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First Amended And Restated Operations And Maintenance Agreement

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Sectors: Materials and Construction
Governing Law: The United Kingdom
Effective Date: February 28, 2001
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Exhibit 10.35


CONFIDENTIAL TREATMENT REQUESTED

WITH RESPECT TO CERTAIN PORTIONS HEREOF

DENOTED WITH " ***"

EXECUTION COPY


KRATON POLYMERS NEDERLAND B.V.


- and -

SHELL NEDERLAND CHEMIE B.V.


FIRST AMENDED AND RESTATED OPERATION AND MAINTENANCE

SERVICES AGREEMENT


Pernis OMS Agreement (Kraton)


FIRST AMENDED AND RESTATED OPERATION AND MAINTENANCE

SERVICES AGREEMENT

THIS AGREEMENT AND RESTATED AGREEMENT is made February 28th 2001

BETWEEN:


1. KRATON POLYMERS NEDERLAND B.V. a company incorporated under the laws of The Netherlands with its principal office at Vondelingenweg 601, 3196 KK Vondelingenplaat, Rotterdam, The Netherlands (the " Owner" ); and


2. SHELL NEDERLAND CHEMIE B.V. a company incorporated under the laws of The Netherlands with its principal office at Vondelingenweg 601, 3196 KK Vondelingenplaat, Rotterdam, The Netherlands (the " Operator" ).


RECITALS:

(A) The Operator or Affiliates of the Operator operate the Site.

(B) The Owner owns the Plant.

(C) The Parties have entered into an Operation and Maintenance Services Agreement dated October 29, 1999 for the provision of certain operation and maintenance services for the Plant (" the Operation and Maintenance Services Agreement" ).

(D) Shell Petroleum N.V. has entered into Transaction Documents with RK Polymers LLC (formerly known as Ripplewood Chemical Acquisition LLC), as the purchaser, for the sale of its interest in the shares of Kraton Polymers Holdings B.V. to such purchaser.

(E) In connection with the closing of the sale transaction, the Parties want to amend and restate the Operation and Maintenance Services Agreement as set forth below.


IT IS AGREED as follows: 1. INTERPRETATION

1.1 Definitions

In this Agreement unless the context otherwise requires :

" Affiliate" means in relation to the Operator, N.V. Koninklijke Nederlandsche Petroleum Maatschappij, The " Shell" Transport and Trading Company, p.l.c. (together the " Parent Companies" ) or any entity other than the Parties which is directly or indirectly affiliated with either or both of the Parent Companies. 1 Pernis OMS Agreement (Kraton)

In relation to the Owner, " Affiliate" means Kraton Polymers Holdings B.V. and any entity other than the Parties which is directly or indirectly affiliated with that company.


In relation to any third party successors of the Parties, " Affiliate" means any entity which is directly or indirectly affiliated with that third party successor.

For the purposes of this definition, a particular entity is: (i) directly affiliated with another entity or entities if the latter hold(s) or otherwise control(s) by proxy or agreement shares or other ownership interests carrying more than fifty per cent (50%) of the votes exercisable at a general shareholders meeting (or its equivalent) of the entity in question; and

(ii) indirectly affiliated with an entity or entities (the " parent or parents" ) if a series of entities can be specified, beginning with their parent or parents and ending with the particular entity, so related that each entity or entities in the series, except the parent or parents, is directly affiliated with one or more of the entities earlier in the series.

" Agency" means any state or supranational organisation and agency, authority, department, government, legislative, minister, ministry, official or public person (whether autonomous or not) of any state or supranational organisation.

" Agreement" means this First Amended and Restated Operation and Maintenance Services Agreement, including its Appendices, and any amendments hereto to which the Parties may consent from time to time.


" Annual Plan and Budget" means the annual plan and budget approved under Appendix 2, part I. The Annual Plan and Budget for the calendar year during which the First Operating Year commences is set out in Appendix 2, part IV.

" Annual Production Programme" means the annual production programme prepared by the Owner in accordance with Appendix 2, part I.


" Bankruptcy Event" means, in relation to any Party, (i) the making of a general assignment for the benefit of creditors by such Party; or (ii) the entering into of any arrangement or composition with creditors (other than for the purposes of a solvent reconstruction or amalgamation); or (iii) the institution by such Party of proceedings (a) seeking to adjudicate such Party as bankrupt or insolvent or seeking protection or relief from creditors, or (b) seeking liquidation, winding up, or rearrangement, reorganisation or adjustment of such Party or its debts (other than for purposes of a solvent reconstruction or amalgamation), or (c) seeking the entry of an order for the appointment of a receiver, trustee or other similar official for such Party or for all or a substantial part of such Party' s assets; or (iv) the institution of any proceeding of the type described in (iii) above against such Party.

2 Pernis OMS Agreement (Kraton)

" Business Day" means any day of the week other than Saturday, Sunday or a public holiday at the location of the Plant.


" Commercially Reasonable" when used in the context of efforts to be taken means efforts which would ordinarily be taken by a business person in the applicable industry were he in the position under this Agreement of being the operator of the Plant, or the owner of the Plant, whichever shall be the relevant case. Such efforts shall only be taken at the sole cost and request of the Party entitled to request or require " commercially reasonable" efforts (" the Requiring Party" ) provided, however, that the Party who undertakes such efforts shall not be (i) obligated to interfere with its own business activities or plans, nor (ii) required to employ additional employees in order to accomplish such matters, nor (iii) required to expend any of its own funds to accomplish such request without the right to reimbursement from the Requiring Party;


" Consent" includes any approval, authorisation, consent, exemption, filing, licence, order, permission, recording or registration (and references to obtaining Consents shall be construed accordingly).

" Default Rate" means a percentage equal to the base lending rate of the bank specified in Appendix 7 plus 3 percent per annum.


" Dispute" means any dispute or difference which arises between the Parties in connection with or arising out of this Agreement (including, without limitation, any dispute as to the termination or invalidity of this Agreement or any provision of it).

" Effective Date" means February 28th 2001.


" Environmental Agreement" means the Non-US Environmental Agreement dated January 31, 2001 by and between Shell Petroleum N.V. and Shell Elastomers, Inc.

" Elastomers Field" means the Elastomers Field as defined in the Intellectual Property Transfer and License Agreement.


" Financial Reporting Accounts" means those books and records maintained by the Operator for financial reporting to the Operator' s parent company(ies) or corporate headquarters, which shall be maintained in accordance with generally accepted accounting principles and which shall be applied on a consistent basis.


" First Operating Year" means the period from the Effective Date until the following 31st December.

" Fixed Costs" means the direct fixed costs (without mark-up or profit factor, except in accordance with Appendix 2, part II, paragraph 1.4) incurred by the Operator in providing Operation Services but which do not vary with consumption, usage or production. Fixed costs includes all personnel costs for the Staff (which includes, but is

3 Pernis OMS Agreement (Kraton)

not limited to, wages, associated benefits, applicable taxes and allocated pension costs) and the costs of any Subcontractors in each case in accordance with this Agreement. For the avoidance of doubt, wherever and to the extent the Operator enjoys a pension fund contribution holiday, the Owner will share in the benefit of such holiday only until the date when the Operator resumes contribution to the pension fund, at which point the contributions for the relevant employees will be included in the Fixed Costs.

If costs, including personnel costs, are incurred at the Site partly in connection with providing Operation Services and partly in connection with other activities, an allocation of such costs shall be included in Fixed Costs.


" Force Majeure" has the meaning specified in Clause 13.3 .

" Good Industry Practice" means the exercise of that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator engaged in services in the nature of the Operation Services for facilities comparable to the Plant.


" Government Authority" shall mean any government agency, authority, department, ministry, official or public or statutory person of and within the country specified in Appendix 7 or the European Union.

" Gross Negligence" means a failure to perform a duty of care in reckless disregard of the reasonably foreseeable consequences (as distinguished from a mere failure to exercise ordinary care) which affects the life or property of another.

" HSE Standards" means the health, safety and environmental standards established under Appendix 3.

" Improvement" means any change in, addition to, or modification of the Plant (other than routine maintenance or repair) which is required under Law or HSE Standards or which has the effect of extending the useful life of the Plant or its components, lowering the operating costs of the Plant or increasing the efficiency or reliability of the Plant or its production rates or otherwise improving the Plant.

" Insurance Policies" means the policies to be obtained under Clause 12 .

" Interest Rate" means a percentage equal to the base lending rate of the bank specified in Appendix 7 plus 1.5 percent per annum.


" Intellectual Property" means patents and copyrights, whether registered or not, and rights in confidential information and know-how and equivalent rights (including, in all cases, applications and rights to apply therefor) arising anywhere in the world.

4 Pernis OMS Agreement (Kraton)

" Intellectual Property Transfer and License Agreement" means the Agreement dated as of January 31, 2001 between Shell International Research Maatschappij B.V. and Kraton Polymers Research B.V. relating to intellectual property transfer and licensing;


" Joint Operating Committee" means the operating committee to be formed of the Owner' s Representative and the Operator' s Representative which shall have the functions set out in Appendix 1, part III.

" Key Performance Indicators" means the operating targets, such as accident frequency rate, lost time injury rate, plant production rate, plant on-stream factors, quality performance and fixed cost management, set annually by the Owner and the Operator and incorporated in the Annual Plan and Budget.


" Key Staff" means the staff appointed to those positions and specified in Appendix 5 and any successors to those positions.


" Law" means all applicable European Union laws and regulations and national and local laws and regulations of any Government Authority.

" Liability" includes all and any claims, liabilities, costs, damages, expenses, fines and penalties " Loss or Damage" means any loss or damage or injury of whatever nature, including without limitation, personal injury, disease and death;

" Negligence" means a failure to execute ordinary care that affects the life or property of another.

" Monthly Production Forecast" means the Owner' s forecasts by month for the following three calendar months of its desired production volumes and grades and its product delivery schedules.

" Operating Period" means the period commencing on the Effective Date and ending on the Termination Date.

" Operating Year" means each calendar year during the Operating Period commencing on 1st January and ending on 31st December, and includes the First Operating Year and any shorter period commencing on 1st January and ending on the Termination Date.

" Operation Charge" means the charge to be paid by the Owner to the Operator for the provision of the Operation Services as set out in Appendix. 2, part II

" Operation Services" means the services specified in Appendix 1, part 1.


" Operator' s Representative" means the person named as being the Operator' s representative in Appendix 7 and any successor to that position.

5 Pernis OMS Agreement (Kraton)

" Owner' s Representative" means the person named as being the Owner' s Representative in Appendix 7 and any successor to that position.


" Party" or " Parties" means the Owner and/or Operator as the case requires, their successors and permitted assigns.


" Pernis Lease" means the Agreement of Sub-Lease between the Owner and SNR dated 29 October, 1999.

" Permit" means any governmental permit or other governmental authorisations relevant to the operation and maintenance of the Plant.


" Plant" means the plant described in Appendix 7 situated at the Site.

" Plant Manager" means the person appointed to be plant manager of the Plant, who is named in Appendix 5, and any successor to that position.


" Pre-contractual Statement" means any draft, agreement, undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever, whether or not in writing, relating to the subject matter of this Agreement made or given by any person at any time prior to the date of this Agreement.


" Product" means any product manufactured at the Plant.


" Reasonable Actions" when used in the context of actions to be taken means efforts that would ordinarily be taken by a business person in the applicable industry were he in the position under this Agreement of being the operator or the owner of the Plant, whichever shall be relevant;


" Records" means all documents, computer discs, magnetic tapes or other records.

" Retained Functions" means all rights, powers and duties relating to the operation and maintenance of the Plant not specifically granted to the Operator under this Agreement.


" Site" means the site described in Appendix 7.


" Site Manager" means the manager of the Site and any successor to that position.


" Site Requirements" means any Site-wide Consents relevant to the operation and maintenance of the Plant and due consideration for all other operations on the Site.

" SNR" means Shell Nederland Raffinaderij B-V.


" SNR SUMF Agreement" means the First Amended and Restated SUMF Agreement between the Owner and SNR.

6 Pernis OMS Agreement (Kraton)

" Staff" means such staff as are necessary to provide the Operation Services, as set out in Appendix 5, and their successors.


" Steering Committee" means a steering committee consisting of senior representatives of the Owner and the Operator with responsibilities beyond the daily operation of the Plant. The Steering Committee shall discuss any matters of a general nature and any matters which are fundamental to the performance of this Agreement pursuant to its terms.


" Subcontractor" means any person to whom any part of the Operation Services has been subcontracted.

" SUMF Agreements" means the two First Amended and Restated Site Services, Utilities, Materials and Facilities Agreements of even date and made between the Owner and the Operator and between the Owner and SNR in support of the operations relating to the Plant.

" Taxes" includes any sales or use tax, any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature, value added tax or other governmental charge or tax other than taxes measured by income.


" Termination Date" means the date referred to in Appendix 7, or, if earlier, the date this Agreement is terminated in accordance with its terms.

" Transaction Documents" means: (i) that certain Sale Agreement dated October 20, 2000 by and between Shell Petroleum N.V. and RK Polymers (formerly known as Ripplewood Chemical Acquisition LLC) and all documents executed in connection therewith, including the following:

(ii) the Pernis Lease;

(iii) the SUMF Agreements;

(iv) the Intellectual Property Transfer and License Agreement;

(v) the Environmental Agreement; and

(vi) other agreements between the Operator or any of its Affiliates and the Owner or any of its Affiliates relating to the Plant or the Site.

" Wilful Misconduct" means an intentional act or omission which is in disregard of a known risk or a risk so obvious that it cannot be said one were truly unaware of it and that risk is so great that it is highly probable that harm will follow.

7 Pernis OMS Agreement (Kraton) 1.2 Interpretation

In this Agreement, including the Appendices, unless the context otherwise requires:

(A) references to Clauses and Appendices are to Clauses of, and Appendices to, this Agreement;

(B) use of any gender includes the other genders;

(C) references to a " company" shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established;

(D) references to a " person" shall be construed so as to include any individual, firm, company, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality);

(E) references to " USD" are to United States dollars and to " NLG" are to Dutch Guilders;

(F) any reference to a " day" (including within the phrase " Business Day" ) shall mean a period of 24 hours running from midnight to midnight;

(G) a reference to any other document referred to in this Agreement is a reference to that other document as amended, varied, novated or supplemented at any time;

(H) where a word or phrase is given a particular meaning, other parts of speech and grammatical forms of that word or phrase have corresponding meanings; (I) references to the Owner shall be deemed to include its successors and assigns and references to the Operator shall be deemed to include its successors and assigns;

(J) reference to an " authorisation" includes any authorisation, consent, order, approval, resolution, licence, exemption, permission, notarisation, recording, filing and registration; and

(K) a reference to this " Agreement" or any other agreement or document shall be construed as a reference to it as amended, modified or novated from time to time.

(L) The table of contents and headings in this Agreement are inserted for convenience only and shall not be taken into consideration in the interpretation or construction of this Agreement.

(M)

In the event of a conflict between the terms and conditions set out in the main body of this Agreement and any of the Appendices, the relevant Appendix shall

8 Pernis OMS Agreement (Kraton)

prevail, in relation to that Appendix, unless expressly stated otherwise in this Agreement. (N) In the event of any inconsistency between the provisions of this Agreement and the Intellectual Property Transfer and Licence Agreement, the terms of the Intellectual Property Transfer and Licence Agreement shall prevail.

1.3 Environmental Agreement

With respect to Environmental Conditions (as defined in the Environmental Agreement) existing as of Closing, in the event of a conflict between any provision of this Agreement and the Environmental Agreement, the provisions of the Environmental Agreement shall govern. Any obligation or liability of any Buyer Indemnified Party (as defined in the Environmental Agreement) or Seller Indemnified Party (as defined in the Environmental Agreement) under this Agreement, shall be without prejudice to the rights, if any, of the relevant party to claim Environmental Damages (as defined under the Environmental Agreement) under the Environmental Agreement.

2. APPOINTMENT OF OPERATOR

2.1 Appointment

The Owner appoints the Operator to provide the Operation Services until the Termination Date and the Operator accepts the appointment and agrees to provide the Operation Services in accordance with this Agreement.


The Operator' s provision of Operation Services and performance of its duties hereunder shall be under the sole supervision, control and direction of the Operator and not the Owner, unless otherwise provided in this Agreement.

2.2 Operation Charge

The Owner shall pay to the Operator the Operation Charge for the provision of the Operation Services as set out in Appendix 2, part II. 2.3 Term


This Agreement shall commence on the Effective Date and continue in full force and effect until the Termination Date.

3. OPERATOR' s GENERAL OBLIGATIONS

3.1 General

The Operator shall operate and maintain the Plant from the Effective Date until the Termination Date safely and efficiently and in accordance with:

9 Pernis OMS Agreement (Kraton) (A) Law;

(B) Good Industry Practice;

(C) Site Requirements;

(D) the reasonable instructions of the Site Manager, given in accordance with this Agreement;

(E) Annual Plan and Budget;

(F) HSE Standards;

(G) Insurance Policies; and

(H) the reasonable instructions of the Owner, given in accordance with this Agreement, and, without prejudice to that generality, shall provide the Operation Services.


The Operator shall notify the Owner immediately upon becoming aware of any conflict between the requirements specified in this Clause 3.1 recommending which requirement should prevail and shall comply with the Owner' s reasonable instructions as to which requirement should prevail, provided always that the Operator' s obligations under (A), (F), (C) and (D) above in that priority shall prevail.

3.2 Retained Functions

The Operator shall not undertake the Retained Functions.

3.3 Training

The Operator shall provide or procure the provision of orientation training, annual mandatory training, refresher training, basic operating skills training and job specific training for the Staff and any Subcontractor' s staff.

3.4 Maintaining Authorisations

The Operator shall obtain and maintain in full force and effect all authorisations required to enable the Operator to provide the Operation Services and which need to be obtained and maintained by, or in the name of, the Operator.


The Operator shall provide reasonable assistance to the Owner in the obtaining and maintenance by the Owner of any authorisations to be obtained under Clause 4.2 . 10 Pernis OMS Agreement (Kraton) 4. OWNER' S GENERAL OBLIGATIONS

4.1 Access to the Plant

Following the Effective Date the Owner shall allow the Operator to have access to and egress from all parts of and all buildings that are part of the Plant to the extent necessary to allow the Operator to perform the Operation Services.

4.2 Maintaining Authorisations

The Owner shall obtain and maintain in full force and effect all authorisations required for the operation and maintenance of the Plant (other than those which need to be obtained and maintained by, or in the name of, the Operator).


The Owner shall provide reasonable assistance to the Operator in the obtaining and maintenance by the Operator of any authorisations to be obtained under Clause 3.4 . 4.3 Retained Functions

The Retained Functions shall be discharged by the Owner, its agents or employees in such manner as the Owner shall require. 4.4 Monthly Production Forecast

The Owner shall provide the Monthly Production Forecast to the Operator by the 22nd calendar day of the month preceding the first month to which the Monthly Production Forecast relates.

4.5 Information

The Owner shall provide all drawings, technology support, specifications, diagrams and other information that are in its possession but not in the possession of the Operator that are required for the operation and maintenance of the Plant and the performance by the Operator of the Operation Services.

4.6 Training

The Owner shall provide such process specific technical training for the Staff and the Subcontractor' s staff as is necessary to enable the Operator, the Staff and any Subcontractor to perform the Operation Services.

4.7 General

The Owner shall do all such other things that are part of the Retained Functions as the Owner determines are reasonably required for the operation and maintenance of the Plant and the performance by the Operator of the Operation Services.

11 Pernis OMS Agreement (Kraton)

The Operator will not be in breach of this Agreement to the extent that the breach results from Owner' s failure to make available all the feedstocks, site services, utilities, materials and facilities as were made available to the Operator at the Effective Date to enable the Operator to provide the Operation Services and to manufacture Product.

5. ORGANISATION

5.1 Operator' s Staff

The Operator shall provide the Staff in accordance with this Agreement.


As at the Effective Date, the Operator shall provide the Staff set out in Appendix 5.

The Operator shall ensure that the Staff are suitably qualified, experienced and competent for the performance of the Operation Services and that they shall have the same level of qualifications, experience and competence for the performance of such Operation Services as staff who provide similar services for the other operations of the Operator and its Affiliates at the Site. The Operator shall be responsible for selecting, hiring, employing and assigning the Staff in accordance with this Agreement and obtaining all necessary authorisations relating to them.

5.2 Plant Manager

The Plant Manager shall be suitably qualified, experienced and competent for the performance of his duties and the provision of the Operation Services at the Plant.


Currently the Plant Manager is also the plant manager of other facilities at the Site, which has proven to be a cost effective organisation scheme.

The Owner shall be consulted on the identity of the Plant Manager and may propose candidates for consideration. However, the Operator retains the right to select the Plant Manager.


The Plant Manager shall provide reports to the Owner on matters relating to the Plant including, but not limited to, production, scheduling and quality management as prescribed in Appendix 1:Part II.


The Plant Manager shall take instructions from and report to the Site Manager on matters relating to, but not limited to, health, safety and environmental issues, consents, employment issues relating to the Staff and all matters relating to the Site.

5.3 Key Staff

The Key Staff shall be suitably qualified, experienced and competent for the performance of their duties and the provision of the Operation Services at the Plant. The Key Staff

12 Pernis OMS Agreement (Kraton)

shall take instructions from and report to the Plant Manager on all matters relating to the Plant, the Operation Services and the Site.

The Owner may appoint any of the Key Staff, who shall be seconded by the Owner to the Operator.

(i) If the Owner wishes to appoint any member of Key Staff who immediately prior to any such appointment was employed by the Operator, the Operator shall, provided the member of Key Staff consents to becoming employed by the Owner, terminate the employment of such member and the Owner will offer such member employment on terms so that the total pay and benefits package (including pension entitlement) offered to him is no less favourable tha
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