project
Management Committee, will constitute a quorum at any regular meeting of the
Project Management Committee, and any action to be taken by vote of the Project
Management Committee will be authorized by vote of not less than a majority of
those participants present at any such meeting at which a quorum is present and
continuing, provided that such majority includes at least two representatives of
DynaMotive on the Project Management Committee. The Project Management Committee
may also act by the written consent of all members then in office.
Decisions of the Project Management Committee
3.6 The parties will be bound by decisions of the management committee that are
reached in accordance with this part 3 AND are within the mandate provided by
DynaMotive's board pursuant to the determination of objectives and strategies as
indicated in3.1
Exchange of Information for Project Management Committee
3.7 As long as it is entitled to be represented on the Project Management
Committee, DynaMotive and ESI will, subject to the confidentiality requirements
of each such Party, provide to the Project Management Committee access to its
relevant technical, policy and strategic information, including Intellectual
Property Rights and Know-How, in order to ensure orderly rollout and advancement
of the Technology; provided, however that such access will not constitute a
license or any other right of any of any Party to use and exploit the
Intellectual Property Rights or Know-How of the other Party.
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PART 4
TECHNICAL SUPPORT, CONSULTING, RESEARCH & PERSONNEL
Technical Support
4.1 ESI will provide technical support, expertise, assistance and advice to
DynaMotive related to all aspects of the Technology including but not limited:
development of emission baselines for individual projects under
consderation by DynaMotive;
formulation of emissions trading and strategies, both for individual
projects and for DynaMotive as a whole;
financial advisory to individual projects,with emphasis on emissions
trading, environmental funds and so called "soft" forms of finance;
provision of "white paper" support services to enhance the credibility of
the DynaMotive process to policy makers, environmental advocates and other
relevant decision makers
marketing of resultant emission reductions, debt and equity opportunities
into appropriate markets.
DynaMotive will pay ESI for the Services the sum of $85,000 per year during
the Term of this Agreement as follows:
(a) DynaMotive will issue ESI common stock 30 days from the Effective Date
for the first year of the Term of this Agreement in the amount of $85,000,
payable in common stock at the price of $.75 per share; the common stock
due for the first quarter will be released to ESI on the day of issue (no
later than November 1, 2001); thereafter, the common stock will be released
to ESI on a quarterly basis (see Section 5.7) against presentation of
invoices;
(b) DynaMotive will issue ESI common stock 30 days from the first
anniversary of the Effective Date at the price equal to the simple average
of the closing price as quoted on the OTC Bulletin Board or any other stock
exchange on which DynaMotive stock is primarily trading at such time, for
the 20 days preceding the first anniversary of the Agreement for month 13
to 24 of the Term of this Agreement up to the amount of $85,000. Stock
would be released on a quarterly basis against presentation of invoices;
(c) either Party may request that payment for the third year of the Term
shall be made in common stock of DynaMotive then DynaMotive will pay ESI in
common stock 30 days from the second anniversary of the Effective Date at
the price equal to the simple average of the closing price as quoted on the
OTC Bulletin Board or any other stock exchange on which DynaMotive stock is
primarily trading at such time, for the 20 days preceding the
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second anniversary for months 25 to 36 of the Term of this Agreement up to
an aggregate amount of $ 85,000 for the year.
(d) notwithstanding the foregoing, if a Party requests the payment of fees
in cash in the third year of the Term then the payment of fees by
DynaMotive to ESI shall be $85,000 in cash for the third year of the Term
of this Agreement. Payment in cash will be made monthly in arrears against
presentation of invoices.
Personnel
4.2 Upon execution of this Agreement, ESI will appoint one employee who is a
suitably qualified to manage DynaMotive's account. ESI would further provide
strategic advice pursuant to clause 3 from its pool of expertise as may be
required from time to time by DynaMotive.
Replacement Rights of DynaMotive
4.3 DynaMotive will have the right to have replaced, the person appointed
pursuant to Section 4.3 if, in DynaMotive's not unreasonable determination, such
person is not performing satisfactorily. DynaMotive will provide specific
written reasons for its determination. Upon receipt of such reasons, ESI will
use commercially reasonable effort to replace such appointee with an appointee
whose qualifications and experience are acceptable to DynaMotive, acting
reasonably. ESI will perform the replacement within a reasonable amount of time
from receipt of written reasons from DynaMotive.
Additional Personnel
4.4 ESI will, at DynaMotive's request, appoint additional employees who are
suitably qualified and experienced to dedicate their normal working hours to the
management of all aspects of the DynaMotive account at DynaMotive's expense as
per Schedule A.
ESI Partners
4.5 ESI may, with DynaMotive's consent in writing, which consent may be withheld
for any reason, solicit the strategic advice of ESI Partners, subject to any ESI
Partner entering into a confidentiality agreement on terms similar to those
contained herein prior to the disclosure of any information related to
DynaMotive, the Technology or Bio Oil, by ESI to the ESI Partner.
Consulting
4.6 ESI will provide ongoing continuous consulting services to DynaMotive in the
implementation of the Technology including:
conducting emissions baseline studies to evaluate the emission reduction
potential for the Technology in different applications;
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prepare appropriate regulatory and financial offering documentation to
permit a review of the emission reduction work by relevant external parties
interested in purchasing or otherwise rewarding the environmental benefits
of the DynaMotive process
providing regular reports as to the nature and results of its activities.
4.7 ESI agrees that any development shall be performed in accordance with agreed
upon protocols and all applicable laws.
4.8 DynaMotive will have the right, but not the obligation, to monitor in
conjunction with ESI, the activities and goals towards which ESI's activities
should be directed as agreed upon by the Project Management Committee.
4.9 ESI will provide recommendations on a regular basis as to the direction for
the development of further business opportunities for the Technology, pursuant
to the terms and conditions of this Agreement.
PART 5
SERVICES
Services
5.1 ESI will provide the Services to DynaMotive and licensees of Technology
pursuant to the terms and conditions set out in Schedule A.ESI would present
DynaMotive with order for services under the specific headings and the services
would be deemed to be contracted as per schdule A once accepted by DynaMotive in
writing.
Right of First Refusal-Exclusivity as Provider
5.2 The parties acknowledge their intent to enter into a preferred commercial
relationship whereby certain exclusivity rights and a right of first refusal be
provided to ESI to supply certain services. Specific terms and conditions will
be agreed upon by the parties within 180 days of this agreement.
During the180 days from the date of this Agreement, ESI and DynaMotive will
work cooperatively to establish those services that will be provided on an
exclusive basis to DynaMotive and those services that will be provided on a
right of first refusal to ESI. The Parties agree that within the 180 day period,
ESI will have a right of first refusal to project work required by DynaMotive or
Licensees of DynaMotive.
ESI and DynaMotive may consider to establish a special purpose company to
provide the above services to 3rd party clients. Fees under this heading are
anticipated to reasonably reflect ESI's standard fees for similar services in
similar circumstances.
Services envisaged to be provided under exclusive arrangement:
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(a) Project Level Emission Reduction Analysis for Bio-Oil developments
(b) Coordinating emissions and other environmental values to third parties
(c) Developing offering memorandums for emission reductions and other
environmental values
(d) Provision of strategic advice regarding emissions and other
environmental values in jurisdictions where DynaMotive and/or its clients
are considering implementation of the technology
(e) Responsibility for coordinating all regulatory submissions made on
behalf of DynaMotive and/or its clients in regards to emission reductions
and other environmental values.
(f) Development of Monitoring and Verification Plans for emissions
reduction claims
Conditions to Right of First Refusal
5.3 The right of first refusal set forth in Section 5.2 will apply only with
respect:
(a) to services that ESI is reasonably competent to provide,
(b) in circumstances where ESI has the required resources ready and
available to ensure the provision of the required services in a timely,
efficient and effective manner, as when and where required by DynaMotive,
and
(c) in circumstances where DynaMotive has the authority with respect to the
particular project to select ESI as the provider of the services in
question.
Following receipt of notice from DynaMotive setting forth the terms and
conditions and other details of the services to which the right of first refusal
applies, ESI will confirm in writing to DynaMotive within 15 days whether it is
willing to provide those services upon the terms and conditions set forth in the
notice from DynaMotive. If ESI fails to 12 confirm its acceptance as provided
herein, DynaMotive will be free to engage a third party to provide the services
upon those terms and conditions. If DynaMotive can demonstrate reasonably that
ESI's price is 12.5% or more higher, or that its terms and conditions of service
are materially less favourable to DynaMotive than those of other qualified
service providers, ESI may either adjust it price or terms and conditions as
required to match the other service provider or decline to provide those
services. If during any 12 month period ESI declines to provide services to
which the right of first refusal applies more than 30% of the time within any
geographic area, ESI's right to be the exclusive provider of services in that
area under the right of first refusal will be cancelled. For the purposes of
this Section 5.3, North America, South America, the European Union and Latin
America are each deemed to be a geographic area and, in all other cases, a
country will be deemed to be a geographic area.
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Marketing
5.5 ESI will assist in all aspects of marketing, promoting and selling the
Technology in all relevant and applicable markets, as agreed upon by the
parties.
Fees for Services
5.6 In addition to the Services to be provided herein by ESI, DynaMotive may, by
separate written purchase order, request that ESI provide additional services
(). DynaMotive will pay ESI for the Services pursuant to the terms of Schedule
A.
5.7 ESI will invoice DynaMotive for the Services pursuant to the terms below,
paid in cash, common shares and the issuance of non-transferable warrants as
follows:
The parties will determine an annual budget for services for each year. The
budget shall be prepared as an estimation of services required to be
provided to meet DynaMotive's development plans. The determination and
approval of a budget would not constitute a contract for services. Services
would be rendered pursuant to specific project requirements by DynaMotive
and the fair market value of such services when rendered Shall be paid for
on the basis of 50% cash, and 50% in common shares Valued according to
Section 4.1(a), (b) and (c), plus the allotment of warrants equal in number
to one-half the number of common shares which warrants shall be
non-transferable, and exercisable at at the higher of $1.50 or 50% above
the established value for the stock for the relevant period per common
share and have a 3-year term from the date of issuance. The Warrant
exercise price (after the 2001/2002 budget) shall be reset annually at a
premium to the price of the shares set under Section 4.1(b) and (c). Shares
and warrants shall be issued within 10 days of each calendar quarter
commencing January 10, 2002.
For the year commencing October 1, 2001 budgeted services by ESI shall Have
an estimated fair market value of $300,000 plus the guaranteed amount of
$85,000 under Section 4.1 for an aggregate of $385,000 at standard ESI
billing rates. The amounts when due shall be paid for as follows:
Payable
-----------------------------
Section Amount Cash Shares Warrants
@ 1.50
-------------------------------------------------------
Section 4.2 $ 85,000 113,333 56,666
Section 5.7 $300,000 $150,000 200,000 100,000
For purposes hereof, ESI shall invoice monthly providing reasonable Details
of activities, results, and responsible personnel time recorded. DynaMotive
shall pay cash portion monthly and shares and warrants quarterly by January
10, April 10, July 10 and October 10 of each year for the previous quarter
as set out above.
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Fees for Services to Licensees
5.8 Regardless of the provisions of Section 5.7, if ESI provides services to
Third Parties on behalf of DynaMotive, ESI and DynaMotive will negotiate the
fees for such services based on the nature of the services and the scope and
value of the project in question. The negotiated fees are anticipated to
reasonably reflect ESI's standard fees for similar services in similar
circumstances.
Expenses
5.9 Provided DynaMotive approves a budget in advance, reasonable travel, living
and other expenses will be reimbursed to ESI by DynaMotive at cost within 30
days of receipt by DynaMotive of an invoice for such expenses together with
appropriate supporting invoices or other verification acceptable to DynaMotive
acting reasonably.
PART 6
INFORMATION, ASSISTANCE AND COOPERATION
Provision by DynaMotive of the Technology
6.1 DynaMotive will provide ESI with reasonable access to information related to
the Technology subject to such restrictions, as DynaMotive may consider
appropriate to safeguard confidentiality.
Provision of Technical Assistance and Information to DynaMotive
6.2 ESI will provide
DynaMotive with reasonable access to information to all information in
ESI's control or possession related to the Technology; and
Non-Solicitation of Employees
6.3 Other than any transfers and secondments of employees contemplated in this
Agreement, no Party, will from the date of execution of this Agreement and until
the expiry of one year after the termination or expiration of this Agreement,
solicit for employment or employ any Person who is or was an employee of the
other Party or induce any such employee to leave his or her employment with such
other Party.
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PART 7
TRADEMARKS AND PATENTS
Trademark/Brand Use
7.1 Nothing contained in this Agreement provides a licence to use any of the
other Party's trademarks, tradenames or name in any manner whatsoever.
Action by Parties to Protect Intellectual Property from Infringement
7.2 If ESI becomes aware of any infringement of DynaMotive's Intellectual
Property Rights by a Third Party, ESI will immediately notify DynaMotive of such
infringement and provide all reasonable assistance to DynaMotive in the
prosecution or defence of DynaMotive's Intellectual Property Rights.
PART 8
NON-COMPETITION
Non-Competition by ESI
8.1 ESI will not directly or indirectly, in sole proprietorship, in any
partnership or joint venture or as an owner of more than 10% of the voting
shares in the capital of any class of a corporation or in any other manner,
compete with DynaMotive in the research, development, production, distribution,
sale or service of the BioOil Technology during the Term of this Agreement and,
for a period of 10 years following the termination or expiration of this
Agreement.
Proceedings
8.2 Each Party will ensure that it does not, at any time, take any step or
proceeding to have any of the provisions contained in this Agreement declared
invalid or unenforceable or use any defence based on a claim of invalidity or
unenforceability of any provision contained in this Agreement.
PART 9
INTELLECTUAL PROPERTY &
CONFIDENTIALITY
Intellectual Property Ownership
9.1 Notwithstanding anything to the contrary in this Agreement, all intellectual
property and improvements, enhancements and modifications thereto; materials,
documents, data, information, know-how, methodologies, techniques, opinions and
suggestions of every kind
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and description supplied to ESI by or on behalf of DynaMotive or prepared or
developed by ESI for improvements of the Technology, pursuant to this Agreement,
----------------------------------
shall be the sole and exclusive property of DynaMotive.
9.2 DynaMotive shall have the sole right to make whatever use it deems desirable
of any of the same; provided that ESI may retain copies of such materials if and
to the extent required by applicable laws.
Retention of Materials
9.3 Unless otherwise required by law or the terms of this Agreement, all such
DynaMotive property which ESI shall have in its possession shall be maintained
in a safe and secure place by ESI for a period of not less than three years from
the date of receipt thereof and shall be organized in such manner that it will
be ready for immediate reference.
9.4 After three years or such longer period as may be required by applicable
laws, ESI will dispose of or deliver such property to DynaMotive in accordance
with DynaMotive's written instructions.
9.5 If DynaMotive fails to give those instructions, ESI will notify DynaMotive
in writing of that fact and, if said instructions are still not forthcoming
within 30 days of such notification then ESI may destroy such property as it
determines.
Disclosure
9.6 ESI will disclose promptly and fully to DynaMotive or its nominee any and
all patentable inventions, discoveries, Know-How, methodologies, techniques and
improvements learned, conceived or made by or on behalf of ESI or its employees
or agents relating to the Technology.
Assistance
9.7 Whenever requested to do so by DynaMotive, ESI will execute (and will cause
each and every one of its employees and agents to execute) any and all
applications, assignments or other instruments and give testimony which
DynaMotive shall deem necessary to apply for any obtain letters of patent,
copyright or other similar protections available in the United States, Canada or
any other country or to otherwise protect DynaMotive's interest therein provided
that DynaMotive will reasonably compensate ESI for any time devoted to said
activities after the term hereof and to reimburse it for expenses incurred in
connection therewith.
9.8 ESI will include in every agreement with any of its investigators,
scientists, employees, officers or agents a provision requiring such persons o
acknowledge DynaMotive's exclusive ownership of all intellectual property rights
related to the Technology and to assign to DynaMotive, on terms substantially
similar to this section, all patentable inventions, discoveries, improvements,
know-how, methodologies, techniques and other intellectual property relating to
the Technology learned, conceived or made by or on behalf of such persons.
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Confidentiality Obligations
9.9 During the Term and for a period of five years following its expiration or
termination for any reason, each Party will, and will cause its directors,
officers, employees and agents to, keep all Confidential Information disclosed
to any of them by the other Party confidential and will not use or disclose such
Confidential Information to any Person except to the extent
such use or disclosure is expressly permitted or contemplated pursuant to
this Agreement or any agreement contemplated herein;
such use or disclosure is strictly necessary to enable the recipient of
such Confidential Information to exercise its rights and perform its
obligations under this Agreement or any agreement contemplated in this
Agreement;
such use or disclosure is required by applicable law;
such information is in the public domain other than as a result of a breach
of this Agreement or any agreement contemplated in this Agreement; or
such use or disclosure is required pursuant to a final order or judgement
of a court of competent jurisdiction and in such case the Parties will
cooperate with one another to obtain an appropriate protective order or
other reliable assurance that the confidentiality of such Confidential
Information will be maintained.
Publicity
9.10 Each Party will not, and will ensure that its Affiliates, directors,
officers, employees and agents do not, release any publicity or advertising
relating to this Agreement, the agreements and instruments entered into pursuant
to this Agreement or the transactions contemplated hereunder and thereunder to
any Third Party, including any news media organization, without the prior
consent of the other Party.
Treatment of Confidential Information
9.11 Each Party acknowledges that the Confidential Information of the other
Party consists in part of information vital to the business and commercial
prospects of the other Party and that such information is the special, valuable
and unique property of the other Party and would not normally be disclosed to
it. Accordingly, each Party agrees to act as a fiduciary of the other Party and
to use commercially reasonable efforts to protect Confidential Information and
keep it confidential using a standard of care no less than the degree of care
that such Party would be reasonably expected to employ for its own Confidential
Information.
Actions to Protect Confidential Information
9.12 Without prejudice to any other rights or remedies, in the event of
litigation relating to a breach of the provisions of this Part 9, if a court of
competent jurisdiction determines in a final, non-appealable order that any of
such provisions has been breached, the
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Party in breach will indemnify and hold harmless the other Party for its costs
and expenses (including reasonable legal fees and expenses) incurred in
connection with all such litigation.
No Waiver By Virtue of Non-Exercise of Rights
9.13 No failure or delay by either Party or either Party's respective
representatives in exercising any right, power or privilege under this Part 9
will operate as a waiver thereof nor will any single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege
hereunder. No provision of this Part 9 may be waived or amended nor any consent
given except in writing signed by a duly authorized officer of each Party so
waiving or consenting.
Confidentiality Provisions Effective on Effective Date
9.14 The provisions contained in this Part 9 will take effect on the Effective
Date, at which time they will supersede the terms and conditions contained in
any previous agreement or undertaking between DynaMotive and ESI.
PART 10
WARRANTIES & LIMITED LIABILITY
Warranty
10.1 Except as expressly stated in this Agreement, DynaMotive makes no warranty,
representation, condition, or covenant of any kind, express, or implied, oral or
written, statutory or otherwise, all implied warranties, representations,
conditions or covenants of merchantable quality or fitness for a particular
purpose or warranties arising from a course of dealing or usage of trade or that
any product to be developed as part of the agreement will become functional or
does not infringe upon the Intellectual Property Rights of any Third Party are
hereby expressly waived and disclaimed.
Limited Liability
10.2 DynaMotive will not be liable to ESI with respect to anything done or
omitted to be done, in accordance with the terms of this Agreement or
instructions properly received pursuant hereto, if done in good faith and with
reasonable care and without wilful or wanton misconduct on DynaMotive's part.
10.3 DynaMotive will not be liable to ESI for any act or omission that results
in any claim, damage or legal action whatsoever for any act or omission of ESI
in performing any of obligations required of ESI under this Agreement
Indemnity
10.4 ESI will indemnify and hold DynaMotive harmless against any loss, claim,
damage, judgement, liability or expense (including reasonable legal fees and
expenses on a
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solicitor and his own client basis) resulting from direct act or omission of ESI
in connection with ESI's performance or breach of its obligations under this
Agreement.
10.5 DynaMotive will indemnify and hold ESI harmless against any loss, claim,
damage, judgement, liability or expense (including reasonable legal fees and
expenses on a solicitor and his own client basis) resulting from direct act or
omission of DynaMotive in connection with DynaMotive's performance or breach of
its obligations under this Agreement.
10.6 Notwithstanding any provision to the contrary contained in this Agreement,
neither of the parties shall be responsible for losses or consequential,
indirect or special damages of any kind that arise from or are in any way
related to the performance or breach of this Agreement except for a breach of an
obligation under Part 9.
10.7 Except for a breach of an obligation under Part 9, the total liquidated
damages against one Party by the other arising for any liabilities for failures
to comply with obligations under this Agreement will be limits to an amount
equal to 30% of the revenue generated by the item in question.
10.8 On a case by case basis, the parties will judge if DynaMotive requires
additional insurance coverage for contingencies. If, such additional coverage is
available on commercially reasonable terms and is recommended by ESI, but
DynaMotive decides not to obtain that coverage, ESI will be released of any
responsibility arising from such decision.
PART 11
TERMINATION
Termination Without Cause
11.1 Any Party may terminate this Agreement without cause by giving, at any time
after the first anniversary of the Effective Date, at least six months' notice
in writing of such termination.
Termination for Cause
11.2 Subject to Section 11.3, Section 11.4 and Section 11.5, if a Party (a
"Breaching Party") directly or indirectly
commits a material breach of any provision of Part 9;
commits a material infringement of any interest of another Party in
Intellectual Property Rights or Know-How; and
commits a material default in observing or performing any other material
covenant, agreement or condition of this Agreement on its part to be
observed;
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(each a "Fundamental Breach") the result of which is that it would be
unconscionable for the other Party (the "Non-Breaching Party") to be
obligated to continue to observe its covenants and obligations under this
Agreement. The Non-Breaching Party may terminate this Agreement for cause.
Notice of Fundamental Breach
11.3 A Party that determines that a Fundamental Breach has occurred may give
written notice of such Fundamental Breach (the "Notice of Fundamental Breach")
to the Breaching Party and a copy of such notice to each other Party, which
notice will set out in reasonable detail the nature of the Fundamental Breach
and will expressly refer to this Part 11.
Curing of Fundamental Breach
11.4 A Breaching Party that receives a Notice of Fundamental Breach will have
such reasonable period of time as is necessary to cure such breach, but in any
event no more than 30 days from the date of receipt by it of a Notice of
Fundamental Breach, and if such Breaching Party cures the Fundamental Breach
which is the subject of the Notice of Fundamental Breach within such period, or
the Party or Parties that gave notice of such Fundamental Breach 20 under
Section 12.3 waive such Fundamental Breach within such period, the rights of the
Non-Breaching Parties under this Part 11 in respect of such Fundamental Breach
will terminate.
Termination on Failure to Cure Fundamental Breach
11.5 If a Breaching Party does not cure a Fundamental Breach for which it has
received a Notice of Fundamental Breach within the period of time prescribed in
Section 11.4 and the Fundamental Breach is not waived in accordance with Section
11.4, the Non-Breaching Parties in respect of such Fundamental Breach may, by
mutual agreement and by notice (the "Notice of Termination") to the Breaching
Party, terminate this Agreement effective the date of the Notice of Termination.
Unless so terminated, this Agreement will continue in full force and effect
except as otherwise expressly provided herein and, except as otherwise agreed by
the Non-Breaching Parties, the New Alliance will be deemed to continue between
the Non-Breaching Parties.
Termination of Service Schedules
11.6 A Party may terminate a Service Schedule pursuant to the terms and
conditions of the Service Schedule without terminating this Agreement.
No Limitation of Remedies
11.7 Nothing in this Part 11 is intended to preclude or limit in any way any
Party's right to pursue any other remedy it may have against another Party, in
law or in equity, in respect of a Fundamental Breach.
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PART 12
DISPUTE RESOLUTION AND APPLICABLE LAW
Dispute Resolution
12.1 Any dispute between the parties in connection with the Agreement
will first be attempted to be resolved by the parties through good faith
negotiations and in connection therewith, either Party may request in
writing that the other Party meet and commence such negotiations within a
reasonable period of time (in no event later than seven days) after such
request; if within seven days after commencement of negotiations, the
parties cannot come to agreement, the parties will attempt to resolve the
dispute by mediated negotiation and will use best efforts to agree on the
choice of mediator within seven days of a request for mediation by one
Party to the other;
if the matter cannot be resolved by mediation within 14 days after the
appointment of a mediator, or if the parties cannot agree on a mediator
within seven days after a request of a Party to appoint a mediator, either
Party may refer the matter to arbitration in accordance with the provisions
set out below;
any dispute between the parties which cannot be settled by negotiation or
mediation will be determined by arbitration in accordance with the
Commercial Arbitration Act (British Columbia) and arbitration will be the
Exclusive method for final resolution of such dispute;
there will be a single arbitrator who will be disinterested in the dispute
or controversy and will be impartial with respect to all parties hereto. If
the parties cannot agree on an arbitrator within seven days after the
dispute going to arbitration, the appointment will be according to the
Commercial Arbitration Act (British Columbia);
the determination of the arbitrator will be final and binding on the
parties;
each Party will bear its own costs in any such arbitration, provided that,
if the arbitrator finds that any Party acted unreasonably he may, in his
discretion, award costs against such Party;
the arbitrator will have the discretionary authority to grant injunctive
relief and specific performance as may be requested by a Party;
any order of an arbitrator may be entered with a Court of competent
jurisdiction for the purposes of enforcement;
the place of arbitration will be Vancouver, British Columbia; and
the arbitrator will give effect insofar as possible to the desire of the
parties hereto that the dispute or controversy be resolved in accordance
with good commercial practice, and the arbitrator will decide such dispute
in accordance with the laws of British Columbia.
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Applicable Law
12.2 This Agreement is and will be deemed to have been made in British Columbia
and the construction, validity and performance of this Agreement will be
governed in all respects by the laws of the Province of British Columbia. The
parties hereto irrevocably attorn to the jurisdiction of the courts of the
Province of British Columbia in regard to any claim or action arising out of
this Agreement.
PART 13
GENERAL
Modifications, Approvals and Consents
13.1 No amendment, modification, supplement, termination or waiver of any
provision of this Agreement will be effective unless in writing signed by each
of the Parties having rights under this Agreement at that time and then only in
the specific instance and for the specific purpose given.
Further Assurances
13.2 The Parties will execute such further assurances and other documents and
instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.
Entire Agreement
13.3 The provisions in this Agreement constitute the entire agreement between
the Parties in respect of the matters agreed to or expressly contemplated herein
and supersede all previous expectations, understandings, communications,
representations and agreements, including the MOU, whether verbal or written
among such Parties.
Expenses
13.4 Except as otherwise expressly stated in this Agreement, each Party will
bear its own costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement.
Notices
13.5 Every notice, request, demand, direction or other communication (a
"Notice") required or permitted to be given pursuant to this Agreement will be
deemed to be well and sufficiently given if in writing, in the English language,
and delivered by hand (including recognized overnight courier service) in each
case addressed as follows:
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if to DynaMotive at:
105 -1700 West 75th Avenue
Vancouver, British Columbia
Canada, V6P 6G2
Attention: Andrew Kingston
with a copy to
Lang Michener
1500 - 1055 West Georgia Street
Vancouver, British Columbia
Canada V6E 4N7
Attention: Karl Gustafson
if to ESI at:
206 West Bonita
Claremont, CA 91711 USA
Attention: Marc Stuart
or to such other address as is specified by the particular Party by Notice
to the others.
Deemed Receipt
13.6 Any Notice delivered as aforesaid will be deemed conclusively to have been
effectively given and received on the day Notice was delivered as aforesaid if
it was delivered on a day that was a Business Day or on the next day that is a
Business Day if it was delivered on a day that was not a Business Day.
Change of Address
13.7 A Party may at any time, by Notice to the others, change its address to
some no less convenient address and will so change its address whenever its
address ceases to be suitable for delivery by hand.
Force Majeure
13.8 No Party will be liable for its failure to perform any of its obligations
under this Agreement due to a cause beyond its control including acts of God,
fire, flood, explosions, strikes, lockouts or other industrial disturbances,
laws, rules and regulations or orders of any duly constituted governmental
authority (each an "Intervening Event").
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Time Limits Extended
13.9 Subject to Section 13.11, all time limits imposed by this Agreement will be
extended by a period equivalent to the period of delay resulting from an
Intervening Event.
Elimination of Intervening Event
13.10 A Party relying on the provisions of Section 13.8 will take all reasonable
steps to eliminate any Intervening Event and, if possible, will perform its
obligations under this Agreement as far as practical, but nothing herein will
require the Party to question or test the validity of any law, rule, regulation
or order of any governmental authority or to complete its obligations if an
Intervening Event renders completion impossible.
Continuation of Intervening Event
13.11 If an Intervening Event continues for more than 180 days and materially
adversely affects the ability of a Party to perform its obligations hereunder,
the Parties will use their best efforts to adapt the requirements of this
Agreement and each other agreement contemplated in this Agreement in a manner
that achieves to the greatest extent possible the economic, legal and commercial
objectives of such Parties as evidenced in this Agreement and the agreements
contemplated in this Agreement and, if they do not agree on the manner in which
such requirements should be adopted within a further 90 days, any such Party may
require the matter to be determined in accordance with Part 12.
Enurement
13.12 This Agreement will enure to the benefit of and be binding upon the
Parties and their respective successors and permitted assigns.
Severability
13.13 If any provision contained in this Agreement is found by any court,
arbitrator or Governmental Authority, for any reason, to be invalid, illegal or
unenforceable in any respect in any jurisdiction,
the validity, legality and enforceability of such provision will not in any
way be affected or impaired thereby in any other jurisdiction and the
validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby, unless in
either case as a result of such determination this Agreement would fail in
its essential purpose; and
the Parties will use their best efforts to substitute for any provision
that is invalid, illegal or unenforceable in any jurisdiction a valid and
enforceable provision which achieves to the greatest extent possible the
economic, legal and commercial objectives of such invalid, illegal or
unenforceable provision and of this Agreement and, failing the agreement of
the Parties on such a substitution within 30 days after the finding of the
court, arbitrator or Governmental Authority any Party may refer the matter
for dispute resolution under Part 12.
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Survivability
13.14 Unless otherwise expressly provided in this Agreement, those provisions
which by their nature are intended to survive the expiration or termination of
this Agreement will survive and remain in effect for a period of three years
following the expiration or termination of this Agreement. The provisions of
Part 8 (Non-Competition) shall survive for a period of 10 years, and the
provisions of Section 9.9 (Confidentiality Obligations) shall survive for a
period of five years, following the expiration or termination of this Agreement.
The provisions of Section 9.1 shall continue in effect indefinately regardless
of the expiration or termination of this Agreement
Cooperation
13.15 The Parties will cooperate to apply for and obtain all necessary
exemptions and rulings from applicable Governmental Authorities.
Deemed Term of Agreement
13.16 If the length of the term of this Agreement is found by any court,
arbitrator or Governmental Authority to be invalid, illegal or unenforceable,
the term of this Agreement will be deemed to be replaced by a term having the
maximum length of time which is not invalid, illegal or unenforceable according
to such court, arbitrator or Governmental Authority.
Time of the Essence
13.17 Time is of the essence in the performance of each obligation under this
Agreement.
Counterparts
13.18 This Agreement may be executed in any number of notarial authentic copies,
each of which will together, for all purposes, constitute one and the same
instrument, binding on the Parties, and each of which will together be deemed to
be an original.
No Partnership or Unincorporated Joint Venture
13.19 The Parties expressly disclaim any intention to create or form a
partnership or unincorporated joint venture among any of the Parties or any of
the other corporations referred to in this Agreement.
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IN WITNESS WHEREOF this Agreement has been executed by the Parties on the day
and year first above written.
DYNAMOTIVE ENERGY SYSTEMS CORPORATION
Per: /s/ Andrew Kingston
-----------------------------
Authorized Signatory
Per: /s/ Bayne E. Boyes
-----------------------------
Authorized Signatory
ECOSECURITIES INC.
Per: /s/ Marc Stuart
-----------------------------
Authorized Signatory
Per:
-----------------------------
Authorized Signatory