EXHIBIT 4.3
OPERATION AND MAINTENANCE AGREEMENT
by and between
PRINS RECYCLING CORP.
and its Subsidiaries
KTI OPERATIONS, INC.
Dated as of April 21, 1997
OPERATION AND MAINTENANCE AGREEMENT
This Operation and Maintenance Agreement (the "Agreement") dated as of
April 21, 1997, by and between KTI Operations, Inc., a Delaware corporation (the
"Operator"), and PRINS RECYCLING CORP., a New York corporation and its
subsidiaries (the "Owner") witnesseth that:
WHEREAS, the Owner owns recycling and paper processing facilities located
in Newark, New Jersey, Boston, Massachusetts and Chicago, Illinois (as
hereinafter defined, the "Facilities") which processes waste paper and
commingled post consumer recyclables;
WHEREAS, the Owner has sought relief under Chapter 11 of the Bankruptcy
Code;
WHEREAS, the Operator has significant experience in the operation of waste
processing facilities;
WHEREAS, the Owner desires to obtain access to the experience of the
Operator by retaining the Operator to provide supervisory services, advice and
recommendations to the Owner concerning the administration, operations and
maintenance of the facilities; and
WHEREAS, the Operator is a wholly-owned subsidiary of KTI, Inc. ("KTI ), a
New Jersey publicly traded company listed in the NASDAQ National Market system,
which has an interest in acquiring the facilities under an Owner sponsored plan
of reorganization.
WHEREAS, the Operator is willing to provide the Owner with supervisory
services, advice and recommendations concerning the administration, operation
and maintenance of the Facilities; and
NOW THEREFORE, in consideration of the mutual covenants contained herein,
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree to enter into
this Agreement:
ARTICLE I.
DEFINITIONS
Affiliate: With respect to any Person, any Person or group of Persons
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person or group of Persons acting in
concert, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
Approved Capital Budget: The capital equipment repair and replacement
budget as approved by the Owner, as such Capital Budget may be modified in
writing in accordance with the terms of this Agreement.
Approved Operating and Maintenance Budget: The Operating Budget as
approved by the Owner as such Operating and Maintenance Budget may be modified
in writing in accordance with the terms of this Agreement. The Operating Budget
shall include the fully allocated salary costs for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
Calendar Month: The period from the first day of any month to the last day
of such month inclusive.
Capital Budget: That budget to be prepared by the Operator pursuant to
Article 2.02 of this Agreement. The proposed Capital Budget shall include items
of capitalized equipment (as treated for accounting purposes) to be replaced or
to be repaired, as well as replacement inventory of spare parts, for the period
from the commencement of the Agreement to July 31, 1997.
Effective Date of this Agreement: This Agreement shall be effective at
12:01 A.M. of the day after the Bankruptcy Court for the District of New Jersey
approves this Agreement.
Equipment: All of the recycling, processing, mechanical and electrical
equipment, instrumentation and control equipment, and Rolling Stock used at or
in connection with the operation of the Facilities, and owned or controlled by
the Owner.
Facilities: Company's recycling and waste paper processing facility and
ancillary facilities located on the Site as presently constituted, in the Cities
of Newark, New Jersey, Boston, Massachusetts and Chicago, Illinois as of the
date of this Agreement, together with any ancillary facilities which may
hereafter be acquired or constructed by Owner and used for or in conjunction
with the processing of commingled post consumer recyclables and waste paper,
whether or not located on the present Site within the Cities of Newark, Boston
and Chicago; provided that any such subsequently acquired or constructed
ancillary facilities, or an allocated portion thereof to be included within the
definition of Facilities for purposes of this Agreement, shall be exclusively
devoted to the replacement or support of the primary activities of the plant
located on the present Sites as contemplated by this Agreement.
Facility Costs: All costs associated with the day to day operations,
maintenance and administration of the Facilities.
Force Majeure: With regard to the performance of any obligation under this
Agreement, except as to payment obligations, events such as an act of God, act
of public enemy, sabotage, wars, blockade, insurrection, riots, explosions,
fires, floods, storm, lightning, earthquake, wind, ice, strikes, lockouts or
other industrial disturbance, drought, appropriation and other causes not
reasonably within the control of any party invoking Article 10.10 hereof for its
benefit. The financial inability of either party hereto pay or perform its
obligations under this Agreement shall not be deemed as events of Force Majeure.
Good Engineering Practices: Those practices, methods and equipment that
are generally observed at the time of reference in prudent engineering practice
for handling, processing and disposal operations, similar in size and function
to the Facility, in order to operate waste processing and other equipment
lawfully, with safety, dependability, efficiency and economy and in compliance
with applicable governmental codes, if any, establishing engineering standards
for such waste handling, processing and disposal operations.
Hazardous Waste: Waste with inherent properties which make such waste
dangerous to manage by ordinary means, including but not limited to chemicals,
explosives, pathological wastes, radioactive wastes, toxic wastes and other
wastes defined as hazardous at any time during the term of this Agreement by the
States of New Jersey, Massachusetts and Illinois or the Resource Conservation
and Recovery Act of 1976, as amended, or other Federal, State or local laws,
regulations, orders, or other actions promulgated or taken at any time and from
time to time, or any material which, if processed at the Facility, would be
deemed hazardous at any time during the term of this Agreement by the States of
New Jersey, Massachusetts or Illinois or under the Resource Conservation and
Recovery Act of 1976, as amended, or other federal, state or local laws,
regulations, orders, or other governmental actions promulgated or taken at any
time and from time to time.
Labor: All natural persons employed by Operator to perform the tasks
necessary to supervise, give advice and make recommendations concerning the
administration, operation and maintenance of the Facilities in accordance with
Good Engineering Practices and as required by this Agreement.
Labor Costs: For any relevant period the sum of all costs, fees and
expenses incurred by Operator for Labor during such period, including without
limitation all (a) salaries, wages and other compensation payable to or for the
account of employees, (b) bonus and incentive compensation payments made to or
for the account of employees, (c) contributions and payments to employee
savings, retirement and other benefit plans for employees, (d) the cost of
providing medical, dental disability and occupational hazard plans or insurance
for employees and their dependents, (e) the cost of providing life insurance
coverage for employees and their dependents, (f) employee training relating to
the administration, operation and maintenance of the Facility, including
tuition, travel, meals and lodging and (g) FICA and other taxes or governmental
charges payable with respect to employees, including unemployment compensation.
Legal Requirements: All laws, statutes, codes, ordinances, orders, awards,
judgments, decrees, injunctions, rules, regulations, authorizations, consents,
approvals, orders, permits, franchises, licenses, directions and requirements of
all governments or governmental units, courts or arbitrators, which now or at
any time hereafter may be applicable to or affect the Facility or any part
thereof or any streets, sidewalks, curbs, or gutters adjoining the Facility or
any part thereof or any use or condition of the Facility or any part thereof or
the acquisition, construction, ownership, use or operation of the Facility or
any part thereof, except those the non-compliance as to which will not have a
material adverse effect on the acquisition, ownership or operation of the
Facility.
Notice of Termination: That notice issued by the Owner or Operator
pursuant to Article VI of this Agreement which shall terminate this Agreement.
Operator Fixed Fee: The Operator Fixed Fee shall be for $166,667 per
month, subject to a maximum of $500,000 payable to the Operator (whether or not
the term of the agreement shall continue for more than three (3) months.
Operating Budget: That budget to be prepared by the Operator pursuant to
Article 2.02 of this Agreement. The proposed Operating Budget shall include
detailed month by month projections of the Facility's operating costs, revenues
and performance assumptions for the period commencement of the Agreement to July
31, 1997.
Operating Costs: For any relevant period, the actual costs directly,
properly and reasonably incurred by the Operator for the account of the Owner in
the ordinary course of business for the supervision, administration, operation
and maintenance of the Facility, including, without limitation, Labor Costs;
provided, however, that no costs incurred or paid by the Operator to any
Affiliate of the Operator shall be treated as an Operating Cost unless incurred
in accordance with Article V.
Operator's Invoice: A written document delivered by the Operator to the
Owner stating the amount due for Operating Costs for bi-weekly periods.
Permits: All of the consents, approvals, authorizations, directions,
licenses and permits issued to the Owner or Operator with respect to the
ownership, construction, and operation of the Facility. A list of all Permits as
in effect on the date of this Agreement are listed in Exhibit A hereto.
Person: Any individual or a corporation, partnership, trust, incorporated
or unincorporated association, joint venture, joint stock company, government
(or any agency or political subdivision thereof) or other entity of any kind.
Sites: The real property and any and all rights or interests in real
property upon which the Facilities are located at the time of reference.
Subcontractor: Any person, firm or corporation which performs work for the
Operator or the Owner at the request and direction of the Operator pursuant to
the terms of this Agreement.
ARTICLE II.
DESIGNATION OF OPERATOR AND WORK SCOPE
2.01 Designation of Operator:
(a) The Operator agrees to supervise, give advice and make recommendations
concerning the administration, operation and maintenance of the Facilities
(including, without limitation, maintenance scheduling and planning) in
accordance with the terms and conditions of this Agreement.
(b) Subject to the terms of this Agreement and so long as it remains in
effect, the Owner hereby gives the Operator the non exclusive right (which shall
not constitute an easement or other restriction on the Facility) to enter on the
premises on which the Facilities are located and to occupy and have free access
to use the same for solely the purpose set forth in this Agreement. The Operator
agrees that in its capacity as the Operator it does not and shall not claim at
any time any interest or estate of any kind or extent whatsoever in the
Facilities by virtue of this Agreement or the Operator's occupancy or use of the
Facilities hereunder.
(c) The Operator covenants that it will comply with Good Engineering
Practices in performing its services for the Facilities. In the event that the
Operator fails to comply with Good Engineering Practices in performing its
services for the Facilities for reasons other than the insufficiency of
available operating revenues, and said failure results in the Owner being
assessed fines or penalties by any governmental entity, said fines and penalties
shall be charged back and set off against the Operator's Fixed Fee.
(d) The Operator shall act as the primary spokesman for the Facilities in
consultation with the Owner.
2.02 General Duties: The Operator shall in consideration for the Operator's
Fixed Fee, supervise, give advice and make recommendations to the Owner
concerning the administration, operations and maintenance of the Facilities in
accordance with Good Engineering Practices and in substantial compliance with
all Legal Requirements. Subject to the foregoing, as well as the satisfaction by
the Owner of its obligations under Article III hereof, the Operator shall
supervise, give advice and make recommendations concerning the following tasks:
(a) All administrative work of the Facilities including:
(i) The Planning, scheduling and conduct of all business incidental
to the ownership, operation and maintenance of the Facilities.
(ii) The administration of all contracts with private haulers,
municipalities, paper ▇▇▇▇▇ and others on a day to day basis.
(iii) The review, approval and payment, in accordance with the
Approved Operating Budget, on behalf of Owner, to the extent funds are
made available by Owner, of invoices for Facility Costs and
recordkeeping for the Owner.
(iv) Prompt preparation of invoices for all material deliveries in
accordance with the applicable agreements and collection of payments
on accounts receivable for the Owner's account.
(v) Development and submission of a spare parts inventory program to
the Owner for approval.
(vi) Based on the approved spare parts inventory program, and in
accordance with the Approved Capital Budget or the Approved Operating
Budget, as applicable, the procurement, in Owner's name, of an
inventory of spare parts, materials, and supplies (including
Consumables and items covered by plant office expenses and rolling
stock expenses), and the review, approval and, on behalf of Owner, the
payment of invoices for the same.
(vii) The performance of all accounting services for the Owner
(except as noted below), including but not limited to closing the
books monthly, quarterly and yearly and supplying summary accounting
data to the Owner for any monthly, quarterly, year end or other
reports rendered or to be rendered by Owner. The Operator is not
obligated to prepare tax returns, reports due to the US Trustee or
reports for submission to the Securities and Exchange Commission.
(viii) The preparation of monthly and quarterly detailed financial
and operating reports with Approved Operating Budget and Approved
Capital Budget comparisons (budget to actual including an explanation
of any material variances), an updated annual forecast with actual
year-to-date numbers and updated projections for remaining months, and
such other reports, including reports required by PNC Bank, National
Association, as are reasonably requested by Owner.
(ix) Maintenance of true, complete and accurate cost ledgers and
accounting records in accordance with generally accepted accounting
principles utilized by the Owner regarding the services provided and
expenses paid or incurred by it pursuant to the Agreement.
(x) The preparation of the Operating Budget and Capital Budget to the
Owner for its approval.
(xi) Maintenance of appropriate inventories consistent with the
approved spare parts and inventory plan and the issue, and recording
of issuance, of inventory and spare parts items.
(b) Performance of operation and maintenance services at the Facilities
within budgetary limitations:
(i) Maintenance of an effective and sufficient operating work force
through appropriate hiring, termination, training, administration and
compensation.
(ii) Development and maintenance of safety procedures, a safety
manual, an employee job-site conduct handbook and an effective safety
program, including, without limitation, fire and explosion safety
measures.
(iii) Operation and maintenance of the scale-house and provision
of all related operational services.
(iv) Operation and maintenance of the Facilities in a reasonably
clean, safe and efficient manner in accordance with Good Engineering
Practices and in substantial compliance with all Legal Requirements.
(v) Acceptance, storage and processing of all commingled post
consumer recyclables and waste paper delivered to the Facilities in
accordance with a waste protocol to be agreed upon by the Owner and
Operator provided however, that the Operator shall not be obligated to
accept any waste which it reasonably believes (a) presents a danger to
the health or safety of the public or Facilities personnel, or (b)
would cause the Facilities to be in violation of any Legal
Requirement.
(vi) Maintenance of true, complete and accurate operating logs,
records and reports necessary for proper operation and maintenance of
the Facilities.
(vii) Maintenance at the administrative offices located at the
Facilities of drawings, instruction books, and operating and
maintenance manuals and revision of drawings as modifications are
made.
(viii) Maintenance of Facilities tool room equipment and
instruments.
(ix) Development, implementation and regular updating of a maintenance
program that meets Equipment manufacturers' specifications and
recommendations and the Facilities requirements.
(x) Scheduling and performance of all maintenance necessary to be in
accordance with Good Engineering Practices and manufacturers'
specifications and recommendations and in substantial compliance with
all Legal Requirements.
(xi) Scheduling, performance and recording periodic operational checks
and tests of Equipment which are necessary to be in accordance with
the Equipment manufacturers' specifications and recommendations and in
substantial compliance with all Legal Requirements.
(xii) Evaluation of the nature and impact of any Equipment failure
and if the failure is major or material review the situation with the
Owner and mutually agree on a reasonable remedy of the matter,
provided that in the event of an emergency or other situation where
expediency is required to protect Equipment, property, safety, health,
or the environment, the Operator may take all necessary action to deal
with such situation for the Owner's account without the review and
agreement of Owner.
(xiii) Obtaining and maintaining required Permits in the Owner's
name and on its behalf.
(xiv) Prepare maintenance budget and incorporate the maintenance
items contained therein in the Operating Budget or the Capital Budget,
as appropriate, and operate the Facilities in accordance with the
Approved Operating Budget and Approved Capital Budget for such items.
(xv) Provision of necessary and desirable security services for the
Facilities.
(xvi) Provision of yard maintenance and removal services.
(xvii) Maintenance of adequate inventories or supplies of
consumables.
(xviii) Provision of unrestricted access to the Facility and
cooperation with the Owner in all inspections of the Facilities, which
inspections may occur at any time.
(xix) Operation and maintenance of the Facilities in such a way so as
to be in substantial compliance with all Permit requirements
(including, without limitation, the Environmental Compliance
Standards), taking such samples and performing and reporting such
tests as are required by all Permits, and advising the Owner of any
areas of Permit conflicts or violations or unsatisfactory conditions
or test results, including performing all necessary testing, reporting
and other requirements of Permits.
2.03 The Operator's Authority to Act in an Emergency: Notwithstanding anything
to the contrary contained in this Agreement, the Operator may, without obtaining
the prior written consent of the Company, make any decision or take any action
which otherwise requires the prior written consent of the Company pursuant to
the terms of this Agreement if (i) in the good faith judgment of the Operator,
such decision or action is necessary for the protection of life or health or for
the preservation of the Facilities or to avoid the suspension of any service to
or of the Facilities and there is insufficient time to notify the Owner; and
(ii) expenses incurred by the Operator in advance of notifying the Owner do not
exceed $25,000; provided, that the Operator shall use all reasonable efforts to
notify the Owner and request its consent prior to making any decision or taking
any action and in any event shall notify the Owner and request its consent as
promptly as practicable thereafter. In the event that the consent of the Owner
is denied, the Operator shall use its reasonable efforts to terminate any
contract or agreement entered into on the basis of such emergency, or any work
or services to be performed pursuant thereto.
ARTICLE III.
RESPONSIBILITIES OF THE OWNER
3.01The Owner shall be responsible for the following:
(a) Owner shall promptly pay the Operator the Operating Costs for each
bi-weekly period during the term of this Agreement, beginning on the
Effective Date of this Agreement, and payable on the first business day of
each bi-weekly period continuing until such time as this contract is
terminated under Article VI or VII hereof.
(b) Owner shall pay the Operator's Fixed Fee to the Operator promptly
after the date of confirmation of the Owner's plan of reorganization
following the sale of the Facilities, provided that the Operator shall not
be entitled to receive the Operator's Fixed Fee unless the Facilities are
sold for a net sales price in an amount sufficient to result in net
proceeds paid or payable to PNC in the full amount of its loan, including
principal and interest.
(c) Approve on a timely basis the Operating and Maintenance Budget and
Capital Budget providing for the costs and expenses reasonably necessary
for Operator to administer, operate and maintain the Facility in accordance
with its obligations under this Agreement.
(d) Provide and maintain the insurance coverage required to be maintained
for the Facilities, including:
(i) All Risk Property Damage, including physical damage, business
interruption, extra expense (wind damage, flood, electrical damage) up
to the full value of the Facilities.
(ii) Boiler and Machinery, including physical damage and business
interruption up to the full value of the covered equipment.
(iii) Comprehensive General Liability with combined property
damage and injury coverage.
The Operator shall be listed as an Additional Insured on general liability
policies, including excess liability umbrella. The Owner shall provide the
Operator with certificates of insurance showing policy provisions and showing
the Operator as an Additional Insured on liability policies. The Operator shall
have the right to review all insurance policies and make recommendations
regarding the same. Such policies shall contain a provision that such insurance
policies are primary with respect to any other insurance. Additionally, the
policy provisions shall provide that the Operator be given at least thirty (30)
days prior written notice from the insurance company of policy cancellation(s).
The Owner shall not modify or terminate any insurance coverages listed in this
Article 3.01(c) without the written consent of the Operator.
The Owner waives its right of recourse against the Operator and the Operator's
Subcontractors and their employees for any loss or damage payable by the
insurance coverage listed in this section.
ARTICLE IV.
CERTAIN REPRESENTATIONS AND WARRANTIES
The Operator represents and warrants to the Owner that:
4.01 (a) Corporate Organization: The Operator is duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) Power and Authority: The Operator has the requisite corporate power
and authority to enter into this Agreement and to perform according to the terms
hereof.
(c) Due Authorization: The Operator has taken all actions required to be
taken by it under law, its Articles of Incorporation, its bylaws or otherwise
and has obtained all approvals and consents necessary to authorize the
execution, delivery and performance of this Agreement by it and the consummation
of the transactions contemplated hereby except such approvals and consents the
absence of which would not have a material adverse effect on the Facilities, the
Operator or upon the Operator's ability to perform its obligations hereunder.
(d) Validity: This Agreement constitutes the legal, valid and binding
obligation of the Operator, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws or principles of equity
affecting the rights of creditors generally.
(e) No Violation: The execution and delivery of this Agreement does not
contravene any provision of, or constitute a default under, any indenture,
mortgage, or other material agreement binding on the Operator or any valid order
of any court, or any regulatory agency or other body having authority to which
the Operator is subject.
(f) Qualification as Foreign Corporation: The Operator is duly qualified
or licensed to do business and is in good standing in the State of New Jersey,
Massachusetts and Illinois.
(g) Facility Operations: The supervisory services under this Agreement
shall be performed by competent operators, in a competent manner in accordance
with Good Engineering Practices and in substantial compliance with all Legal
Requirements and in accordance with the scope in this Agreement or any other
detailed work scope agreed upon by the parties and will be free from defects in
workmanship.
Provided that Operator has been notified in writing promptly after the
Owner becomes aware of a defect, and whether a claim, however, instituted, is
based on contract, indemnity, warranty, tort (including Operator's own
negligence), strict liability or otherwise, the exclusive remedy for any claim
based on failure of, or defect in, services furnished by Operator hereunder
shall be (a) for deficient services, the retraining or replacement of the
Operator's personnel and the reperformance by the Operator of any defective
portion of the service furnished, and (b) for any damaged part of the equipment
resulting from defective operating, maintenance or repair services performed
under this Agreement, the repair or replacement at the Owner's option of the
damaged part. In any event, however, if damage to any Facility equipment is
caused to any material extent by defective equipment or inadequate or poor
engineering design of the Facilities or equipment therein ("Contributory
Cause"), notwithstanding the neglect or negligence of Operator, such
Contributory Cause, shall bar any claim by Owner against Operator for such
damage.
This warranty is exclusive and in lieu of all other warranties, whether
written, oral, implied or statutory. NO IMPLIED STATUTORY WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY. The
Operator does not warrant under this Agreement any product, material or services
of others which the Owner has furnished. Unless expressly stated in the work
scope, the Operator does not warrant under this Agreement the fitness or
suitability of the equipment on which the services are performed, or any
modification thereof, for any specific application, performance, results or use.
Any oral or written representation, warranty, course of dealing or trade usage
not contained or referenced herein will not be binding on any party.
4.02 The Owner represents and warrants to the Operator as follows:
(a) Organization: Prins Recycling Corp. is a New York corporation duly
organized, validly existing and in good standing in both the States of New
York and New Jersey.
(b) Power and Authority: Owner has the requisite power and authority to
enter into this Agreement and to perform according to the terms hereof,
subject to approval by the Bankruptcy Court for the District of New Jersey
(c) Due Authorization: The Owner has taken all actions required to be
taken by law, its Articles of Incorporation, its bylaws or otherwise to
authorize the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, subject to approval by the
Bankruptcy Court for the District of New Jersey.
(d) Validity: This Agreement constitutes the legal, valid and binding
obligation of the Owner, enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws or principles of equity
affecting the rights of creditors generally.
(e) No Violation: The execution and delivery of this Agreement does not
contravene any material provision of, or constitute a material default
under, any material indenture. mortgage or other material agreement binding
on Owner or any valid order of any court, or any regulatory agency or other
body having authority to which Owner is subject.
ARTICLE V.
LIMITATION ON AFFILIATED TRANSACTIONS BY
OPERATOR AND EMPLOYMENT OF CERTAIN PERSONS
Affiliated Transactions: In performing its obligations hereunder, the
Operator will not make any payment to or invest in, or acquire, lease, sell,
transfer or provide any assets or services from or to KTI or any of KTI's
subsidiaries or engage in any other transaction with any of them, except that
the Operator shall be permitted (i) to deal with the Owner in strict accordance
with the express written terms of this Agreement; and (ii) to engage in any
other transaction with KTI and its subsidiaries, which (w) is in the ordinary
course of the Operator's business, (x) is upon terms no less favorable to the
Operator than would be obtained in a comparable arms' length transaction with a
Person not an Affiliate and (y) the Owner has given its prior written consent
after receiving a reasonable description in writing of each of the terms
thereof.
ARTICLE VI.
TERM OF THIS AGREEMENT
6.01 (a) Term: This Agreement will be effective on the Effective Date and
remain in effect until July 31, 1997 unless mutually extended by the Operator
and the Owner.
ARTICLE VII.
EVENT OF DEFAULT
7.01 Event of Default:
Owner shall be in default under this Agreement if:
(a) the Owner fails to pay when due any amount payable by Owner to
Operator hereunder, and ten (10) days have elapsed after such due date;
(b) other than the existing proceedings in the Bankruptcy Court for the
District of New Jersey, there is an assignment for the benefit of the
Owner's creditors, or the Owner is adjudged a bankrupt, or a petition is
filed by or against the Owner which is not dismissed within 60 days under
the provisions of any state insolvency law or under the provisions of the
Federal bankruptcy laws, or the business or principal assets of the Owner
are placed in the hands of a receiver, assignee, or trustee;
(c) the Owner is dissolved and there is no reconstitution of the Owner
within thirty (30) days of such dissolution, or the Owner's existence is
terminated or its business is discontinued;
(d) Owner assigns or transfers this Agreement in violation of Article
9.01;
(e) the Owner shall fail to comply in any material respect with its
obligation to provide and maintain insurance under Article 3.01(c); or
(f) the Owner shall fail to comply in a material respect with any of its
other covenants, agreements or obligations hereunder, and such failure
shall continue for thirty (30) days after the Owner receives notice from
the Operator with respect to the same;
7.02 Remedy. If the Owner is in default, the Operator may, at its option and
without further notice, proceed to enforce any or all of the following remedies
by notice in writing to the Owner,
(a) terminate this Agreement as provided in Section 7.03; provided that if
the default arises under Section 7.01(a) above and Owner disputes the amount due
in good faith, Operator may not terminate this Agreement until the dispute is
resolved and payment due is thereafter withheld wrongfully.
(b) Proceed to arbitration in accordance with Article XIII
7.03 Rights Upon Default.
(a) Right of Operator. Upon the occurrence and continuance of an event of
default described in Section 7.01, the Operator may, at its option, terminate
this Agreement by delivering written notice of termination to the Owner, which
notice of termination shall be effective fifteen (15) days after the date it is
received by Owner; provided, however, that if the Owner has cured such default
within such fifteen (15) day period, such Notice of Termination shall be deemed
to have been canceled and shall be null and void. In the event of such
termination, the Owner shall pay all Operator Fixed Fee then due. In such event,
Operator shall take all necessary steps to protect the Facilities, leaving the
same in an orderly and safe condition, prior to leaving the premises.
7.04 Right of Owner to Terminate. Upon a default by Operator of its obligations
hereunder the Owner may, at its option, terminate this Agreement upon ten (10)
days written notice.
ARTICLE VIII.
LIMITATIONS OF LIABILITY
8.01 Limitation of Liability. The Operator's liability to the Owner, on all
claims of any kind (excluding death or bodily injury), whether based on
contract, indemnity, warranty, tort (including as the case may be, a party's own
negligence), strict liability or other, for all losses or damages arising out
of, connected with, or resulting from this Agreement or from the performance or
breach thereof, or from any services covered by or furnished during the term of
this Agreement, shall in no case exceed the fees actually received by the
Operator.
8.02 Waiver of Consequential Damages. In no event, whether based on contract,
indemnity, warranty, tort (including, as the case may be, a party's own
negligence) or otherwise, shall the Operator or its Subcontractors and suppliers
be liable to Owner, or the Owner, its Subcontractors and suppliers be liable to
Operator, for special incidental exemplary, indirect or consequential damages
including, but not limited to, loss of profits or revenue, loss of use of the
equipment or any associated equipment, cost of capital, cost of purchased power,
cost of substitute equipment, facilities or services, downtime costs, or claims
of customers of the Owner or Operator for such damages, and each party shall
indemnify the other, its Subcontractors and suppliers against any such claims
from the other's suppliers or customers. In no event shall the Operator be
liable under this Agreement for any loss or damage whatsoever arising from its
failure to discover mechanical or engineering design problems in the Facility
Equipment, and where Equipment failure results from the combined effects of
neglect in maintenance, poor design or inappropriate equipment application,
Operator shall have no liability with respect to any loss resulting to the
Equipment or Facility, or from its failure to discover latent defects or defects
inherent in the design of the Equipment. If the Operator furnishes the Owner
with advice or assistance without separate compensation therefor, the Operator
will not be subject to any liability whether in contract, indemnity, warranty,
tort (including Operator's own negligence) or otherwise
ARTICLE IX.
ASSIGNMENT
9.01 Assignment by the Owner: The Operator may terminate this Agreement without
penalty upon the giving of 10 days written notice if (a) the assignment of this
Agreement is attempted or (b) a contract to sell the Facilities is executed
between the Owner and a third party.
The Owner may extend employment offers to any employees of the Operator who
work for the Operator in connection with the operation of the Facilities.
9.02 Assignment by the Operator. The Operator shall have the right to assign
this Agreement, provided that the Owner gives its prior written consent to such
assignment, such consent shall not be unreasonably withheld. Notwithstanding the
foregoing, the Operator shall be permitted to assign its right to receive
payment of the Operator's Fixed Fee hereunder without obtaining the consent of
the Owner.
ARTICLE X.
MISCELLANEOUS
10.01 Independent Contractor. The Operator shall at all times be deemed an
independent contractor and not by reason of this Agreement a joint venture,
agent or principal of the Owner and none of the Operator's officers, directors,
partners, employees, agents or representatives or the officers, directors,
partners, employees, agents or representatives of its subcontractors shall be
considered officers, directors, partners, employees, agents or representatives
of the Owner.
10.02 Regulated Party Status. The Operator shall not be construed to be a
general partner of the Owner for any purpose, and the parties shall deal with
each other at arms length.
10.03 Severability. The invalidity, in whole or in part, of any of the
foregoing sections or paragraphs of this Agreement will not affect the validity
of the remainder of such sections or paragraphs.
10.04 Entire Agreement. This Agreement and all amendments thereto contain
the complete agreement between the Owner and the Operator with respect to the
matters contained herein and supersede all other agreements, whether written or
oral, with respect to the matters contained herein between the Owner and the
Operator.
10.05 Amendment. No modification, amendment, or other change to this
Agreement will be effective unless consented to in writing by each of the
parties hereto.
10.06 Waiver. Failure or forbearance by any party to exercise any of its
rights or remedies under this Agreement shall not constitute a waiver of such
rights or remedies. No party shall be deemed to have waived or forborne any
right or remedy resulting from such failure to perform unless it has made such
waiver specifically in writing.
10.07 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original and all of which shall be
deemed one and the same Agreement.
10.08 Choice of Law. This Agreement shall be governed by the laws of the
State of New Jersey without reference to conflict of laws or the principles
thereof.
10.09 Title Passage. Title to all materials and services provided under
this Agreement shall pass to the Owner upon performance of the work or upon the
Owner becoming obligated to make payment therefor. It is expressly understood
and agreed, however, that the passage of title shall not release the Operator
from its responsibility to fully carry out its obligations under this Agreement.
10.10 Force Majeure. The parties hereto shall be excused from performance
under this Agreement to the extent, but only to the extent, that performance
hereunder is prevented by an act or event of Force Majeure. Operator shall use
its best efforts to take all reasonable steps to overcome or mitigate the
effects of such an act or event of Force Majeure, provided that the costs of
such steps shall in all events be considered Operating Costs for the purposes
hereof. Owner shall take all reasonable steps to overcome or mitigate the
effects of an event of Force Majeure. The Operator may not incur expenses in
excess of $25,000 to overcome or mitigate the effects of such force majeure
event without the Owners prior written consent.
ARTICLE XI.
DISPUTES
11.01 Procedure.
Any other controversy, dispute or claim between the Operator and the Owner
may be taken to arbitration pursuant to Section 11.02. Arbitration shall be the
exclusive procedure for resolving disputes under this Agreement.
11.02 Disputes.
The parties agree that time is of the essence in resolving any controversy,
dispute or claim, and they shall proceed as expeditiously as possible to resolve
such dispute among themselves. Absent such resolution, all disputes may be
referred by either party to the Bankruptcy Court for the District of New Jersey
for resolution. For the purpose of this provision, the Operator consents to the
jurisdiction of said Bankruptcy Court.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first set forth above.
OWNER:
PRINS RECYCLING CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: President & Chief Financial Officer
OPERATOR:
KTI OPERATIONS, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President