EXHIBIT 10.2
23 April 1996
Supplementary Agreement
to the Agreement of 30 December 1986
between
Xxxxxxxxxx Chemie GmbH, Dr.-Xxxxxx-Xxxxxxxxxx-Strasse 4, 47198 Duisburg
- hereinafter referred to as "Xxxxxxxxxx" -
and
KRONOS TITAN-GMBH, Xxxxxxxxxxxx 0, 00000 Xxxxxxxxxx
- hereinafter referred to as "KRONOS" -
WHEREAS,
By date of 30 December 1986 the parties concluded an Agreement on the
reprocessing of the spent acid generated in the production of titanium dioxide
in the Leverkusen and Xxxxxxx plants, on the decomposition of the filter salts
derived from this spent acid and of further filter salts supplied from
Nordenham, on the supply of fresh acid generated from the filter salts and the
supply of burner discharge.
After discontinuation of the roasting of Meggen pyrites in spring 1995 the
sulphuric acid plant at Xxxxxxx previously partly converted for the
decomposition of filter salts finally will no longer be operated mainly for
producing sulphuric acid, but for decomposing filter salts.
The parties agree that the economic balance of this Agreement is essentially
affected by the new situation of the sulphuric acid plant.
THEREFORE, by this Supplementary Agreement the parties intend pursuant to the
Hardship Clause (Section 15) to adjust the Agreement of 30 December 1986 to the
changed conditions by eliminating the unreasonable hardship for Xxxxxxxxxx and
by maintaining the economic equilibrium.
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1. Definitions
The following provisions replace the stipulations of Section 1 (4) fresh
acid and explain Section 1 (13) filter salt quantities of the Agreement
of 30 December 1986. The new definitions are:
1.1 Fresh Acid
Fresh acid shall mean the sulphuric acid produced in the Xxxxxxx
sulphuric acid plant. The fresh acid derived from the decomposition of
filter salts is divided into equivalent acid and concurrent acid.
1.1.1. Equivalent Acid
Equivalent acid shall mean the fresh acid produced from filter salts and
from the adhering spent acid reconcentrated to approximately 70 percent,
which fresh acid is adjusted for KRONOS to about 96 percent sulphuric
acid.
1.1.2. Concurrent acid
Concurrent acid shall mean the fresh acid additionally produced in the
Xxxxxxx sulphuric acid plant during the decomposition of filter salts,
which acid results from the use of pyrite, sulphur or other sulphurous
material. The concurrent acid is likewise adjusted for KRONOS to about
96 percent sulphuric acid.
1.2. Filter Salt Quantities
At the beginning of each subsequent year, the filter salt quantities
from Leverkusen and Xxxxxxx shall be determined for the final account of
the preceding year as follows: In a first step the theoretical filter
salt quantities shall be calculated from the analyses of the spent acid
supplied by the two plants. The same applies to spent acid quantities
supplied from third parties for reprocessing. In case the theoretical
total quantity thus calculated differs from the total actual quantity
weighed, the differing quantity shall be apportioned to the various
supplier sources in proportion to the theoretical quantities obtained.
The factor obtained from the corrected final account of the preceding
year for the quantity of filter salt in kilogram as is per ton of spent
acid shall be used for the calculation of the current year. The quantity
of filter salts from Nordenham shall be calculated - as up to now - from
the incoming quantities weighed.
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2. Decomposition of Filter Salts/Disposal of Cinders/Supply of Fresh Acid
Art. 2 of this Supplementary Agreement shall replace Section 6
(completely) as well as Paragraphs 1., 2., 4., 5., and 6. of Section 11
of the Agreement of 30 December 1986.
2.1.1. Xxxxxxxxxx shall decompose - together with other filter salts - the
filter salts supplied by KRONOS from Nordenham as well as the filter
salts generated in reprocessing the spent acid from Leverkusen, by use
of pyrite and/or sulphur as well as coal and/or other material.
2.1.2. The Xxxxxxx filter salt decomposition plant/sulphuric acid plant has a
capacity to decompose 244,000 t filter salt per year.
KRONOS shall have the right to have up to 110,000 tons of filter salt
(as obtained in reprocessing of the Leverkusen spent acid and/or as
supplied from Nordenham) decomposed by Xxxxxxxxxx in the filter salt
decomposition plant. These 110,000 tons of filter salt correspond to 45
percent of the capacity, the other 55 percent shall be used by
Xxxxxxxxxx for decomposing filter salts corresponding up to 134,000 t
filter salt per calendar year.
In case one of the two parties declares an essentially higher or lower
demand of decomposition capacity than it is entitled to for an extended
period of time, Xxxxxxxxxx shall examine an adaptation of the plant
capacity if a capacity exchange between both parties is not possible. In
case of a capacity modification or exchange of capacity, the capacity
allocation - at present 55 Xxxxxxxxxx : 45 KRONOS - shall be newly
determined.
In case of Force Majeure the possibly remaining capacity of the filter
salt decomposition plant shall be used proportionately (at a ratio of 55
Xxxxxxxxxx : 45 KRONOS) and the filter salts stored at each party's
plant shall be processed subsequently according to the ratio taking into
account the technical feasibility.
2.2.1. Xxxxxxxxxx shall dispose of the cinders resulting from the decomposition
of KRONOS filter salts as far as - at reasonable conditions - possible.
The parties agree that KRONOS shall obtain a co-ownership in the total
cinders generated according to Art. 2.1.1. of this Supplementary
Agreement, viz. proportionately to the filter salt quantities decomposed
for KRONOS related to the total filter salt quantities decomposed. The
rights and obligations resulting from the ownership/co-ownership shall
be independent of the obligations assumed by Xxxxxxxxxx under this
Agreement. Also beyond the
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termination of the Agreement, KRONOS shall proportionately to its
co-ownership share liabilities and risks for the total cinders generated
till the termination of the Agreement.
2.2.2. The current costs required for the disposal of the cinders including the
operating costs for the intermediate storage pile IV as well as
potential treatment cost shall be allowed for according to Art. 3. of
this Supplementary Agreement. Xxxxxxxxxx assumes that all cinders
generated can further be disposed of as since May 1993.
Costs for further intermediate storage or final depositing will be
shared between KRONOS and Xxxxxxxxxx at the ratio of their agreed
ownerships in the cinders. KRONOS shall pay its share in the costs
immediately after they have been incurred and calculated as far as these
costs were not yet settled pursuant to Art. 3. of this Supplementary
Agreement.
KRONOS's cost sharing for cinder disposal shall not be affected by a
potential termination of the Agreement.
Xxxxxxxxxx shall inform KRONOS about essential developments regarding
dumping of the cinders.
2.3.1. KRONOS shall be allocated a certain quantity of fresh acid in proportion
to the filter salt supplied. The quantity of fresh acid to be
apportioned to KRONOS shall be calculated by breaking down the entire
sulphuric acid quantity produced at the Xxxxxxx sulphuric acid plant
(calculated as 100 percent sulphuric acid) proportionately to the filter
salt quantities supplied by KRONOS related to the total quantity.
2.3.2. Xxxxxxxxxx shall supply KRONOS with equivalent acid. KRONOS shall
continuously take for each ton of filter salt from Nordenham or
Leverkusen spent acid (cf. 1.2.) 0.60 tons fresh acid 100 percent,
delivered as 96 percent fresh acid. The acids shall be taken by KRONOS
as up to now.
2.3.3. The amount of concurrent acid to be apportioned to KRONOS shall be
calculated from the difference between the total quantity of fresh acid
to be apportioned pursuant to Art. 2.3.1. and the quantity of equivalent
acid to be apportioned pursuant to Art. 2.3.2. of this Supplementary
Agreement.
Up to 31 December 1996, Xxxxxxxxxx shall continue to sell the concurrent
acid attributable to KRONOS, delivered as 96 percent fresh acid, via the
previous distribution channel. Following 31 December 1996 Xxxxxxxxxx
shall provide
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KRONOS with the total concurrent acid to be apportioned to KRONOS and
KRONOS shall continuously take this acid. The equivalent acid and
concurrent acid quantities shall be calculated separately for the last
time in the final account of the year 1996.
2.3.4. The price for the fresh acid taken by KRONOS, i.e. equivalent acid and
concurrent acid, is determined to be 0.00 DM.
Xxxxxxxxxx shall pay KRONOS a compensation for the concurrent acid still
sold via the previous distribution channel corresponding to the
quarterly determined average sales price of Xxxxxxxxxx ex works Xxxxxxx
(after sales commission) for 96 percent fresh acid from the sales to
third parties.
2.3.5. Following 31 December 1996 KRONOS shall market the entire fresh acid it
is entitled to via the MG Chemiehandel GmbH as far as the fresh acid
shall not be taken for its own demand. The pertaining agreements shall
be negotiated separately between MG Chemiehandel and KRONOS.
Should, during the period of the Agreement, a new situation arise which
makes adherence to the present provisions unreasonable for KRONOS,
Xxxxxxxxxx and KRONOS shall adjust Art. 2.3.5. by maintaining the
economic equilibrium.
3. Costs for the Decomposition of KRONOS Filter Salts
Art. 3. of this Supplementary Agreement shall replace Section 9
(completely) as well as Paragraph 3. of Section 11 of the Agreement of
30 December 1986.
The costs of decomposing the filter salts shall be calculated on the
basis of the cost calculation system installed at Xxxxxxxxxx (at present
SAP differential planning cost) for which company-uniform accounting
principles are applied. Difference is made between variable and fixed
costs.
3.1. Variable Costs
The variable actual costs which particularly include the costs for
pyrite, sulphur, and coal as well as the variable parts of the energy
costs and the steam credit shall be charged to Xxxxxxxxxx and KRONOS
proportionately to the filter salts used.
3.2. Fixed Costs
The fixed costs shall be apportioned in relation to the capacity claim
pursuant to Art. 2.1.2. of this Supplementary Agreement.
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3.3 Invoicing
The invoice to be submitted by Xxxxxxxxxx to KRONOS for the
decomposition of filter salts includes the sum of the variable costs
pursuant to Art. 3.1. and the fixed costs pursuant to Art. 3.2. plus the
current value added tax.
3.4. Pursuant to Section 18 of the Agreement of 30 December 1986 KRONOS may
check the costs invoiced by Xxxxxxxxxx to KRONOS pursuant to Art. 3.3.
4. Lump-Sum Remuneration
Art. 4. of this Supplementary Agreement shall replace Section 10
(completely) of the Agreement of 30 December 1986.
In addition to the share in capital charges and operating costs, KRONOS
shall pay Xxxxxxxxxx a monthly lump sum effective January 1996 for the
remaining period of this Supplementary Agreement for the reprocessing of
the Leverkusen spent acid and the decomposition of the filter salts
generated therefrom as well as for the decomposition of the Nordenham
filter salts.
The lump-sum payment shall be calculated by using extra charges
expressed in percent of the costs charged by Xxxxxxxxxx to KRONOS for
the reprocessing of spent acid and the decomposition of filter salts.
The extra charges shall amount to 3.5 percent for the reprocessing of
spent acid and to 7 percent for the decomposition of filter salts.
5. Capital Expenditures for the Sulphuric Acid Plant
Decisions on capital expenditures for the Xxxxxxx sulphuric acid plant
shall be made solely by Xxxxxxxxxx and be financed by Xxxxxxxxxx on its
own decision without any obligation of KRONOS to share the expenditures.
These investments shall be considered in the cost accounting system via
the capital service and thus in the costs to be proportionately charged
to KRONOS by Xxxxxxxxxx pursuant to the stipulations in Art. 3. of this
Supplementary Agreement.
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6. Taking Effect/Period of Agreement
6.1. This Agreement shall become effective on 1 September 1995 and shall be
valid exclusively for the supplies and services effected from this date
on.
6.2. Regarding decomposition of the Nordenham filter salts, the period of
notice pursuant to Section 21 Paragraph 3 Sentence 1 of the Agreement of
30 December 1986 for the termination of supplies and/or services shall
be extended from 3 to 4 years.
Regarding reprocessing of the spent acid from Leverkusen and of the
filter salts derived from this spent acid: Should KRONOS shut down the
sulfate route production of titanium dioxide in the Leverkusen plant,
the period of notice pursuant to Section 21 Paragraph 3 Sentence 1 for
the termination of supplies and/or services shall be reduced from 3
years to 6 months. In this shutdown case, KRONOS will also be free of
the obligation to pay the proportionate fixed costs as of the end of the
relevant accounting period. In this case, Xxxxxxxxxx and KRONOS
conjointly will newly determine the sharing of the fixed costs for
decomposition of filter salts from Xxxxxxx and Nordenham by maintaining
the economic equilibrium. The notice pursuant to this paragraph can
first be given with effect for 31 December 1998.
6.3. The Agreement of 30 December 1986 shall continue to be effective
unchanged unless modified by express stipulation of this Supplementary
Agreement.
Duisburg-Xxxxxxx, Xxxxx 30, 1996 Leverkusen, May 3, 1996
Xxxxxxxxxx Chemie GmbH KRONOS TITAN-GMBH
/s/ Xx. Xxxxxxxx Xx. Xxxxxx /s/ Xx. X. Xxxxxxx Xx. X. Xxxxx
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Xx. Xxxxxxxx Xx. Xxxxxx Xx. X. Xxxxxxx Xx. X. Xxxxx
