LICENSE AND OPERATING AGREEMENT
This Operating Agreement is made this day of July, 1997 by and between
Carteret Biocycle Corporation, a Delaware corporation ("Company") and SD & G
Aggregates, Inc., a New Jersey corporation and its affiliates, subsidiaries,
sister companies and shareholders, and any other entity established by SD & G
Aggregates, Inc. or any of its shareholders to perform their covenants
hereunder, whether directly or indirectly involved, and whether as
shareholders, partners, members, owners, principals, or agents of such other
entity (collectively "SD & G").
WHEREAS, the Company is planning to develop, construct, and operate a facility
to do bioremediation of contaminated soils, and
WHEREAS, the Company has entered into several agreements simultaneous herewith
including; a Ground Lease Agreement with 40 Sayerville Realty Company; and a
Consulting Agreement with Windsor Environmental Technologies Corporation
(collectively "Related Agreements"), and
WHEREAS, the Company is desirous of conducting the operations of its
bioremediation facility utilizing the permits and licenses held by SD & G, and
WHEREAS, SD & G is willing to provide exclusive use of its permits and
licenses to Company as specified herein,
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. License.
SD & G hereby grants to Company a perpetual, exclusive license to use the
Permits and Licenses listed on Schedule A hereto in the State of New Jersey as
set forth in this Agreement.
2. Restrictions.
Company shall not sublicense, transfer or convey any rights hereunder without
the prior written consent of SD & G; except to its parent, subsidiaries, or
affiliated companies, or to any company, person or entity with which the
Company may merge or consolidate or to a purchaser of its assets or to any
company, person or entity under common control with the Company.
SD & G may not sell, assign, or convey any of its rights hereunder to any
company, entity or person without the prior written consent of the Company.
3. Deposit Monies.
Company shall provide $100,000 deposit at the time of the execution of this
Agreement.
4. Fee.
In consideration for the grant of the license and the use of permits and
licenses, Company agrees to pay SD & G upon the following basis: Two percent
of Gross Sales
(i) Notwithstanding anything to the contrary in this Section 4, the parties
agree that a cap shall exist on all fees due hereunder as follow: $1,500,000
or ten years from the date the facility opens for business to third parties,
whichever comes first; thereafter, for an additional ten years or $1,00,000
whichever comes first, at the rate of 0.666% of Gross Sales.
5. Representations and Warranties of SD & G.
SD & G hereby represents and warrants to Company as follows:
(i) it is the owner of the licenses and permits listed on Schedule A hereto,
free and clear of any liens, encumbrances, or claims, and otherwise has the
right to grant to the Company the rights set forth in this Agreement.
(ii) there is no litigation or judgements affecting the aforesaid
licenses and permits
(iii) the licenses and permits are valid and enforceable, and have been
lawfully issued.
(iv) SD & G is in full compliance with all laws and regulations affecting the
aforesaid licenses and permits.
(v) the aforesaid licenses and permits constitute all licenses and permits
necessary to operate the bioremediation process and non-bioremediation process
at this facility of the Company which is envisioned by this Agreement, and the
consummation of this transaction will not result in the revocation,
suspension, or limitation of the licenses and permits in any manner, and the
licenses or permits do not require the consent of its issuing authority to or
as a result of the consummation of the transaction contemplated hereby.
(vi) SD & G shall maintain the aforesaid licenses and permits in good
standing order, valid and enforceable taking whatever action is necessary and
appropriate to operate under these licenses and permits, renew, modify, as may
be requested by the Company, or otherwise maintain their viability at its sole
expense.
(vii) SD & G shall maintain no other licenses or permits which are not the
subject of this transaction or which are not necessary to accomplish and
effectuate the transaction contemplated hereby. In the event SD & G does hold
other licenses or permits which are not subject to this transaction
("non-essential licenses"), SD & G shall immediately divest itself of such
non-essential licenses no later than 90 days subsequent to the signing of this
Agreement, to another entity as owned by the same principals.
(viii) General Counsel for SD & G shall provide a legal opinion
simultaneous with the execution of this Agreement verifying the accuracy of
the representations and warranties set forth in this Section 5(i)-(vii).
(ix) SD & G shall accept all quantities of screened debris from the Company
generated from the facility which is the subject of this Agreement at a cost
of $1.25 per ton. For purposes of this Agreement screened debris shall be
defined as, but not limited to concrete, asphalt, brick, block, and natural
rocks not to exceed 6" in diameter.
(x) The Company shall be allowed to expand its recycling operations to
include any form of recycling allowable under SD & G's permits and licenses,
and if not allowable under their permits and licenses, then the Company, with
the full cooperation and support of SD & G, shall apply to the appropriate
government agency for a modification or amendment to the permit or license to
perform the non-permitted recycling operations. The Company shall bear the
sole cost and expense for such permit or license modification.
6. Right of First Refusal.
SD & G is currently evaluating the potential of obtaining a permit or license
to conduct the remediation of dredge spoils from dredging operations to be
located on a 17 acre parcel adjacent to the premises which are the subject
hereof. For purposes of this Agreement, remediation shall be defined as all
operations and processes appropriate to the performance of remediation,
including but not limited to transportation, loading and unloading material,
conveying material, transferring material on-site or off-site, windrowing,
mixing material, and other such functions involved in the remediation process.
In the event, SD & G is granted a permit or license or otherwise, directly or
indirectly, is allowed to conduct dredge spoils remediation operations on said
premises, the Company is granted a right of first refusal to obtain a
perpetual and exclusive license to operate the dredge spoils remediation
operations. The parties agree to negotiate in good faith the contract terms
necessary and appropriate to consummate such a transaction. Further, in the
event SD & G receives a bona fide offer from a third party to finance and
operate a dredge spoils remediation operation on said premises, the Company
will be provided with 45 days to notify SD & G of its intent to match the bona
fide offer from the third party. This 45 day period shall be measured
beginning with the first day the Company receives notice from SD & G of the
third party bona fide offer. If the Company notifies SD & G of its intent to
match the bona fide offer, the Company shall have 30 days from the date of
such notice to negotiate and execute a contract with SD & G relative to its
offer. Both parties agree to negotiate such terms in good faith. In the event
the Company notifies SD & G of its refusal to match the bona fide offer from
the third party, SD & G shall be free to execute a contract with said third
party but only upon the same terms and conditions as offered to the Company.
In the event these third party negotiations develop terms and conditions
different from what was offered to the Company, SD & G shall provide the
Company with 45 days to accept or reject the revised offer and terms. In the
event SD & G is not successful in Closing a transaction upon the same terms
and conditions as offered to the Company with the third party within 120 days
for whatever reason, then SD & G shall provide the Company with a 30 day
period as a new opportunity to match the offer.
7. Board Representation.
During the term of this Agreement, Xxxx Fable shall be granted one seat on the
Board of Directors of the Company, and if an Audit Committee is created by the
Board of Directors, Xxxx Fable shall be entitled to one seat on the Audit
Committee.
9. Indemnification.
9.1 Survival of Representations and Warranties. The representations and
warranties of SD & G hereto as set forth in Sections 5 and 6 of this Agreement
or in any writing delivered pursuant hereto shall survive the execution of
this Agreement and the consummation of the transactions contemplated hereby
(and any examination or investigation by or on behalf of any party hereto) and
shall not terminate but shall continue indefinitely.
9.2 Indemnification.
(a) SD & G covenants and agrees to defend, indemnify and hold harmless the
Company and each Person who controls the Company within the meaning of the
Securities Act from and against any Damages arising out of or resulting from:
(i) any inaccuracy in or breach of any representation or warranty made by SD &
G in this Agreement or in any writing delivered pursuant to this Agreement; or
(ii) the failure of SD & G to perform or observe fully any covenant,
agreement or provision to be performed or observed by SD & G pursuant to this
Agreement or any Related Agreements.
9.3 Third Party Claims.
(a) If any party entitled to be indemnified pursuant to Section 9.2 (an
"Indemnified Party") receives notice of the assertion by any third party of
any claim or of the commencement by any such third person of any Action (any
such claim or Action being referred to herein as an "Indemnifiable Claim")
with respect to which another party hereto (an "Indemnifying Party") is or may
be obligated to provide indemnification, the Indemnified Party shall promptly
notify the Indemnifying Party in writing (the "Claim Notice") of the
Indemnifiable Claim; provided, that the failure to provide such notice shall
not relieve or otherwise affect the obligation of the Indemnifying Party to
provide indemnification hereunder, except to the extent that any Damages
directly resulted or were caused by such failure.
(b) The Indemnifying Party shall have thirty (30) days after receipt of the
Claim Notice to undertake, conduct and control, through counsel of its own
choosing, and at its expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith; provided, that (i) the Indemnifying Party shall permit the
Indemnified Party to participate in such settlement or defense through counsel
chosen by the Indemnified Party (subject to the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld), provided that the
fees and expenses of such counsel shall not be borne by the Indemnifying
Party, and (ii) the Indemnifying Party shall not settle any Indemnifiable
Claim without the Indemnified Party's consent. So long as the Indemnifying
Party is vigorously contesting any such Indemnifiable Claim in good faith, the
Indemnified Party shall not pay or settle such claim without the Indemnifying
Party's consent, which consent shall not be unreasonably withheld.
(c) If the Indemnifying Party does not notify the Indemnified Party within
thirty (30) days after receipt of the Claim Notice that it elects to undertake
the defense of the Indemnifiable Claim described therein, the Indemnified
Party shall have the right to contest, settle or compromise the Indemnifiable
Claim in the exercise of its reasonable discretion; provided, that the
Indemnified Party shall notify the Indemnifying Party of any compromise or
settlement of any such Indemnifiable Claim.
(d) Anything contained in this Section 9.3 to the contrary notwithstanding,
SD & G shall not be entitled to assume the defense for any Indemnifiable Claim
(and shall be liable for the reasonable fees and expenses incurred by the
Indemnified Party in defending such claim) if the Indemnifiable Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the Company which it determines, after conferring with its
counsel, cannot be separated from any related claim for money damages and
which, if successfully, would adversely affect the business, properties or
prospects of the Company.
9.4 Indemnification Non-Exclusive. The foregoing indemnification provisions
are in addition to, and not in derogation of, any statutory, equitable or
common-law remedy any party may have for breach of representation, warranty,
covenant or agreement.
9.5 Set-off. Notwithstanding any provision of this Agreement or of any
other agreement, instrument or undertaking, it is understood and agreed that
Company shall have the right to set-off the amount of any indemnity under
Sections 9.2 or 9.3 hereof to the extent SD & G shall be liable therefor
against any sums of money or any shares of the Company at any time payable or
deliverable to SD & G. The remedies provided in this Article shall be
cumulative and shall not preclude the assertion by any party of any other
rights or the seeking of any other remedies by it against any other party.
10. Notices.
All notices requests, demands and other communications hereunder must be in
writing and shall be deemed to have been given if delivered by hand or mailed
by first class, registered mail, return receipt requested, postage and
registry fees prepaid and addressed as follows:
(i) If to the Company:
Carteret Biocycle Corp.
0000 Xxxxxx Xx., Xxxxx 000X
Xxxx Xxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxxxx, President and CEO
Telecopy: (000) 000-0000
(ii) If to SD & G, addressed to:
SD & G Aggregates, Inc.
Attn: Xxxxx Xxxx
0000 Xxxxx Xx.
Xxxxxxxx, XX 00000
Addresses may be changed by notice in writing signed by the addressee.
11. Miscellaneous.
This Agreement embodies the entire understanding between the parties hereto
respecting the subject matter hereof and no change, alteration or modification
hereof may be made except in writing signed by both parties hereto. The
headings in this Agreement are for convenience of reference only and shall not
be considered as part of this Agreement or to limit or otherwise effect the
meaning hereof. If any provisions of this Agreement shall be held invalid,
illegal or unenforceable in whole or in part, neither the validity of the
remaining part of such provisions nor the validity of any other provisions of
this Agreement shall in any way be affected thereby. This agreement shall in
all respects be governed by and construed in accordance with the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
Witnesses: "COMPANY"
_________________________ By: ____________________________
Xxxx Xxxxxxxxx, President
"SD & G"
__________________________ _____________________________
Xxxxx Xxxx, President
"Shareholders of SD & G"
____________________________ _____________________________
Xxxxx Xxxx
____________________________ _____________________________
