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Exhibit 10.10
THIS AGREEMENT is made between:
1) The Associated Octel Company Limited having its registered ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ House, Berkeley Square, London, England
W1X 6DT (the "Owner") and
2) Great Lake Chemical Corporation, having its principal place of business at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ (the
"Contractor").
WHEREAS
1) Owner desires that Contractor undertake the conversion of Feedstock (as
defined herein) to be supplied by Owner into Product (as defined herein)
using a Conversion Process (as defined herein) provided by the Owner; and
2) Contractor is willing to undertake the conversion of Feedstock supplied by
Owner into Product by use of the Conversion Process under the terms and
conditions set forth in this Agreement.
IT IS AGREED AS FOLLOWS:
ARTICLE 1 -- DEFINITIONS
The following terms shall have the following meanings:
a) "Feedstock" means the substances listed in Part 1 of Appendix A, and any
changes thereto mutually agreed in writing by the parties;
b) "Product" means Stadis registered trademark425 and Stadis registered
trademark450 (Enhanced);
c) "Compensation" means the sum set forth in Appendix D representing
undepreciated capital expended by Contractor in connection with this
Agreement which shall be payable by Owner to Contractor upon termination
of this Agreement pursuant to the provisions of Section 2.6;
d) "Contractors Plant" means Contractor's manufacturing site at Newport,
Tennessee, USA;
e) "Conversion Process" means the process of Owner set out in Appendix C, and
any changes thereto mutually agreed in writing by the parties;
f) "Specification" means (a) with respect to Product, the properties and
respective tolerances in Appendix B and which are verified by use of the
analytical methods set forth in Appendix B and (b) with respect to
Feedstock, the properties and respective tolerances set forth in Part 2 of
Appendix A, and any changes to (a) or (b) that are mutually agreed in
writing by the parties;
g) "Closure Fee" means the sums set forth in Appendix F.
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h) "Contract Year" means the twelve (12) month period commencing on the
Distribution Date, and each successive 12 month period commencing on the
anniversary of the Distribution Date.
i) "Quarter" means the three month period commencing every January 1,
April 1, July 1 and October 1.
j) "Distribution Date" means the date on which Contractor distributes as a
dividend to the holders of its common stock the common stock of Octel Corp.
pursuant to the terms and conditions of the Transfer and Distribution
Agreement dated June 24, 1998 between Contractor and Octel Corp.
ARTICLE 2 -- DURATION; TERMINATION
2.1 This Agreement shall be deemed to have commenced on the Distribution Date
and shall continue in force until terminated by either party as provided in
Section 2.2, 2.5, 9.4 or 9.8.
2.2 Either party may terminate this Agreement without cause on at least twelve
months' written notice to the other party; provided, however, no such
termination of this Agreement shall be effective until the expiration of
three (3) Contract Years.
2.3 Owner shall be in default if any one or more of the following events shall
happen:
(a) Owner shall fail to pay any amount due hereunder and such failure is
not cured within thirty (30) days after receipt of Contractor's
written notice to Owner; or
(b) Owner shall fail to perform or comply with any of the other material
terms or conditions of this Agreement for reasons other than an event
of Force Majeure (as defined herein) and such failure, if curable,
shall continue without cure for a period of sixty (60) days after
written notice thereof from Contractor to Owner; or
(c) filing by Owner of a voluntary petition of bankruptcy or a voluntary
petition or answer seeking reorganization, rearrangement or
readjustment of its debts, or any relief under any bankruptcy or
insolvency act or law, now or hereafter existing, or any agreement by
Owner indicating consent to, approval of, or acquiescence in, any such
petition or proceeding; or
(d) the application by Owner or the consent or acquiescence of Owner in
the appointment of a receiver or trustee for all or a substantial part
of any of its properties or assets; or
(e) the making by Owner of a general assignment for the benefit of
creditors; or
(f) the admission of Owner in writing of its inability generally to pay
its debts as they mature; or
(g) the filing of an involuntary petition against Owner seeking
reorganization, rearrangement, or readjustment of its debts or for any
other relief under any bankruptcy or insolvency act or law, now or
hereafter existing, or the involuntary appointment of a receiver or
trustee for Owner for all or a substantial part of its property or
assets, or the issuance of a warrant of attachment, or execution of
similar process against a substantial part of the property of Owner
and the continuance of such for ninety (90) days undismissed or
undischarged.
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2.4 Contractor shall be in default if any of one or more of the following
events happen:
(a) Contractor shall fall to perform or comply with any of the material
terms or conditions of this Agreement, for reasons other than an event
of Force Majeure, and such failure, if curable, shall continue without
cure for a period of sixty (60) days after written notice thereof from
Owner to Contractor; provided, however, that Owner's sole remedy for
Product claims shall be as provided in Article 12 and Contractor shall
not be deemed to be in breach of this Agreement for purposes of this
Section 2.4 so long as Contractor satisfies or is disputing in good
faith any claim of Owner under Article 12; or
(b) the filing by Contractor of a voluntary petition of bankruptcy or a
voluntary petition or answer seeking reorganization, rearrangement, or
readjustment of its debts, or any relief under any bankruptcy or
insolvency act or law, now or hereafter existing, or any agreement by
Contractor indicating consent to, approval of, or acquiescence in, any
such petition or proceeding; or
(c) the application by Contractor or the consent or acquiescence of
Contractor in the appointment of a receiver or trustee for all or a
substantial part of any of its properties or assets; or
(d) the making by Contractor of a general assignment for the benefit of
creditors; or
(e) the admission of Contractor in writing of its inability generally to
pay its debts as they mature; or
(f) the filing of an involuntary petition against Contractor seeking
reorganization, rearrangement or readjustment of its debts or for any
other relief under any bankruptcy or insolvency act or law, now or
hereafter existing, or the involuntary appointment of a receiver or
trustee for Contractor for all or a substantial part of its property
or assets, or the issuance of a warrant of attachment, or execution of
similar process against a substantial part of the property of
Contractor and the continuance of such for ninety (90) days
undismissed or undischarged.
2.5 (a) Contractor may terminate this Agreement in the event of a Regulatory
Change (as defined herein) as provided in Section 9.4.
(b) Contractor may terminate this Agreement in the event Contractor
chooses not to meet a lower price offer made to and accepted by Owner
as provided in Section 9.9.
(c) Owner may terminate the Agreement, effective on notice from Owner to
Contractor, within sixty (60) days after consummation of a transaction
wherein a majority of the issued and outstanding common stock of
Contractor, or substantially all of the assets utilized by Contractor
in connection with this Agreement, including without limitation,
Contractor's Plant, are acquired, legally or beneficially, by a
corporation or other entity that competes in the fuel additives
business with Owner.
(d) Contractor may terminate this Agreement if it is prevented from
increasing the Conversion Charge as provided in Section 9.8.
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(e) This Agreement may be terminated by either party due to a Force Majeure
as provided in Article 8.
(f) Upon the occurrence of any event of default (as defined in Sections 2.3
and 2.4), and during the continuance thereof, the non-defaulting party,
at its option, and without prejudice to other lawful remedies which may
be available, may elect to terminate this Agreement upon thirty (30)
days' prior written notice, provided, however, that in the event of the
appointment of a receiver or trustee, the Agreement may not be
terminated if the receiver or trustee agrees to assume the defaulting
party's liabilities and obligations under this Agreement.
2.6 (a) Upon termination of this Agreement in the event of the default of
Owner (as provided in Sections 2.3 and 2.5), in the event of a change
in control of Contractor (as provided in Section 2.5(c)) or by Owner
on 12 months notice (as provided in Section 2.2), (i) Contractor shall
cease to convert any further Feedstock as soon as it is able to do so
safely, although the conversion of any Feedstock already commenced
shall be completed and Owner shall pay the Conversion Charge for
resulting Product and any other Conversion Charge due and owing and
all taxes and duties applicable thereto, (ii) Owner shall pay
Compensation in the amount provided in Appendix D, (iii) Owner shall
pay any sums due and owing as provided in Section 6.5, (iv) Owner
shall reimburse Contractor the full amount of any sums not recouped by
Contractor for a capital investment made in connection with a
Regulatory Change as described in Section 9.4, (v) Owner shall
reimburse Contractor the full amount of any sums not recouped by
Contractor for a capital investment made to implement a change in the
Conversion Process as described in Section 9.6(a)(ii), (vi) Owner
shall reimburse Contractor any sums advanced by Contractor on behalf,
and for the account, of Owner in connection with Owner's obligation to
purchase and supply Feedstock, and (vii) Owner shall pay the
Termination Fee set forth in Appendix F.
(b) Upon termination of this Agreement in the event of the default by
Contractor (as provided in Sections 2.4 and 2.5) or due to an event of
Force Majeure (as provided in Article 8),(i) Contractor shall cease to
convert any further Feedstock as soon as it is able to do so safely,
although the conversion of any Feedstock already commenced shall be
completed and Owner shall pay the Conversion Charge for resulting
Product and any other Conversion Charge due and owing and all taxes
and duties applicable thereto and (ii) Owner shall reimburse
Contractor any sums advanced by Contractor on behalf, and for the
account of Owner in connection with Owner's obligation to purchase and
supply Feedstock.
(c) Upon termination of this Agreement in the event of a Regulatory Change
(as provided in Section 9.4),(i) Contractor shall cease to convert any
further Feedstock as soon as it is able to do so safely, although the
conversion of any Feedstock already commenced shall be completed and
Owner shall pay the Conversion Charge for resulting Product and any
other Conversion Charge due and owing and all taxes and duties
applicable thereto, (ii) Owner shall pay Compensation in the amount
provided in Appendix D, (iii) Owner shall pay any sums due and owing
as provided in Section 6.5, (iv) Owner shall reimburse Contractor the
full amount of any sums not recouped by Contractor for a capital
investment made in connection with a Regulatory Change (such
regulatory change being earlier in time and not the Regulatory Change
that is the cause of the termination of the Agreement) as described in
Section 9.4, (v) Owner shall reimburse Contractor the full amount of
any sums not recouped by Contractor for a capital investment made to
implement a change in the Conversion.
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Process as provided in Section 9.6(a)(ii), (vi) Owner shall reimburse
Contractor any sums advanced by Contractor or behalf, and for the
account, of Owner in connection with Owner's obligation to purchase and
supply Feedstock, and (vii) Owner shall pay the Termination Fee set
forth in Appendix F.
(d) Upon termination of this Agreement in the event Contractor is prevented
from increasing the Conversion Charge (as provided in Section 9.8),
or by Contractor on 12 months notice (as provided in Section 2.2),
(i) Contractor shall cease to convert any further Feedstock as soon
as it is able to do so safely, although the conversion of any Feedstock
already commenced shall be completed and Owner shall pay the Conversion
Charge for resulting Product and any other Conversion Charge due and
owing and all taxes and duties applicable thereto, (ii) Owner shall
reimburse Contractor any sums advanced by Contractor on behalf, and for
the account of Owner in connection with Owner's obligation to purchase
and supply Feedstock, and (iii) Owner shall pay the Termination Fee set
forth in Appendix F.
(e) Upon termination of this Agreement in the event Contractor chooses not
to meet a lower price offer (as provided in Sections 2.5 and 9.9),
(i) Contractor shall cease to convert any further Feedstock as soon as
it is able to do so safely, although the conversion of any Feedstock
already commenced shall be completed and Owner shall pay the Conversion
Charge for resulting Product and any other Conversion Charge due and
owing and all taxes and duties applicable thereto, (ii) Owner shall pay
Compensation in the amount provided in Appendix D, (iii) Owner shall
reimburse Contractor the full amount of any sums not recouped by
Contractor for a capital investment made in connection with a
Regulatory Change as described in Section 9.4(a), (iv) Owner shall
reimburse Contractor the full amount of any sums not recouped by
Contractor for a capital investment made to implement a change in the
Conversion Process as described in Section 9.6(a)(i), (v) Owner shall
reimburse Contractor any sums advanced by Contractor on behalf, and for
the account, of Owner in connection with Owner's obligation to purchase
and supply Feedstock, and (vi) Owner shall pay the Termination Fee set
forth in Appendix F.
(f) The provisions of Section 2.6 shall not be deemed to limit in any way
the rights or remedies of either party in the event of any default
under or breach of this Agreement by the other party.
(g) Upon termination of the Agreement, Contractor shall, at Owner's
expense and at Owner's direction, dispose of all Feedstock. Upon
termination of the Agreement, Contractor shall not utilize the
Conversion Process without the written consent of Owner.
ARTICLE 3 -- SUPPLY OF FEEDSTOCK
3.1 Owner shall deliver Feedstock or cause Feedstock to be delivered to
Contractor at the Contractor's Plant at no cost to Contractor and when
requested by Contractor, in quantities required by Contractor to produce
Product as contemplated herein. If Contractor discovers any failure of
Feedstock to meet the Specification, it will promptly notify Owner, who
shall be responsible for providing replacement Feedstock and reimbursing
Contractor for any costs or expenses incurred by Contractor as a result of
the non-conforming Feedstock (including, but not limited to, process
downtime costs). Each delivery of Feedstock shall be accompanied by a
certificate of analysis confirming that the Feedstock meets its
Specification. Contractor shall
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reasonably assist Owner or Owner's nominee in the purchase of Feedstock at the
most favorable prices available.
ARTICLE 4 -- CONVERSION
4.1 Contractor shall convert Feedstock delivered by or on behalf of Owner into
Product. Owner shall order and purchase one hundred percent (100%) of its
worldwide requirements of Product from Contractor. Contractor shall supply
to Owner 100% of the Product it converts by use of the Conversion Process.
Contractor's Plan shall be certified to ISO 9002 at all times during the
term of this Agreement.
4.2 Contractor shall carry out the conversion by means of the Conversion
Process. In the event of any accidental loss of Feedstock (other than the
failure to utilize Feedstock at the rate set forth in Appendix H), Product
or any intermediate in the Conversion Process, Contractor shall be liable
to (a) reimburse Owner for the value of the demonstrated actual Feedstock
content of the loss or (b) replace the demonstrated actual Feedstock
content of the loss. For purposes of a reimbursement under (a) above,
Feedstock shall be valued as set forth on Exhibit E. Contractor shall also
utilize Feedstock at the rate, and under the terms and conditions, set
forth in Appendix H.
4.3 Contractor shall permit Owner's employees, on at least 24 hours' notice to
Contractor, access during regular business hours to all production units
and data associated with the Conversion Process or with the analysis of
Product.
4.4 Contractor shall, at Contractor's expense, arrange for the lawful disposal
of any waste arising from the Conversion Process. Contractor shall notify
Owner in writing of the arrangements for disposal existing on the
Distribution Date and shall notify Owner of any subsequent change in waste
disposal arrangements.
ARTICLE 5 -- CONFIDENTIALITY
5.1 Neither party shall disclose any information concerning the Conversion
Process, Conversion Charge, Compensation or any other term or condition of
this Agreement, or any of the other party's technical, financial,
marketing, manufacturing or other similar information, to any third party
without first obtaining the written consent of the other party, except as
required by applicable law, a stock exchange on which either party's (or
any such party's parent company, if applicable) stock is traded, or as
ordered by a court of competent jurisdiction. The foregoing restrictions
shall not apply to any information which the disclosing party can show:
(a) has been lawfully received by the disclosing party from a third-party
who has not breached a contractual, legal or fiduciary duty of
non-disclosure to the non-disclosing party or to another party; or
(b) is or becomes publicly known other than by disclosure by the
disclosing party.
In the event disclosure is required by applicable law, a stock exchange on
which either party's (or any such party's parent company, if applicable)
stock is traded, or by a court of competent jurisdiction, the disclosing
party shall provide the non-disclosing party with sufficient notice to
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afford the non-disclosing party an opportunity to obtain a protective order
or other relief preventing disclosure. The disclosing party shall use
reasonable efforts to assist the non-disclosing party in its efforts to
obtain a protective order or other relief preventing disclosure. The
non-disclosure requirements in this Article 5 shall not be deemed to (a)
prohibit Owner from disclosing the Conversion Process to third parties, or
prohibit Contractor from disclosing its manufacturing know-how and
technology to third parties, or prohibit this Agreement from being included
as an exhibit to any Registration Statement filed by Owner's parent
company, Octel Corp., in connection with the distribution of the common
stock of Octel Corp. as a dividend to the holders of Contractor's common
stock pursuant to the Transfer and Distribution Agreement, dated________,
1998, between Contractor and Octel Corp., or (b)(i) prohibit Owner from
disclosing to third parties any Manufacturing Improvement that has been
licensed to it pursuant to Section 9.6(b) or (ii) prohibit Contractor from
disclosing to any third parties any Invention that has been licensed to it
pursuant to Section 9.6(b), provided, however, that in the case of (i) and
(ii) the third party agrees in writing to be bound to the non-disclosure
covenants set forth in this Section 5.1.
ARTICLE 6 -- ORDERS
6.1 Owner shall provide to Contractor during the month of November each year a
forecast prepared in good faith of monthly quantities of Product likely to
be required by Owner during the following Contract Year. No Quarter in the
forecast will show quantities in excess of 720,000 pounds, and no month
within such Quarter shall show quantities in excess of 300,000 pounds,
without the written content of Contractor. The forecast shall be
non-binding and is intended by the parties to facilitate their planning.
6.2 Contractor shall run two campaigns per Contract Year to manufacture
Product, with the scheduling of the manufacturing campaigns to be
determined by Contractor in its sole discretion, provided, however,
Contractor shall use reasonable efforts to cooperate with Owner in good
faith to schedule its manufacturing campaigns so as to minimize the
quantity of Product held by Contractor in Inventory at Contractor's Plant.
6.3 Owner shall place firm orders for Product at least six months in advance of
requested delivery. Firm orders for Product will not exceed 720,000 pounds
in any Quarter, and will not exceed 300,000 pounds in any month within
such Quarter without the written consent of Contractor.
6.4 Contractor shall manufacture Product ordered by Owner pursuant to Section
6.3 but such obligation shall be expressly conditioned upon delivery of
Feedstock meeting its Specification to Contractor in such quantities, and
on or before the delivery date reasonably requested by Contractor for such
Feedstock. Owner shall place orders with its suppliers of Feedstock with
sufficient advance notice, based on Owner's past practices with said
suppliers, to assure delivery to Contractor in such quantities, and on or
before the delivery date reasonably requested by Contractor.
6.5 Owner shall pay the Conversion Charge (as defined herein) for a minimum of
500,000 pounds of Product per Contract Year ("Annual Minimum Volume"). If
Owner does not pay an invoice which is dated in a Contract Year until after
the end of the Contract Year, but does pay said invoice within the thirty
(30) day period set forth in Section 9.5, Owner shall be deemed to have
paid for said Product during the relevant Contract Year. If Owner has not
paid for at least the Annual Minimum Volume in any Contract Year, Owner
shall, within thirty days following the
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end of said Contract Year, pay to Contractor the Conversion Fee for the
difference between the Annual Minimum Volume and the quantity of Product
actually paid for by Owner in said Contract Year.
ARTICLE 7 -- DELIVERY
7.1 (a) Contractor shall analyze each shipment of Product before delivery to
confirm that such Product complies with all parts of the Specification, and
with each shipment of Product Contractor shall provide a certificate of
analysis signed by Contractor's designated analytical person or quality
control manager referring to all Specification items. Promptly after
receipt of each shipment of Product at the destination designated by Owner
pursuant to Section 7.2, Owner shall examine such Product for any damage,
nonconformance or shortage. Owner shall notify Contractor within twenty-one
(21) days of the receipt of such shipment of Product whether the Product
complies with the Specification. Failure of Owner to notify Contractor
within the twenty-one day period of non-conformity with Specification shall
constitute irrevocable acceptance of Product and shall bar Owner from
making any claim that such Product is non-conforming to Specification in
any respect (under any theory, including without limitation, negligence,
strict liability, contract, warranty or otherwise).
(b) If Owner has notified Contractor in a timely manner that Owner
believes that Product does not conform with Specification, the parties
agree to consult with each other in order to explain and resolve any
discrepancy between each other's determinations. If such consultation does
not resolve the discrepancy, Owner and Contractor shall nominate an
independent reputable laboratory, acceptable to each, to carry out tests on
representative samples taken from such shipment in dispute and/or any
samples retained by Contractor, and the resulting determination shall be
binding on the parties and the cost thereof shall be paid by the party
whose results were in error. Owner's sole and exclusive remedy for a
failure by Contractor to supply Product complying with Specifications shall
be that remedy specified in Section 12.3(a).
7.2 Product shall be delivered, at Owner's expense, from Contractor's Plant to
the destination designated by Owner. Product will be delivered in rail car,
truck or drum, as specified by Owner. Owner shall provide, or shall cause
the driver of any truck used to deliver Product to provide to Contractor a
written certification confirming that the storage tank on such truck into
which Product will be pumped has been cleaned and decontaminated of all
substances previously contained in the storage tank. Owner is responsible
for and assumes all liability with respect to the suitability and
compliance with law of all trucks used to deliver Product. Owner further
assumes all responsibility for the suitability of the cleaning and
decontamination of storage tanks on delivery trucks such that the storage
tanks do not cause Product to fail to comply with its Specification. Owner
shall select all drums to be used to package Product for delivery to
Owner's designated destinations, and shall purchase and deliver to
Contractor all such drums on or before the delivery date requested by
Contractor. Owner shall be solely liable for the suitability and compliance
with law of all drums. Drums shall be labeled in accordance with Owner's
instructions. Owner shall pay to Contractor the sum of USD 0.14 as a
filling charge for each drum filled by Contractor. Owner shall take
delivery of all Product manufactured by Contractor during a manufacturing
campaign so that at the conclusion of any manufacturing campaign no Product
shall remain at Contractor's Plant.
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7.3 Contractor will retain all Product samples for one (1) calendar year.
Thereafter, all Product samples will be disposed of by Contractor, or at
Owner's request, said samples will be delivered to Owner, at Owner's cost.
ARTICLE 8 -- FORCE MAJEURE
8.1 "Force Majeure" shall mean and include any circumstance to the extent
beyond the reasonable control of the party so affected (other than an
obligation to pay money), including without limitation, the following:
any act of nature or public enemies, explosion, fire, storm, earthquake,
flood, drought, perils of the sea, the elements, casualty, breakdown of
plant, strikes, lock-outs, labor controversies (regardless of whether such
strikes, lock-outs or labor controversies are within the reasonable control
of the party), riots, sabotage, embargo, war (whether or not declared or
whether or not the United States of America is a participant), governmental
laws, regulations, orders or decrees, the refusal of a required
governmental license, registration or permit, or seizure, in each case for
reasons other than the adverse financial condition of the party so
affected. Shortage of Feedstock shall not be deemed to be an event of Force
Majeure if invoked by Owner under circumstances where Owner has failed to
place orders with its suppliers of Feedstock with sufficient advance
notice, based on Owner's past practices with said suppliers, in order to
obtain delivery to Contractor of Feedstock in such quantities, and on or
before the delivery date reasonably requested by Contractor.
8.2 (a) Contractor shall not be liable for its failure to produce or sell
Product, or to otherwise perform its obligations hereunder, if such
failure is due to an event of Force Majeure. Similarly, Owner shall not be
liable for its failure to purchase Product or to otherwise perform its
obligations hereunder if such failure is due to an event of Force Majeure;
provided however that an event of Force Majeure shall not suspend or
otherwise affect Owner's obligations to pay the Conversion Fee for Product
or any other sums due and owing Contractor as provided herein. Any party
suffering an event of Force Majeure shall use all commercially reasonable
efforts to remove such cause or causes with reasonable dispatch and shall
promptly notify the other party of the existence of the event of Force
Majeure, and the expected delays and the estimated effect upon performance
to result therefrom. The requirement that any Force Majeure be remedied
using all commercially reasonable efforts shall not require the settlement
of strikes, lock-outs or labor controversies by acceding to the demands of
the opposing party or parties. If a Force Majeure event affecting a
party's performance is projected to be permanent or of a duration of at
least twelve (12) months, the other party may terminate the Agreement on
60 days notice.
(b) During the time Contractor is unable to produce or sell Product, or
to otherwise perform its obligations hereunder, it shall not be obligated
to procure Product from any alternative producer or supplier. Any Product
omitted hereunder due to either party's failure to perform its obligations
hereunder due to an event of Force Majeure shall be omitted from this
Agreement and the contracted quantity shall be so reduced for the
applicable contract period, provided, however, upon the termination of a
Force Majeure declared by Contractor, Contractor shall have the option,
with the written consent of Owner, to produce for sale to Owner in the
remaining contract period the quantities of Product omitted (or any
portion of such omitted quantities) due to the event of Force Majeure
declared by Contractor.
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ARTICLE 9 -- CONVERSION CHARGE
9.1 (a) Owner shall pay to Contractor a conversion charge ("Conversion
Charge") for converting Feedstock to Product by use of the Conversion
Process as set forth in Appendix I.
9.1 (b) Effective on the first day of each Contract Year (other than the
first Contract Year) the unit cost then in effect for labor, power,
utilities, caustic and wastewater shall be reviewed and compared with the
unit cost of such factors in effect on the first day of the preceding
Contract Year, and each of the Conversion Charges in Appendix I shall be
increased, but not to exceed 4% for any Contract Year, by the amount of the
net increase of labor, power, utilities, caustic and wastewater taken as a
whole (e.g., if the net increase of labor, power, utilities, caustic and
wastewater is 5%, each of the Conversion Charges in Schedule I will
increase by 4%). If the change in these unit cost factors, taken as a
whole, is a net decrease, the Conversion Charges shall decrease in a like
manner, but not to exceed 4% for any Contract Year. Owner shall have the
right, at its expense, to have an independent auditor that has no
affiliation with Owner or its parent, subsidiary and affiliate entities and
that has entered into a confidentiality agreement reasonably satisfactory
to Contractor, review the records of Contractor to confirm the accuracy of
each change in the unit cost factors made by Contractor. The undertaking of
the independent auditor shall be limited solely to confirming the accuracy
of any changes in the unit cost of labor, power, utilities, caustic and
wastewater. Set forth in Appendix G is an example of how the Conversion
Charge shall be adjusted as provided in this Section 9.1(b). Any payments
made by Contractor in settlement, or in satisfaction of any judgement
rendered in the matter of Great Lakes Chemical Corporation, pending before
the National Labor Relations Board at case numbers 10-CA - 21446, 10-CA -
21640, ▇▇-▇▇ - ▇▇▇▇▇ ▇▇▇ ▇▇-▇▇ - ▇▇▇▇▇, shall not be considered in
connection with the adjustment of the Conversion Charges as provided in
this Section 9.1(b).
9.2 Subject to the adjustment set forth in Section 9.3, the Conversion
Charge invoiced during a Contract Year shall be the Conversion Charge
corresponding to the quantity forecast as being the Owner's aggregate
requirements of Product during such Contract Year (as provided by Owner to
Contractor accordance with Section 6.1).
9.3 No later than forty-five (45) days after the end of each Contract Year
the parties shall calculate the difference between the Conversion Charge
due and owing pursuant to Appendix I for the quantity (in pounds) of
Product actually invoiced in the preceding Contract Year and the Conversion
Charge that was invoiced pursuant to Section 9.2 for such quantity of
Product in the preceding Contract Year, and the difference shall be paid to
or refunded by the Contractor.
9.4 (a) The term "Regulatory Change" shall mean a change effective after
the Division Date by any government, agency, legislative body, court,
utility board or similar entity with respect to (i) any environmental or
safety laws, rules, ordinances or regulations, wastewater or air emission
standards, permits or permit conditions, or (ii) any other or similar
requirements of any kind (regardless of whether they relate to
environmental or safety issues), which would increase Contractor's
operating costs and/or require capital expenditure by Contractor hereunder.
If Contractor or Owner learns that any Regulatory Change is under
consideration, the party learning same will immediately notify the other
and the parties shall work together to attempt to minimize the impact of
any such proposed Regulatory Change. If a Regulatory Change is adopted, the
party learning same will immediately notify the other party. Contractor
shall notify Owner of the amount of any required capital expenditure or the
amount of Contractor's increased operating costs, and shall provide Owner
with information supporting such capital expenditures
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or increased operating costs. In the event of a Regulatory Change, Owner
will as soon as possible after receiving the notice of a required capital
expenditure or increased operating costs, but in no event more than forty
(40) days after such receipt, notify Contractor as to whether or not Owner
agrees to accept an increase in the Conversion Charge or reimburse
Contractor for the required capital expenditures as a result of said
Regulatory Change.
(b) If Contractor has notified Owner of a Regulatory Change affecting
Contractor as described in Section 9.4(a)(i) or (ii) above, and if Owner
gives timely written notice to Contractor that Owner accepts the price
increase or will reimburse Contractor for the required capital expenditure,
the Conversion Charge will be increased in accordance with the following.
If the Regulatory Change will result in an increase in operating costs, the
amount of the increase in operating costs per pound of Product converted
will be added to the Conversion Charge then existing. If the Regulatory
Change requires a capital investment, the parties shall negotiate in good
faith to determine an equitable formula for Contractor to recoup its
capital expenditure, including a twenty percent (20%) return on such
capital, and once the parties have reached agreement on the formula for
Contractor to recoup its capital investment, Contractor will make the
capital investment.
(c) If Contractor has notified Owner of a Regulatory Change affecting
Contractor as described in Section 9.4(a)(i) or (ii) above and if Owner
has provided timely written notice that Owner does not accept the price
increase or will not reimburse Contractor for the required capital
expenditure, or if the parties cannot agree on an equitable formula for
Contractor to recoup its capital investment as provided in the final
sentence of Section 9.4(b) above, or if Owner fails to give timely written
notice that it accepts the price increase or will reimburse Contractor for
the required capital expenditure, then Contractor may in its sole
discretion elect (i) to absorb the increased cost or pay the required
capital expenditure without reimbursement, in which case this Agreement
will remain in full force and effect without change, or (ii) to provide
written notice to Owner that Contractor is terminating the Agreement,
which termination shall become effective six (6) months after receipt
of said notice by Owner, provided, however, if Contractor would be
required to make the capital expenditure or would incur the increase
in operating costs during such 6 month period, (x) Owner shall (1) within
the 6 month period, reimburse Contractor the full amount of such capital
investment, including a twenty percent (20%) return on such capital, and
(2) pay Contractor the amount of its increased operating costs for each
pound of Product manufactured within the 6 month period, or (y) the
Agreement shall terminate immediately upon receipt of Contractor's notice
of termination.
9.5 Conversion Charges shall be invoiced to Owner on the date Product is
shipped by Contractor to the destination designed by Owner. Payment shall
be due 30 days from the date of invoice.
9.6 (a)(i) Contractor will retain the full benefit of all Manufacturing
Improvements for the production of Product. "Manufacturing Improvement"
means any changes in equipment or methods employed by Great Lakes in
undertaking the Conversion Process (but specifically excludes any change
in the Conversion Process) to produce Product which results in decreased
cycle times or a reduction in cost to produce the Product.
9.6 (a)(ii) Contractor will share equally with Owner in full benefit of any
reduction in cost to produce the Product caused by any change in the
Conversion Process (which change shall have been mutually agreed to by
the parties), after Contractor has recouped the full amount of any capital
invested (as provided in the following sentence) to implement the change
in Conversion
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Process. Once Contractor has recouped one hundred percent (100%) of said
capital investment, including a twenty percent (20%) return on such
capital, with such recoupment to be at the rate provided in the following
sentence, the benefits of the change in Conversion Process shall be shared
between the parties by reducing the Conversion Charge in an amount equal
to 50% of the resulting reduction in cost per pound to undertake the
Conversion Process to produce Product (the "Cost Reduction Factor"). The
Conversion Charge payable by Owner shall not be reduced by the Cost
Reduction Factor until the Contractor has recouped the capital invested
(as provided above) to implement the change in Conversion Process, with
the capital to be recouped at the rate of the Cost Reduction Factor
applied to each pound of Product converted by Contractor.
(b) Any improvements, inventions or modifications to the Conversion
Process ("Inventions"), whether or not patentable, conceived by Contractor
or jointly by Contractor and Owner, shall be owned by Owner, and
Contractor shall be granted a non-exclusive, royalty free license to
utilize the Inventions for any purpose other than the manufacture of
Product. Any Inventions,whether or not patentable, conceived by Owner,
shall be owned by Owner. Any Manufacturing Improvement conceived by either
Owner or Contractor, or jointly conceived by Contractor and Owner shall be
owned by Contractor, and Owner shall be granted an exclusive, worldwide,
royalty free license to utilize the Manufacturing Improvement in
connection with (i) the Product or (ii) any product based on the Product
and which incorporates an Invention.
9.7 (a) Contractor shall add to the Conversion Charge an amount equal to any
tax now in effect or hereafter imposed or levied, with respect to the
manufacture, sale, use or delivery of Product and imposed by law at the
point of sale or delivery of such Product (other than taxes based upon
the income or profits of Contractor), including but not limited to, sales
tax, use tax, retailer's occupational tax, gross receipts tax, and value
added tax, in each ease to the extent payable by Contractor or required
to be collected by Contractor.
(b) All taxes now or hereafter imposed or levied with respect to the
manufacture, sale, use or delivery of the Product (other than taxes based
upon the income or profits of Contractor), which are required to be paid
or collected by Contractor and which are not imposed by law at the point
of sale or delivery of Products, including but not limited to, ad valorem
tax, or any environmental tax, shall be paid by Contractor and reimbursed
by Owner. Contractor will periodically calculate any allocation of such
taxes to the Product purchased by Owner and will prepare a separate
invoice to Owner for reimbursement of such taxes.
(c) Owner shall be responsible for and pay any duties which are levied
upon the export or import of Product manufactured by Contractor
hereunder. Both parties will work together to attempt to eliminate any
such duty.
9.8 If Contractor is prevented from increasing the Conversion Charge in
effect at any time by any governmental law, order, regulation or ruling,
then at Contractor's option and upon one hundred and twenty (120) days
notice from Contractor to Owner, Contractor may terminate this Agreement.
9.9 If during the term of this Agreement Owner receives a written offer to
supply Owner's requirements of Product (by the conversion of Feedstock
into Product by use of the Conversion Process) for the following Contract
Year or multiple Contract Years, with such offer describing the specific
quantities of Stadis(R) 425 and Stadis(R) 450 (Enhanced) to be supplied
pursuant thereto, from a manufacturer other than a subsidiary, parent
company or corporate affiliate of
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Owner, at a conversion price lower than the Conversion Charge in effect
under this Agreement, and upon terms and conditions comparable to those
stated in this Agreement, Owner may request Contractor in writing to meet
the lower price offer, provided such request is presented to Contractor
within thirty (30) days of Owner's receipt thereof. Owner's request shall
describe the competitive offer in sufficient detail to reasonably permit
Contractor to verify same, including but not limited to the quality of each
of Stadis(R) 425 and Stadis(R) 450 (Enhanced) to be supplied. Contractor
shall then give notice to Owner stating whether it is willing to adjust the
applicable Conversion Charge under this Agreement to meet the lower price
competitive offer of such other manufacturer. If Contractor does not adjust
the then applicable Conversion Charge under this Agreement to meet the
lower price competitive offer within thirty (30) days after Contractor's
receipt of such request, Owner may, by written notice to Contractor elect
to accept such offer, in which event this Agreement may be terminated by
Contractor any time thereafter on six (6) months written notice to Owner,
provided, however, if Owner has commenced purchasing Product from a third
party pursuant to the lower price competitive offer, Contractor may
terminate the Agreement with no notice. During any Contract Year in which
Owner is purchasing Product pursuant to a lower price competitive offer but
Contractor has not terminated this Agreement, the Annual Minimum Volume
shall not be applicable.
ARTICLE 10 -- RECORDS
10.1 At the end of each manufacturing campaign, Contractor shall supply to Owner
a statement showing the conversion ratio of Feedstock to Product achieved
during such manufacturing campaign. In addition, at the end of each month,
Contractor shall supply to Owner a statement showing:
a) the amount of Feedstock received from the Owner during that calendar
month and the dates of receipt; and
b) the amount of Product shipped during that calendar month and the dates
of shipment; and
c) the amount of Feedstock held in inventory at the Contractor's Plant
awaiting processing; and
d) the amount of Product held in inventory awaiting delivery upon receipt
of instructions from Owner; and
e) the amount of work in process, expressed as Feedstock.
10.2 Owner shall have the right, at Owner's expense, to appoint the independent
auditor identified in Section 9.1(b) to review the records of Contractor on
reasonable notice and during normal business hours, in order to verify (a)
the reduction in cost to produce Product caused by a change in the
Conversion Process and the application of the Cost Reduction Factor to
Owner as provided in Section 9.6(a)(ii) and (b) the statements supplied to
Owner as provided in Section 10.1. The independent auditor shall undertake
the review of records and verification of the matters set forth in clauses
(a) and (b) under the same requirements of confidentiality as provided in
Section 9.1(b). The undertaking of the independent auditor shall be limited
solely to confirming the matters set forth in clauses (a) and (b) above.
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ARTICLE 11 -- TITLE AND RISK
Owner shall have title to Feedstock at all times. Owner shall have risk of
loss for Feedstock until Feedstock is received at Contractor's Plant, at which
time risk of loss shall shift to Contractor. Contractor shall have title to
and risk of loss for Product until the originating carrier takes possession of
the Product at Contractor's Plant for delivery to the destination designated by
Owner, at which time title to and risk of loss for Product shall shift to Owner.
ARTICLE 12 -- REPRESENTATIONS, WARRANTIES AND INDEMNITY
12.1 (a) Contractor represents and warrants that:
(i) Product converted hereunder will meet its Specification, except to
the extent that (x) any failure of Product to meet its Specification is
caused by a failure of Feedstock to meet the Feedstock Specification, or
(y) any failure of Product to meet its Specification is caused by the
failure of any storage tank in a delivery truck to have been cleaned and
decontaminated immediately prior to receiving Product for delivery; and
(ii) Product furnished under this Agreement shall be manufactured,
processed and packaged in material compliance with all applicable
federal, state and local laws, regulations, orders and guidelines and
good industry practice, except to the extent any failure to package
Product in material compliance with all applicable federal, state and
local laws, regulations, orders and guidelines and good industry practice
is caused by the trucks or drums selected by Owner; and
(iii) Product will be conveyed free of any liens and encumbrances, except
to the extent any liens and encumbrances attributable to Owner attach to
the Feedstock or Product; and
(iv) as of the Distribution Date it is aware of no Regulatory Change (as
that term is defined in Section 9.4(a)) which has been proposed or is
under consideration.
(b) CONTRACTOR MAKES NO WARRANTIES OTHER THAN AS PROVIDED IN SECTION
12.1(a) AND CONTRACTOR EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR WARRANTIES
OF FITNESS FOR AN INTENDED PURPOSE OR FOR ANY OTHER PARTICULAR PURPOSE,
WETHER ARISING BY LAW, CUSTOM, CONDUCT OR USAGE OF TRADE.
12.2 Owner represents and warrants that:
(a) It will at all times comply in all material respects with all
applicable laws, regulations, orders and guidelines and good industry
practice, and that it presently has, and will use its best efforts to
maintain, all licenses, permits and similar authorizations required for
the manufacture, processing, packaging, sale and delivery of Product; and
(b) It has the full legal right to use Feedstock and the Conversion
Process to produce Product, and there are no restrictions under law or any
patent, nor is Owner party to any contracts which prohibit Owner from
contracting to have Contractor produce Product as contemplated by this
Agreement; and
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(c) as of the Distribution Date it is aware of no Regulatory Change (as
that term is defined in Section 9.4(a)) which has been proposed or is under
consideration; and
(d) as of the Distribution Date it has provided to Contractor all safety,
health, environmental, hazard and medical information in its possession
relating to Product, the Conversion Process, Feedstock and other raw
materials used to make Product, and it will continue to supply any such
safety, health, environmental, hazard and medical information obtained
after the Distribution Date to Contractor for as long as this Agreement
remains in effect;
(e) all Feedstock will meet the Feedstock Specification; and
(f) all drums in which Product is packaged for delivery, and all trucks
used to deliver Product are suitable for such delivery and comply in all
respects with applicable law; and
(g) the storage tanks in any truck used to deliver Product from
Contractor's Plant to Owner's designated destination shall have been
cleaned and decontaminated immediately prior to receipts of Product for the
delivery such that the use of the storage tank shall not cause the Product
to fail to comply with its Specification.
12.3 (a) In the event that any Product hereunder fails to conform to the
warranty in Section 12.1(a)(i), as Owner's sole remedy for said failure, if
Owner has provided timely notice of such non-conformity under Section
7.1(a), Contractor shall, at its option, (i) supply Owner with the
applicable volume of conforming Product as soon as reasonably practicable,
or (ii) refund the Conversion Charge paid by Owner for the non-conforming
Product. Contractor shall have the right, at Contractor's expense, to
reclaim and rework non-conforming Product, provided, however, if
non-conforming Product cannot be reclaimed and reworked into conforming
Product, Contractor shall reimburse Owner for the cost of the replacement
of all Feedstock used in the non-conforming Product as provided in Appendix
E.
(b) Neither party shall be liable to the other under or in connection with
this Agreement for lost profits or for special, indirect, incidental,
consequential, punitive or exemplary damage of any kind, whether arising in
contract, tort, product liability or otherwise, even if advised of the
possibility of such lost profits or damages. This section shall not serve
to reduce a party's indemnity obligations in connection with claims by
third persons or entities against a party entitled to indemnification under
Section 12.4, nor to reduce Owner's obligations, if any; to pay the sums
provided in Section 6.5. Notwithstanding the preceding sentence or any
other provision of this Agreement, Contractor shall not under any
circumstances be required to pay damages for default or breach or indemnity
in an amount greater that the total amount it has received from Owner in
payment for that Product which is actually involved in the claim for
damages or indemnity.
12.4 (a) Subject to the limitation in the last sentence in Section 12.3(b),
Contractor will indemnify and hold Owner harmless from and against all
claims, actions, judgments, losses, and expenses, including reasonable
attorneys fees, sustained or incurred by Owner, which arise or result from
(i) breach of any warranty by Contractor hereunder (subject to the
limitations set forth in Sections 7.1(a), 7.1(b) and 12.3(a)), (ii) acts,
omissions, or events taking place in connection with the production,
storage, packaging and handling of Feedstock or of Product, in each case
while Owner has the risk of loss therefore (excluding however, claims
relating to the
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suitability or compliance with law of drums in which Product is packaged,
or trucks in which Product is delivered, which shall be Owner's sole
responsibility), and (iii) any negligent acts or omissions of Contractor in
failing to properly seal any drum or railcar in which Product is to be
shipped to the destination designated by Owner, which negligent act or
omission causes Product to be released from such drum or railcar prior to
being received at its destination, provided that, except as set forth in
clause (iii) above, Contractor shall not under any circumstance be
obligated to indemnify or hold Owner harmless from product liability,
recall costs or liability, negligence, breach of warranty, breach of
contract or similar claims made by any person or entity who purchases,
uses, is exposed to or otherwise claims to have been injured or damaged by
or in connection with Product (including any product into which Product has
been incorporated) after risk of loss for said Product passes to Owner.
(b) Owner will indemnify and hold Contractor harmless from and against all
claims, actions, judgments, losses and expenses, including reasonable
attorney's fees, sustained or incurred by Contractor, which arise or result
from (i) breach of any warranty by Owner hereunder, (ii) the ordering,
shipping, handling and delivery of Feedstock before Contractor takes
possession thereof at Contractor's Plant, (iii) except as provided in
Section 12.4(a)(iii), all acts, omissions or events taking place in
connection with Product after risk of loss passes to Owner hereunder,
including without limitation (x) all product liability, recall costs or
liability, negligence, breach of warranty, breach of contract or similar
claims by any person or entity who purchases, uses, is exposed to or
otherwise claims to have been injured or damaged by or in connection with
Product (including any product into which Product has been incorporated),
(w) storage of Product, (x) packaging of Product, (y) handling of Product
or (2) shipment of Product, in each case after risk of loss for said
Product passes to Owner, (iv) claims relating to the suitability or
compliance with law of drums in which Product is packaged or trucks in
which Product is delivered, and (v) any litigation or claim by any third
person or entity alleging that performance by Contractor hereunder, or that
manufacture, sale or use of Product (including any product into which
Product has been incorporated), infringes upon any patent right or any
other intellectual property rights of any third person or entity.
ARTICLE 13 -- MISCELLANEOUS
13.1 All waivers and consents given hereunder shall be in writing. No waiver by
any party of any breach or anticipated breach of any provision hereof shall
be deemed a waiver of any other contemporaneous, preceding or succeeding
breach or anticipated breach, whether or not similar, on the part of the
same or any other party.
13.2 The article and section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.3 Other than with respect to any receivor or trustee that agrees to assume
the liabilities and obligations under this Agreement of the party for whom
it is appointed, this Agreement shall not be assigned by either party
without the prior written consent of the other party, such consent not to
be unreasonably withheld. Subject to the foregoing restriction, this
Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their respective successors and assigns.
13.4 This Agreement may be executed in two or more counterparts, all of which
taken together shall constitute one and the same instrument.
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13.5 This Agreement, including all appendices annexed hereto (each of which is
incorporated herein by reference), contains the entire understanding of
the parties hereto with respect to the subject matter contained herein or
therein, and supersedes all prior negotiations, understanding, or
agreements whether oral or written. The parties agree and acknowledge that
the Agreement has been reached as a result of negotiation between the
parties, each represented by counsel. As a result, if any dispute ever
arises regarding the construction of any provision, neither party shall be
entitled to any favorable or detrimental construction preference.
13.6 This Agreement may not be changed orally, nor shall any modification of
this Agreement be affected by the use of purchase orders, invoices,
acknowledgments, acceptances or other forms at variance with or in addition
to the terms and conditions herein. In case of a conflict between any of
the terms contained in a written purchase order, invoice, acknowledgment,
acceptance or other form and any of the terms of this Agreement, the terms
of this Agreement shall control. No additional terms or conditions of sale
other than those contained in this Agreement shall be effective unless
approved in writing by the representatives of Owner and Contractor
identified in Section 13.8.
13.7 In Case any provision in this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions hereof will not in any way be affected or impaired thereby.
13.8 All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given
(a) on the date of service if served personally on the party to whom
notice is given, (b) on the day of transmission if sent via facsimile to
the facsimile number given below, provided facsimile confirmation of
receipt is obtained promptly after completion of transmission, (c) on the
third business day after delivery to an overnight courier service,
provided receipt of delivery has been confirmed, or (d) on the tenth day
after mailing, provided receipt of delivery is confirmed, if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, properly addressed and
return-receipt-requested, to the party as follows:
If to Contractor: Great Lakes Chemical Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Attn: General Manager-Fine Chemicals
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall
not serve as notice): Great Lakes Chemical Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Assistant General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Owner: The Associated Octel Company Limited
P.O. Box 17, Oil Sites Road
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attn: Company Secretary
Telecopy: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
13.9 This Agreement shall be interpreted and the rights and liabilities of the
parties determined in accordance with the substantive law of the State of
New York, without giving effect to any choice of law rules or provisions
(whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
State of New York. The parties hereby adopt and incorporate by reference
the dispute resolution provisions in Article XI of the Transfer and
Distribution Agreement dated as of , 1998 between Contractor and Octel
Corp.
13.10 The termination of the Agreement shall not impair or prejudice any right
or remedy which either party may have against the other at law or in
equity under this Agreement and which has arisen or accrued prior to or at
the time of termination, including, without limitation, any right or
remedy by reason of any breach hereof. The termination of this Agreement
shall not relieve either party from any covenants or agreements hereunder
which, by their terms, are expressly or impliedly intended to survive
termination, including, but not limited to, Articles 5 and 12 and Section
9.6(b).
ARTICLE 14 -- TRANSITIONAL PHASE
During an initial period until the Owner gives written notice to the Contractor
to the contrary, the Contractor shall purchase Feedstock on behalf of Owner, at
the most commercially advantageous price available instead of Owner itself
purchasing said Feedstock. The Contractor shall then invoice Owner the cost of
purchasing the Feedstock used to make Product. Title and risk of loss for such
Feedstock shall be as provided in Article 11.
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The Associated Octel Company Limited
Signature: ................................................
Date: ................................................
Name: ................................................
Title: ................................................
Great Lakes Chemical Corporation
Signature: ................................................
Date: ................................................
Name: ................................................
Title: ................................................
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APPENDIX A
Part 1
LIST OF FEEDSTOCK
Lupersol
Arquad 2C Nitrate
Dinonylnapthalene sulfonic acid
Dodecyl Mercaptan
Polyflo 130
Kerosene
1-Decene
Dodecylbenzene sulfonic acid
Isopropyl alcohol
Sulfur dioxide
Toluene
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APPENDIX A
PART 2
FEEDSTOCK SPECIFICATION
See Attached
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APPENDIX B
PRODUCT SPECIFICATION
STADIS(R) 425
PROPERTY** UNITS MINIMUM MAXIMUM TYPICAL METHOD
Appearance* Clear, ▇▇▇▇▇▇, ▇▇▇▇▇ Liquid Pass Octel America
Method 97-24
Conductivity pS/m 380 460 400 Octel America
Method 96-21
FlashPoint, *F Report 72 ASTM D93
PMCC
SpGr 60/60F Report 0.850 ASTM D1298
(16/16C)
Color 5.5 3.0 ASTM D1500
Manufacturing Control Specification
ph, Apparent 3.5 5.2 4.4 Octel America
Method ▇▇-▇
▇▇▇▇▇▇(▇) ▇▇▇ (▇▇▇▇▇▇▇▇)
PROPERTY** UNITS MINIMUM MAXIMUM TYPICAL METHOD
Appearance* Clear, ▇▇▇▇▇▇, ▇▇▇▇▇ Liquid Pass Octel America
Method 97-24
Conductivity pS/m 420 540 440 Octel America
Method 96-21
Ash, mass % 0.10 <0.10 ASTM D482
SpGr 60/60F 0.910 0.930 0.920 ASTM D1298
(16/16C)
FlashPoint, *F Report 72 ASTM D93
PMCC
Color 6.5 3.0 ASTM D1500
Manufacturing Control Specification
ph, Apparent 3.7 5.2 4.6 Octel America
Method 96-2
*Parties may agree on instrumental method.
**If Contractor utilizes the process equipment in which Product is manufactured
for the toll manufacture of material other than Product (the "Material") the
parties shall add the Material as a new property to the Specification. The
parties shall negotiate in good faith to establish maximum limits for the
Material that are both measurable and agreeable to the parties. The cost of
sampling each shipment of Product for conformance to such new property shall be
borne equally by the parties.
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APPENDIX C
CONVERSION PROCESS
The Conversion Process is described in its entirety in the documents listed in
Sections A and B below. The documents in Section A were written by the
Contractor with the exceptions as noted, and all bear the signature of ▇▇▇▇
▇▇▇▇▇▇▇▇, dated 8/29/97. Appendix C constitutes the entire agreement of the
parties as to the description of the Conversion Process and shall not be
changed, modified, amended or supplemental in anyway unless expressly agreed in
writing by the parties.
Section A
1) OPERATING INSTRUCTIONS POLYSULFONE AND STADIS 125 BUILDING 8 REVISION 3,
DATED SEPTEMBER 5, 1997
This document requires correction on page 5 Part V Materials to show 473 lbs of
Arquad 2C Nitrate per batch, and on page 19, under Part F Final Additive Mixing,
7.0 to show 473 lbs Arquad 2C Nitrate.
2) OPERATING INSTRUCTIONS STADIS 425 CONCENTRATE AND BULK BUILDING 8
REVISION 2 DATED SEPTEMBER 5, 1997
This document requires correction of Part 1, Process Description, to state in
the second to last sentence in the first paragraph under "Concentrate" to read
as follows: "The R-801 contents are agitated for 50 minutes." This will agree
with XIII Part A Charging R-801/Reaction, paragraph 15.0.
3) OPERATING INSTRUCTIONS STADIS 450 -- REVERSE ADDITION (RA) BUILDING 8,
REVISION 2, DATED SEPTEMBER 5, 1997
This document requires revision on page 2 under I, Process Description, first
paragraph, second sentence to read: "The temperature is adjusted to about
25 degree C and agitated for 50 minutes."
4) OPERATING INSTRUCTIONS STADIS 450 -- REGULAR (REG) BUILDING 8 REVISION 2
DATED SEPTEMBER 5, 1998.
5) OPERATING INSTRUCTIONS STADIS 450 -- ENHANCED BUILDING 8 REVISION 2 DATED
SEPTEMBER 5, 1997.
These instructions under part XIV Charge Calculations, show how to calculate
the amounts of Stadis(R) 450 RA and Stadis(R) 450 REG components. Since the
minimum conductivity requirement is slightly increased in the Specifications,
commensurate changes shall be effective in paragraph 4.0 in part XIV.
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Section B
Test Authorization TA-C-95-287 "Stadis" 450-Enhanced Dated July 31, 1995
Test Authorization TA-C-95-286 "Stadis" 450D Dated July 28, 1995
Test Authorization TA-C-95-285 "Stadis" 425D Conc. Dated July 28, 1995
"Stadis" 425 Concentrate Document No. ▇▇▇-▇▇▇ ▇▇▇ Dated July 1994
Operating Procedure No. 63, SO(2), Cylinder Handling, Dated August 1994
Test Authorization TA-C-95-273 "Stadis" 425 Concentrate Dated July 14, 1995
Test Authorization TA-C-95-274 "Stadis" Polysulfone Intermediate Dated
July 14, 1995
Orchem Method 96-1-1-1 Infrared Spectrophotometric Determination of
1-Decene Polysulfone, Dated 2-28-73
Method No. ▇▇▇▇▇.▇▇▇.▇▇.▇▇ Determination of Sulfur Dioxide (SO(2))
Dated July 17, 1992
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APPENDIX D
COMPENSATION
The following is a table of Compensation payments to be made by Owner to
Contractor upon termination of the Agreement as provided in Section 2.6. The
Compensation payments represent the balance of the undepreciated capital
investment made by Contractor in connection with this Agreement. The
Compensation payments are calculated assuming a December 31 termination, and if
the termination occurs earlier in the calendar year the Compensation payments
shall be increased proportionately to account for the termination not occurring
on December 31.
TERMINATION DATE COMPENSATION PAYMENT
December 31, 1998 USD 581,191.92
December 31, 1999 USD 512,034.80
December 31, 2000 USD 442,877.68
December 31, 2001 USD 373,720.56
December 31, 2002 USD 304,563.44
December 31, 2003 USD 235,406.32
December 31, 2004 USD 166,249.20
December 31, 2005 USD 97,092.08
December 31, 2006 USD 27,934.96
December 31, 2007 USD 0
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APPENDIX E
FEEDSTOCK VALUES
The value of Feedstock shall be the delivered cost (expressed on a unit basis)
to replace the following Feedstock items:
*Price
Lupersol USD 8.26/pound
Arquad 2C Nitrate USD 3.60/pound
Dinonylnapthalene
sulfonic acid USD 2.44/pound
Dodecyl
Mercaptan USD 1.90/pound
Polyflo 130 USD 1.88/pound
Kerosene USD 1.60/gallon
1-Decene USD 0.78/pound
Dodecylbenzene
sulfonic acid USD 0.74/pound
Isopropyl alcohol USD 0.33/pound
Sulfur dioxide USD 0.25/pound
Toluene USD 0.17/pound
*Estimated prices as of April 1, 1998
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APPENDIX F
CLOSURE FEE
As provided in Section 2.6, upon termination of the Agreement, Owner shall pay
Contractor the sum of $32,500, plus all costs to dispose of, or ship to a
destination specified by Owner, all Feedstock and Product, as well as any
demurrage charges incurred by Contractor for Product or Feedstock.
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APPENDIX G
The following is an example of how the Conversion Charge would, under the
assumptions set forth for Years 1 and 2, be increased pursuant to Section
9.1(b) after the first Contract Year of the Agreement:
Factor Year 1 Year 2 Difference Unit Unit Cost % Increase
Consumption Per Increase (Decrease) for
Pound of Product (Decrease) for $1.00 per pound
Converted $1.00 per Pound Conversion
Conversion Charge
Charge
------------------------------------------------------------------------------------------------------------------------
Labor USD 15.58/hr USD 16.08/hr USD 0.50 0.015 USD 0.00750 .75%
Power USD 0.048/kw hr USD 0.054/kw hr USD 0.006 0.025 USD 0.00012 .012%
Caustic USD 0.075/lb USD 0.15/lb USD 0.075 0.045 USD 0.00338 .338%
Gas USD 0.415/therm USD 0.428/therm USD 0.013 0.02 USD 0.00026 .026%
Wastewater USD 1.40/m gal USD 1.35/m gal USD (0.10) 0.0012 USD(0.00012) (.012%)
------------------------------------------------------------------------------------------------------------------------
USD 0.01114 1.114%
Increase in Conversion Charge in Year 2 (USD 0.011)
Less than 1.0 USD 1.511
Not less than 1.0
but less than 1.2 USD 1.361
Not less than 1.2
but less than 1.4 USD 1.261
Not less than 1.4
but less than 1.6 USD 1.161
Not less than 1.6
but less than 1.8 USD 1.011
Not less than 1.8
but less than 2.0 USD 0.971
Not less than 2.0 USD 0.951
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APPENDIX H
FEEDSTOCK RATE
For the first six months of the first Contract Year (the "Trial Period"),
Contractor shall use no more than the quantities of Feedstock set forth in
Table 1 below to produce one (1) pound of Product, provided, however, if during
the Trial Period, Contractor uses more than the quantities of Feedstock set
forth in Table 1 to produce one (1) pound of Product, Contractor shall not be
responsible for the cost of the additional Feedstock.
The parties shall work together in good faith during the Trial Period to explore
ways to reduce the quantities of Feedstock used in the Conversion Process and to
develop accurate baseline data on the Feedstock usage rate for the Conversion
Process. During the Trial Period the parties will have ongoing discussions
regarding the batch to batch performance of the Conversion Process and the usage
of Feedstock therein, as well as formal monthly reviews of Feedstock usage in
the Conversion Process. After the Trial Period the parties shall negotiate in
good faith to establish a permanent Feedstock usage rate for the production of
Product during the remainder of the Agreement. If the parties cannot agree on a
Feedstock usage rate after the Trial Period, the Feedstock usage rate shall be
the average Feedstock usage rate experienced by Contractor during the Trial
Period, plus a factor to account for process variability experienced during the
Trial Period.
TABLE 1
[CAPTION]
RAW MATERIAL STADIS (R) 450 (ENHANCED) STADIS (R) 425
LB. FEEDSTOCK/LB. LB. FEEDSTOCK/LB.
PRODUCT PRODUCT
Arquad 2C Nitrate .0262 .0150
▇ ▇▇▇▇▇▇ .▇▇▇▇ .▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ sulfonic seld .3920 0
Dodecylbenzene sulfonic acid 0 .1150
Isopropyl alcohol .0705 .▇▇▇▇
▇▇▇▇▇▇▇▇ .▇▇▇▇ .▇▇▇▇
▇▇▇▇▇▇▇ Mercaptan .0040 .0035
Polyflo 130 .1601 .1284
Sulfur dioxide .0958 .▇▇▇▇
▇▇▇▇▇▇▇ .▇▇▇▇ .▇▇▇▇
▇▇▇▇▇▇▇▇ 0 1.500
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APPENDIX I
CONVERSION CHARGE
Owner shall pay to Contractor a Conversion Charge which shall vary based on the
quantity of Product (measured in pounds) invoiced by Contractor to Owner
pursuant to this Agreement. In each Contract Year. The Conversion Charge,
subject to any adjustment provided for in this Agreement, shall be that shown in
the following table:
Quantity Invoiced during any Contract Conversion Charge per
Year expressed in Millions of Pounds of Product Pound of Product
Less than 1.0 USD 1.50
Not less than 1.0 but less than 1.2 USD 1.35
Not less than 1.2 but less than 1.4 USD 1.25
Not less than 1.4 but less than 1.6 USD 1.15
Not less than 1.6 but less than 1.8 USD 1.00
Not less than 1.8 but less than 2.0 USD 0.96
Not less than 2.0 USD 0.94
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