PURCHASE AND SALE AGREEMENT
UREA
AMMONIUM NITRATE
1.Effective
Date
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May
7, 2009
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2.Buyer
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Xxxx
Nitrogen Company, LLC ("Buyer")
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3.Buyer
Contact Information
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Attention:
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Xxxx
Xxxxxxxx
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Address:
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0000
Xxxx 00xx
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxx 00000
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Phone:
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(000)
000-0000
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Fax:
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(000)
000-0000
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Email:
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xxxxxxxx@xxxxxxx.xxx
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4.Seller
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Xxxxx
Chemical Company (“Seller”)
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5.Seller
Contact Information
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Attention:
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Xxxxx
X. Xxxx, Vice President
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Address:
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00
X. Xxxxxxxxxxxx Xxx., Xxxxxxxx Xxxx, XX 00000
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Phone:
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000-000-0000
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Fax:
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000-000-0000
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Email:
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xxxxx@xxx-xxx.xxx
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6.Term
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The
term of the Agreement (the “Term”) shall commence at 12:01 a.m. central
time on July 1, 2009 and shall terminate at 11:59 p.m. central time on
June 30, 2014, unless otherwise terminated earlier in accordance with the
Agreement. The term “Term” shall include any renewal of the
Agreement as provided below. The Agreement may be extended for
a twelve (12) month period upon the written agreement of both Buyer and
Seller made on or prior to December 31,
2013. Notwithstanding the foregoing, neither
party shall be obligated to renew the
Agreement.
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PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
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7.Early
Termination
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If
the Seller’s Facility has not produced commercial quantities of Product by
November 30, 2009, then either party may provide written notice to the
other party on or before December 15, 2009 (the “Early Termination Date”)
that it is terminating the Agreement, which it may do without liability
therefor. Seller will use commercially reasonable efforts to
satisfy the condition in the preceding sentence prior to the Early
Termination Date. If neither party terminates the Agreement on
or before the Early Termination Date, then the Agreement will continue in
full force and effect. For purposes of this Section 7,
“produced commercial quantities of Product” shall mean to produce at least
an average of 667 Tons per day of Product at or above the Specifications
(as determined by Section 24) for a period of ten (10) consecutive
days.
If
(i) Seller terminates the Agreement as described in this Section 7 and
(ii) before June 30, 2014, Seller restarts the unit at Seller’s Facility
at which Product is produced, Seller shall notify Buyer at least ten (10)
business days’ prior to any such restart (a “Restart Notice”), and shall
grant to Buyer the right, but not the obligation, to purchase Product
produced at the Seller’s Facility on the same terms and conditions as set
forth in the Agreement. Buyer shall have ten (10) business days
after the delivery of the Restart Notice to notify Seller in writing that
it elects to purchase Product produced at the Seller’s Facility on the
same terms and conditions as set forth in the Agreement, subject to such
changes as may be mutually agreed to in writing by the
parties. For the avoidance of doubt, Buyer’s rights after such
Restart Notice shall be the same as those rights it had immediately prior
to Seller’s termination pursuant to this Section 7 (e.g., same pricing
basis for Product, bonus, quantity, payment obligations, remaining Term,
etc.) and the parties will execute and deliver all documents necessary to
reflect such agreement. If Buyer does not so elect and notify
Seller as set forth in this Section 7, Seller will be free to sell Product
produced at the Seller’s Facility on terms and conditions acceptable to
Seller.
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8.Termination
for Convenience
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On
or after August 1, 2010:
(i)
Seller shall have the unilateral right to terminate the Agreement at any
time and for any reason, without liability therefor; provided Seller provides to Buyer at least
three (3) months’ prior written notice of the termination,
and
(ii)
Buyer shall have the unilateral right to terminate the Agreement at any
time and for any reason, without liability therefor; provided Buyer provides to Seller at least
six (6) months’ prior written notice of the termination.
Buyer
and Seller agree that the notice of termination described in this Section
8 may not be delivered prior to August 1,
2010.
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1
***Confidential***
9.Termination
for Economic
Hardship
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If
Seller shuts down the unit at Seller’s Facility at which Product is
produced solely because of Seller’s Economic Hardship on the sale of
Product to Buyer hereunder, Seller shall have the right to terminate the
Agreement upon thirty (30) days’ prior written notice to
Buyer. Such notice shall be accompanied by a certificate of the
Chief Financial Officer of Seller attesting to the Seller’s Economic
Hardship. For purposes of this Agreement, Seller’s Economic
Hardship is the condition where Seller shuts down the unit at Seller’s
Facility at which Product is produced because Seller is incurring a loss
on a variable cost basis on the sale of Product hereunder.
If,
before June 30, 2014, Seller restarts the unit at Seller’s Facility at
which Product is produced, Seller shall provide Buyer a Restart Notice at
least ten (10) business days’ prior to any such restart, and shall grant
to Buyer the right, but not the obligation, to purchase Product produced
at the Seller’s Facility on the same terms and conditions as set forth in
the Agreement. Buyer shall have ten (10) business days after
the delivery of the Restart Notice to notify Seller in writing that it
elects to purchase Product produced at the Seller’s Facility on the same
terms and conditions as set forth in the Agreement, subject to such
changes as may be mutually agreed to in writing by the
parties. For the avoidance of doubt, Buyer’s rights after such
Restart Notice shall be the same as those rights it had immediately prior
to Seller’s termination pursuant to this Section 9 (e.g., same pricing
basis for Product, bonus, quantity, payment obligations, remaining Term,
etc.) and the parties will execute and deliver all documents necessary to
reflect such agreement. If Buyer does not so elect and notify
Seller as set forth in this Section 9, Seller will be free to sell Product
produced at the Seller’s Facility on terms and conditions acceptable to
Seller.
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10.Product
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The
Product purchased and sold hereunder will be urea ammonium nitrate (the
"Product"). The specifications for the Product are contained in
Appendix I, attached hereto and made a part of the Agreement (the
“Specifications”).
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11.Price
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The
price for Product is set forth in Appendix II attached hereto and made a
part of the Agreement. An example of the price calculation is
included in Appendix II.
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12.Annual
Buyer Bonus
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Seller
shall pay Buyer a bonus (“Annual Buyer Bonus”) as calculated (including
examples) in Appendix III attached hereto and made a part of the
Agreement. If the Agreement commences or is terminated during a
Fertilizer Year (and not on the first or last day of such year), the
amounts in this Section 12 will be prorated
accordingly.
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13.Loading
Schedule
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Each
week, Buyer shall provide Seller with a loading schedule for the following
week. Seller shall deliver and load Product as noted on the
loading schedule and use its commercially reasonable efforts to comply
with the loading schedule provided by Buyer. Buyer may change
the loading schedule or suspend scheduled loading as necessary; provided that Buyer use commercially
reasonable efforts to provide notice of such change before the then
scheduled loading date. If Product is loaded more than two (2)
days in advance of Buyer’s loading schedule, Buyer may, at its option,
either return all or any portion of such Product to Seller at Seller's
risk and expense or retain all or any portion of such Product, in which
event Seller shall reimburse Buyer for all costs incurred in the storage
of such retained Product between the date of actual loading and the date
of the scheduled loading for such Product. If Seller has reason
to believe loading will not be made as scheduled, it will give prompt
written notice setting forth the cause and expected duration of the
anticipated delay. To the extent flexibility is allowed by
customers of Buyer on the timing of loading of Product, the parties will
cooperate to the extent reasonable to coordinate periods and times for
loading
hereunder.
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2
***Confidential***
14.Reporting
and Payment
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On
or before the fourth (4th)
business day of every month, Buyer will prepare and e-mail to Seller a
report for the current month that includes the: (i) estimated volume of
Product to be purchased by Buyer and shipped for the current month and
(ii) estimated Weighted Average Net Sales Price (as defined in Appendix
III) for the current month. The format of this report (“Monthly
Report”) is set forth in Appendix IV. Within seven (7) days
after the end of each week, Buyer will make payment of the Estimated
Weekly Payment by means of electronic funds transfer (EFT) into a U.S.
bank account designated by Seller and payable in dollars. The
“Estimated Weekly Payment” shall mean the volume of Product purchased by
Buyer and shipped the previous week multiplied by the estimated Weighted
Average Net Sales Price.
By
the twentieth (20th)
day of the month after the Monthly Report is sent to Seller, Buyer shall
prepare and e-mail to Seller a report to reconcile all the Estimated
Weekly Payments against the actual amounts owed to Seller for the previous
month (“Reconciliation Report”). The Reconciliation Report
shall include: (i) the difference between the estimated and actual volume
of Product purchased by Buyer and shipped for the previous month, and (ii)
the difference between the estimated Weighted Average Net Sales Price and
actual Net Sales Price (as defined in Appendix II) for the previous
month. In addition, the Reconciliation Report shall calculate
and contain the difference between the (a) total Estimated Weekly Payments
and (b) actual amount owed to Seller, in each case, for the previous month
as calculated pursuant to this Agreement, such difference referred to as
the “Monthly Reconciliation Amount”. In the event the Monthly
Reconciliation Amount is a positive amount (e.g., the total of the
Estimated Weekly Payments for the previous month is greater than the
actual amount owed to Seller for such month), Buyer will subtract such
amount in the next Estimated Weekly Payment. In the event the
Monthly Reconciliation Amount is a negative amount (e.g., the total of the
Estimated Weekly Payments for the previous month is less than the actual
amount owed to Seller for such month), Buyer will add such amount to the
next Estimated Weekly Payment. The format of the Reconciliation
Report is set forth in Appendix IV.
If
Buyer disputes any amounts owing to Seller, the disputed amounts
determined to be due and owing shall be paid promptly following such
determination.
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15.Seller’s
Report
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On
a daily basis, Seller will provide to Buyer the following information
related to Seller’s Facility: (i) the prior day’s beginning and ending
inventory of Product in Tons; (ii) the prior day’s production of Product
in Tons; (iii) the prior day’s Tons of Product shipped/loaded into trucks
and railcars; and (iv) any gains or losses of Product in Tons for the
month (the “Seller Report”). The format of the Seller’s Report
is set forth in Appendix IV.
At
any time, upon Buyer’s request, Seller shall give Buyer and its employees,
agents, and contractors reasonable access, during regular business hours
and upon reasonable advance notice, to such employees, records, and assets
of or relating to the Agreement, in each case, as is necessary to allow
Buyer and its employees, agents, and contractors to make such inspections,
to interview or confer with officers, employees, agents and
representatives of Seller that Buyer believes are necessary and
appropriate, including to confirm the information described in Seller’s
Report, the operational requirements of the Seller’s Facility as described
in Section 18, the Specifications, and the compliance with the exclusivity
requirements set forth in Section
23.
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3
***Confidential***
16.Buyer’s
Position Report
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Buyer
may from time to time sell Product produced at Seller’s Facility to
non-Affiliates of Buyer (“Third-Party Sales”). Promptly after a
Third-Party Sale (but no more than one-time a day for all Third-Party
Sales occurring in a day), Buyer will report to Seller: (i) the volume of
Product for actual Third-Party Sales for the months Product is to be
shipped pursuant to such sales and (ii) the estimated Weighted Average Net
Sales Price for the current month and future months, if available (the
“Buyer’s Position Report”). The Buyer’s Position Report will
also contain volume and price information regarding Product purchased by
Buyer and sold to its Affiliates. Buyer will use
commercially reasonable efforts to provide the Buyer Position Report
before 2:00 p.m. central time each day, but not later than the close of
business each day to allow Seller to place natural gas xxxxxx if Seller
deems appropriate. The format of Buyer’s Position Report is set
forth in Appendix IV.
Buyer
shall maintain adequate books and records to document the Third-Party
Sales. At Seller’s request, but not any more frequently than
one request in any twelve month period, Seller shall have the right to
audit (utilizing an independent third-party auditor) Buyer’s books and
records pertaining to the Third-Party Sales. The Seller’s
right to audit shall be conditioned upon reasonable prior written notice
and will be conducted at reasonable times by an independent third-party
auditor. Such auditor shall be an internationally recognized
public accounting firm mutually agreed by the parties under a
confidentiality agreement reasonably acceptable to Buyer. If
the parties fail to agree upon a firm, then each party’s auditors shall
select a third-party auditor. The auditor shall only be
entitled to review Buyer’s books and records pertaining to the Third-Party
Sales.
If
(a) Buyer and Seller dispute an issue pertaining to a Third-Party Sale and
are unable to reach an agreement about such issue and (b) the issue is
audited by a third-party auditor at the request of Seller as described in
the preceding paragraph: (i) Buyer shall pay all of the third-party
auditor fees and expenses if the third-party auditor determines that Buyer
is entitled to less than fifty percent (50%) of the portion of the amount
in dispute; (ii) Seller shall pay all of the third-party auditor fees and
expenses if the third-party auditor determines that Seller is entitled to
less than fifty percent (50%) of the portion of the amount in dispute; or
(iii) Seller and Buyer shall each pay half of the third-party auditor fees
and expenses if the third-party auditor determines that each of Seller and
Buyer are entitled to exactly fifty percent (50%) of the amount in
dispute.
Buyer
and Seller shall meet either by telephone or in person on a periodic basis
to discuss the Buyer’s purchase of Product under this Agreement; provided, however, all decisions on marketing
strategy and prices for the Product are at Buyer’s sole and absolute
discretion.
Notwithstanding
anything to the contrary set forth herein and except to the extent
disclosed to the third-party auditor as described in this Section 17,
Buyer shall have no obligation to, and will not, reveal to Seller or
Seller’s Representatives the identity of any third-party purchaser or the
price at which Product was sold to such third-party.
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00.Xxxxxxxx
Terms/Shipping Mode
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All
Product purchased by Buyer under the Agreement shall be delivered to Buyer
on a FOB (Seller’s Facility) basis. Product may be delivered to
railcars or trucks arranged by
Buyer.
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4
***Confidential***
18.Seller’s
Facility
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All
Product delivered to Buyer under the Agreement shall be produced at,
prepared for loading and loaded from, Seller’s chemical plant facility
located at Pryor, Oklahoma (“Seller’s Facility”). Seller’s
Facility shall meet or exceed the operating requirements set forth in
Appendix V attached hereto and made a part of the
Agreement.
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19.Seller
Turnaround
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In
the event Seller elects to take a turnaround at the Seller’s Facility
during any Fertilizer Year, Seller shall use commercially reasonable
efforts to provide Buyer with at least 180 days’ prior notice of the
commencement of the turnaround, describing the expected commencement date,
scope, and length of such turnaround (the “Turnaround
Notice”). In addition, Seller shall provide Buyer with periodic
updates regarding the progress of the
turnaround. Notwithstanding the foregoing, Buyer acknowledges
that the Turnaround Notice is a non-binding good faith estimate for
planning purposes only and Seller’s failure to timely provide Buyer with
such notice shall not result in liability to Seller. Seller
shall provide Buyer with notice on the day the Seller’s Facility has
completed the turnaround and is producing Product at or above the
Specifications.
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5
***Confidential***
20.Buyer
Shortfall Payment
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In
recognition that Seller will incur costs at the Seller’s Facility in order
to fulfill its obligations under the Agreement, and further in recognition
that Seller would incur damages, but which would be difficult to
calculate, if: (i) Buyer fails to take delivery of Product produced at
Seller’s Facility meeting the Specifications and (ii) Buyer’s failure described in (i)
above directly causes the (a) entire Product storage capacity at Seller’s
Facility of 40,000 Tons to be utilized and (b) the unit at Seller’s
Facility at which Product is produced to be shut-down or idled, Buyer will
pay Seller, as liquidated damages and not as a penalty, and as Seller’s
sole and exclusive remedy, an amount equal to the Buyer Shortfall Payment,
as calculated (including examples) in Appendix VI attached hereto
and made a part of the Agreement.
Notwithstanding
the foregoing, Buyer shall not be responsible for the Buyer Shortfall
Payment if Buyer's failure described in (i) in the preceding paragraph was
caused by: (i) Seller’s Facility not meeting the operating requirements
set forth in Appendix V; (ii) the loading area or loading equipment at the
Seller’s Facility being unavailable or inaccessible; (iii) the Product
inventory level or other information in Seller’s Report is materially
inaccurate; (iv) rejection or delay by Seller or its agents or
representatives of one or more truck(s) or rail car(s) where such truck(s)
or rail car(s) complied with all material requirements of this Agreement;
(v) a force
majeure condition; (vi) Seller's uncured breach of its obligations
under this Agreement or the Railcar Management Agreement; (vii) delays in
rail or truck transportation beyond the reasonable control of Buyer; or
(viii) any event, development or effect that, individually or in the
aggregate, has impaired, hindered, delayed or adversely affected the
availability for use by Buyer of an adequate number of railcars to take
delivery of Product hereunder, except to the extent caused by Buyer’s
uncured breach of its obligations under this Agreement or the Railcar
Management Agreement.
The
parties agree that said calculation is a reasonable estimate of damages
that Seller would likely suffer in the event of such
failure. Seller will use commercially reasonable efforts to
minimize or eliminate any Buyer Shortfall Payment. If the
Agreement commences or is terminated during a Fertilizer Year (and not on
the first or last day of such year), the amounts in this Section 20 will
be prorated accordingly. Buyer will pay Seller’s invoice for
the Buyer Shortfall Payment (less any Forward Sales Suspension Credit) via
wire transfer in immediately available funds no later than thirty (30)
days from the date of Seller’s invoice to Buyer for the Buyer Shortfall
Payment.
Notwithstanding
any provision of the Agreement to the contrary, (i) in no event shall the
aggregate amount of Buyer Shortfall Payment to be paid by Buyer to Seller
during the Term exceed Four Million Five Hundred Thousand Dollars
(US$4,500,000) and (ii) Buyer shall be relieved of any obligation to pay
the Buyer Shortfall Payment in a Fertilizer Year once Buyer’s purchases of
Product hereunder meet or exceed 300,000 Tons in such Fertilizer
Year.
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21.Production
Credit
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In
recognition that Buyer has agreed to purchase Product in accordance with
the terms and conditions of the Agreement and will incur additional costs
to satisfy its obligations hereunder, and further in recognition that
Buyer would incur damages, but which would be difficult to calculate if
the amount of Product produced at, and made available for delivery to
Buyer from, the Seller’s Facility did not meet a certain minimum level,
the parties agree as follows:
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6
***Confidential***
If
the amount of Product produced at, and made available for delivery to
Buyer from, the Seller’s Facility in any quarter (the “Actual Quarterly
Delivery”) is less than 60,000 Tons, Seller will credit Buyer an amount
equal to the difference between: (i) the Actual Quarterly Delivery and
(ii) 60,000 Tons, multiplied by
***
per Ton (such amount referred to as the “Production
Credit”). Examples of the Production Credit calculation are
included in Appendix VII attached hereto and made a part of the
Agreement.
Notwithstanding
the foregoing, in the event Seller elects to take a turnaround at the
Seller’s Facility during any Fertilizer Year satisfying the requirements
in Section 19, the 60,000 Tons described in this Section 21 shall be
reduced by 857 Tons for each day the Seller’s Facility is shut-down or
idled for such turnaround; provided,
however, that in no event shall such
reduction exceed 20,000 Tons in any Fertilizer Year.
If,
however, during the next quarter after which a Production Credit has been
earned, the Actual Quarterly Delivery is greater than 60,000 Tons of
Product, Seller may apply the amount the Actual Quarterly Delivery (in
Tons) exceed 60,000 Tons to the Actual Quarterly Delivery of the previous
quarter to reduce the amount of Production Credit that has been
earned.
The
parties agree that said calculation is a reasonable estimate of damages
that Buyer would likely suffer in the event of such
failure. Buyer will use commercially reasonable efforts to
minimize or eliminate any Production Credit. If the Agreement
commences or is terminated during a Fertilizer Year (and not on the first
or last day of such year), the amounts in this Section 21 will be prorated
accordingly. Seller will pay Buyer’s invoice for the Production
Credit via wire transfer in immediately available funds no later than
thirty (30) days from the date of Buyer’s invoice to Seller; provided, that such invoice will not be
sent until one (1) quarter has elapsed after a Production Credit has been
earned.
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22.Make-Whole
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If,
for any reason, including those set forth in Section 27 or a termination
of this Agreement, Seller fails to deliver all or part of the quantity of
Product required to be delivered in accordance with the Agreement in order
for Buyer to satisfy the requirements of its existing Third-Party Sales
(for which Seller has entered into a valid and binding contract), either
Buyer or Seller shall pay the other party an amount equal to the
Make-Whole, as calculated (including examples) in Appendix VIII attached hereto
and made a part of the Agreement. The party owing the
Make-Whole will pay the other party’s invoice for the Make-Whole via wire
transfer in immediately available funds no later than thirty (30) days
from the date of the invoice. Each party stipulates that the
payment obligation in this Section 22 is reasonable in light of the
anticipated harm and the difficulty of estimation or calculation of actual
damages and hereby waives the right to contest such payment as an
unreasonable penalty or
otherwise.
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7
***Confidential***
23.Exclusivity
and Other Rights
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Seller
grants to Buyer the right to be the exclusive purchaser of the first ***
Tons of Product produced at, or otherwise made available from, the
Seller’s Facility each month. As such, Seller acknowledges and
agrees that, during the Term, it will not, and will not authorize or
permit any of Seller’s Representatives to, directly or indirectly, accept
any proposal or offer from any Person (other than Buyer) relating to the
first *** Tons of Product produced at, or otherwise made available from,
the Seller’s Facility each month.
For
any amount of Product produced at, or otherwise made available from, the
Seller’s Facility that exceeds *** Tons in a month (“Additional Product”),
Seller shall grant to Buyer the following right:
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(i)
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Seller
shall, as soon as commercially reasonable, send written notice to Buyer
that it desires to sell the Additional Product. Such notice
shall identify the amount of Product Seller desires to sell and proposed
delivery dates.
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(ii)
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Buyer
shall have the right, but not the obligation, to purchase the Additional
Product pursuant to the terms and conditions, including price, as set
forth in this Agreement. If Buyer desires to exercise its right
to purchase the Additional Product hereunder, it shall provide notice to
Seller no later than two (2) business days following Buyer’s receipt of
the notice described in (i) above.
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(iii)
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If
Buyer does not elect to purchase the Additional Product, then Seller shall
have the right to sell such product at a price and upon terms as it deems
appropriate.
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Seller
acknowledges and agrees that, in addition to all other remedies available
(at law or otherwise) to Buyer, Buyer shall be entitled to equitable
relief (including injunction and specific performance) as a remedy for any
breach or threatened breach of any provision of this Section 23, and Buyer
shall not be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy
referred to in this Section 23, and Buyer waives any right it may have to
require that Buyer obtain, furnish or post any such bond or similar
instrument.
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24.Quality
Determination
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For
each load of Product under the Agreement, Seller shall provide Buyer, in a
form reasonably satisfactory to Buyer, a certificate of analysis verifying
that the Product delivered meets in all respects the
Specifications. Such certificate of analysis shall be from a
laboratory acceptable to Buyer and shall be based on samples of the
Product taken after loading that is representative of the entire load of
Product. All sampling and analysis of the Product shall be
conducted in accordance with the methods established by ASTM, The
Fertilizer Institute (“TFI”), the AOAC, or other applicable body for the
sampling and analysis of products like the Product. Samples
shall be retained by Seller for a period of sixty (60) days or longer if
there is a dispute regarding the quality of Product subject to such
samples.
Each
party shall have the right to witness the sampling and/or retain a sample
of each load of Product to Buyer for quality verification and dispute
resolution purposes. Each party shall have the right to have
its sample analyzed by an independent laboratory using the analysis
methods established by ASTM, TFI, AOAC, or other applicable body in case
of a dispute, whose determination shall be binding upon the
parties. If Seller delivers non-conforming or defective
Product, Seller shall, at Buyer’s option, promptly replace non-conforming
or defective Product with Product meeting the Specifications and
requirements of the Agreement; provided that, in lieu of the replacement
of non-conforming or defective Product, Buyer shall have the right, in its
sole discretion, to reject any non-conforming or defective Product and to
revoke any acceptance of such Product and Seller shall refund to Buyer all
amounts paid by Buyer with respect to such Product.
Whether
Buyer rejects such Product or acted in reliance upon Seller’s warranty or
the certificate of analysis provided by Seller, Seller shall bear all
reasonable costs, expenses and liabilities associated with or arising out
of non-conforming or defective Product, including removal, delivery,
transportation, storage, disposal, cleaning, and any property
damage.
Buyer
shall have the right before loading and delivery and for a period of sixty
(60) days after actual receipt of Product even if inspection of the
Product occurred, to reject any non-conforming or defective Product and to
revoke any acceptance of such Product.
Buyer
will use commercially reasonable efforts to assist Seller in minimizing
Seller’s damages in the event Seller delivers non-conforming or defective
Product.
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8
***Confidential***
25.Quantity
Determination
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Each
party shall have the right to witness the measurement of each delivery of
Product under the Agreement. All measuring equipment shall be
maintained and calibrated in accordance with manufacturer’s
specifications, as well as any applicable industry, legal or regulatory
requirements or methods established for the maintenance and calibration of
such measurement equipment.
For Product delivered by
railcar:
The
quantity of Product delivered shall be determined by use of certified
scales, or if a certified scale is not available for measuring railcar
quantities, then the railcar outage tables shall be used. If
the quantity of Product delivered is, in Buyer’s reasonable opinion, lower
than that which is stated by Seller on the xxxx of lading, Buyer may, at
its option, require that the Product quantity be determined using an
independent certified third-party scale service, which quantity
determination will be binding upon the parties. The fees of
such independent scale service shall be borne by the party whose
determination was more incorrect or in error.
For Product delivered by
truck:
The
quantity of Product delivered shall be determined by use of certified
scales at Seller’s Facility. If the quantity of Product
delivered is, in Buyer’s reasonable opinion, lower than that which is
stated by Seller on the xxxx of lading, Buyer may, at its option, require
that the Product quantity be determined using an independent certified
third-party scale service, which quantity determination will be binding
upon the parties. The fees of such independent scale service
shall be borne by the party whose determination was more incorrect or in
error.
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26.Title
and Risk of Loss
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Title
to Product and risk of loss, damage and contamination of Product shall
pass to Buyer when the Product passes the inlet flange of the railcar or
truck, as applicable, during loading at Seller’s
Facility. Product shall be deemed “delivered” at such time as
title passes. Prior to passage of title of the Product to
Buyer, Seller assumes all risk and liability, and Buyer shall not be
liable to Seller for any loss or damage to persons, property or the
environment arising out or related to the Product prior to
delivery.
|
9
***Confidential***
27.Force
Majeure
|
The
parties will be excused from their respective performances hereunder if
performance is prevented or delayed by any acts of God or circumstance
beyond the reasonable control of the party seeking excuse from
performance, including without limitation, fire, explosion, flood,
unusually severe or abnormal weather, riots or other civil disturbances,
wars, acts of terrorism, actions of governments, compliance with any law
or change in law implemented, adopted or promulgated after the date of the
Agreement, or strikes, lockouts or other labor difficulties, mechanical
equipment failures that extend for a period greater than fifteen (15)
consecutive days despite the claiming party’s reasonable attempts to cure
same, or any necessity to not operate, or to reduce operation of,
equipment in order to protect the safety of people or to protect the
environment (“force
majeure”).
Promptly
after a party determines a force majeure condition
exists, that party will notify the other party in writing of the
circumstances and consequences claimed and will use commercially
reasonable means to remove the cause(s) in question. For the
avoidance of doubt, unavailability of raw materials shall not be deemed a
force majeure
unless such failure is caused by circumstances beyond the reasonable
control of Seller’s suppliers that would constitute a force majeure under the
Agreement. In no event shall a change in market conditions,
price of raw materials or other financial change be deemed to be a force
majeure. Neither party will be obligated to settle any
demands of, or disputes with, laborers. If such notice is not
given within seventy-two (72) hours after the party claiming a force majeure becomes
aware of the existence of such force majeure
condition, the excuse from performance shall only be effective from and
after the date of the notice, otherwise the excuse from performance shall
be from the date of the occurrence of such force
majeure. Neither party shall have the right to declare a
force majeure or
be entitled to an excuse from performance for any event or circumstance
caused by its negligence.
If
quantities of Product are affected by force majeure (the
“Force Majeure Quantities”), Buyer shall have the option (not the
obligation) to extend the Term of the Agreement to allow for the delivery
of the Force Majeure Quantities within a reasonable period of time as
determined by Buyer or to delete the Force Majeure Quantities from the
Agreement, but the Agreement will otherwise continue in full force and
effect for the Term set forth in the Agreement.
In
any event, unless otherwise requested by Buyer, Seller shall allocate the
Product, including the raw materials used to produce Product at Seller’s
Facility, in a way to prioritize Product over other goods produced at
Seller’s Facility. Buyer may take reasonable measures necessary
for it to cover any quantity of Product not delivered by Seller during
Seller’s force
majeure. Notwithstanding anything herein to the
contrary, if the force
majeure lasts for more than ninety (90) consecutive days, then
either party, at its option, may terminate the Agreement upon written
notice to the other party.
|
28.Railcars
|
Seller
will, with consultation from Buyer, lease a number of railcars
(“Railcars”) considered by the parties to be appropriate for the use of
Buyer to facilitate deliveries of Product produced at Seller’s Facility to
Buyer and its customers during the Term. The Railcars will be
managed by Buyer, and the parties rights and obligations regarding the
Railcars will be specifically set forth in the Railcar Management
Agreement (in the form attached hereto as Appendix IX attached hereto
and incorporated herein) to be executed and delivered simultaneously with
this Agreement.
|
10
***Confidential***
29.Access
to Seller’s Facility
|
Buyer
acknowledges that all drivers for motor carriers loading Product at the
Seller’s Facility will be required to follow Seller’s reasonable plant
safety rules and procedures while at the Seller’s
Facility.
|
30.Forward
Sale Suspension
|
In
the event Seller’s Facility suffers a failure of mechanical or chemical
function or equipment normally used by Seller for manufacturing, handling
or delivering of Product, a plant shutdown, a necessity to not operate, or
to reduce operation of, equipment in order to protect the safety of people
or to protect the environment, then Seller may notify Buyer of such event,
its request for Buyer to suspend any forward Third-Party Sales of Product,
and the expected timing of each (“Forward Sales
Suspension”). Upon receipt of such notice from Seller, Buyer
shall suspend any forward Third-Party Sales of Product; provided, however, Buyer may conclude any such sale
for which it may have potential liability for Buyer’s refusal to finalize
the sale, which shall be determined in the reasonable judgment of Buyer
(upon and in conformity with the advice of its in-house
counsel). Seller shall provide Buyer with periodic updates
regarding the timing of the Forward Sale Suspension. Seller
shall provide Buyer with at least two (2) business days’ prior notice
before the Forward Sales Suspension is ended.
For
every day during the Forward Sales Suspension (including the day notice is
given to commence and end such suspension), Seller shall provide to Buyer
a credit that may, at Buyer’s option, be applied to the calculation of a
Buyer Shortfall Payment that equals 857 Tons per day (“Forward Sales
Suspension Credit”). Buyer may apply a Forward Sales Suspension
Credit, or any portion thereof, to any Buyer Shortfall Payment that
accrues from the day after the Forward Sales Suspension is ended to the
day that is one hundred eighty (180) days thereafter. An
example of the Forward Sales Suspension Credit calculation is included in
Appendix VI.
If
the Agreement commences or is terminated during a Fertilizer Year (and not
on the first or last day of such year), the amounts in this Section 30
will be prorated accordingly.
|
31.Definitions
|
As
used in the Agreement, in addition to the terms defined elsewhere herein,
the terms noted on Appendix X, attached hereto and incorporated herein,
shall have the meanings set forth on Appendix X.
|
32.Terms
and Conditions
|
The
Terms and Conditions are hereby attached hereto as Appendix XI and
incorporated into and made a part of the Agreement by reference as
essential terms and conditions. All purchases by Buyer of
Product are expressly limited to and conditioned upon acceptance of such
Terms and Conditions, regardless of whether Buyer purchases Product
through any media or means, including written purchase orders, electronic
orders via EDI, acknowledgements, confirmations, or other writings from
Seller to Buyer. Unless such provisions are expressly agreed to
by Buyer in a writing signed by Buyer, any additional or conflicting terms
and conditions contained on, attached to or referenced by Seller's order
confirmation or otherwise, or other prior or later communication from
Seller to Buyer, shall have no effect on the purchase of any such Product
by Buyer from Seller and are expressly rejected by Buyer. In
the event of a conflict between the specific provisions of this Agreement
and the Terms and Conditions, the specific provisions of this Agreement
shall
control.
|
[signature
page to follow]
11
***Confidential***
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
by their duly authorized representatives effective as of the day and date first
set forth above.
Seller:
|
Buyer:
|
|||
XXXXX
CHEMICAL COMPANY
|
XXXX
NITROGEN COMPANY, LLC
|
|||
By:
|
By:
|
|||
Print:
|
Print:
|
|||
Title:
|
Title:
|
|||
Date:
|
Date:
|
[SIGNATURE
PAGE TO UREA AMMONIUM NITRATE PURCHASE AND SALE AGREEMENT]
12
***Confidential***
List
of Appendices
Appendix
I – Product Specifications
|
Appendix
II – Product Pricing
|
Appendix
III – Bonus
|
Appendix
IV – Reports
|
Appendix
V – Seller’s Facility Operating Requirements
|
Appendix
VI – Buyer Shortfall Payment
|
Appendix
VII – Example of Production Credit
|
Appendix
VIII – Make-Whole
|
Appendix
IX – Railcar Management Agreement
|
Appendix
X – Definitions
|
Appendix
XI – Terms and
Conditions
|
13
***Confidential***
Appendix
I
Product
Specifications
UAN
|
Typical
|
Min
|
Max
|
|
%
Nitrogen
|
32.00%
|
31.80%
|
32.50%
|
|
Appearance
|
Clear
|
Clear
|
Clear
|
|
Color
|
colorless
|
colorless
|
colorless
|
|
Free
Ammonia
|
500
ppm
|
200
ppm
|
700
ppm
|
|
Specific
Gravity @ 60 deg F
|
1.32
|
1.3
|
1.34
|
|
Gauge
Pressure @ 140 deg F
|
PSIG
|
N.A
|
N.A
|
N.A
|
Approx.
Salt Out Temp (deg F)
|
Deg
F
|
32
F
|
32
F
|
32
F
|
Approx.
Salt Out Temp (deg C)
|
Deg
C
|
0
C
|
0
C
|
0
C
|
PH
UAN Day Tank (to maintain 0.1% Free NH3)
|
7
|
6.8
|
7.2
|
|
AN/UREA
Ratio @ Origin
|
1.33
|
1.1
|
1.35
|
|
Corrosion
Inhibitor
|
PO4
Based
|
PO4
Based
|
PO4
Based
|
|
Inhibitor
rate
|
ppm
|
100
ppm
|
80
ppm
|
120
ppm
|
%
Nitrogen
|
28.00%
|
27.80%
|
28.50%
|
|
Approx.
Salt Out Temp (deg F)
|
Deg
F
|
0
F
|
0
F
|
0
F
|
Approx.
Salt Out Temp (deg C)
|
Deg
C
|
-
17.8 C
|
-
17.8 C
|
-
17.8 C
|
14
***Confidential***
Appendix
II
Product
Pricing
Net Sales
Price:
The “Net
Sales Price” shall equal the Net Third-Party Sales Price or the Net Affiliate
Sales Price, as applicable and determined below:
Net Third-Party Sales
Price:
The price
for Product purchased by Buyer and sold to non-Affiliates under Third-Party
Sales (the “Net Third-Party Sales Price”) will be established using the
following formula:
Net
Third-Party Sales Price (expressed in US$ per Ton) = ***
Where:
|
***
|
|
***
|
|
***
|
Net Affiliate Sales
Price:
The price
for Product purchased by Buyer and sold to its Affiliates (“Net Affiliate Sales
Price”) will be the actual price per Ton (on an FOB (Seller’s Facility) basis)
established by mutual agreement in writing between Buyer and Seller (which shall
be net of any discounts).
However,
in the event a price cannot be agreed to in writing by Buyer and Seller, the Net
Affiliate Sales Price shall be established using the following
formula:
Net
Affiliate Sales Price (expressed in US$ per Ton) = ***
Where:
|
***
|
|
***
|
|
·
|
***
|
|
·
|
***
|
|
·
|
***
|
|
·
|
***
|
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
|
15
***Confidential***
Example
#1:
***
***
***
***
***
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
|
16
***Confidential***
Appendix
III
Annual
Buyer Bonus
For each
Fertilizer Year, Seller shall pay to Buyer a bonus on each Ton of Product sold
to Buyer hereunder (“Annual Buyer Bonus”), and established using the following
formula:
If the Annual Seller Margin ***, then
the Annual Buyer Bonus shall equal ***.
If the
Annual Seller Margin ***, then the Annual Buyer Bonus shall equal the product of
(A) Annual Seller Margin multiplied by (B) ***
per Ton.
Where:
The
Annual Buyer Bonus shall not exceed *** per Ton.
|
Annual
Seller Margin = ***
|
Weighted
Average Net Sales Price = ***.
|
Seller
Gas Cost = ***
|
|
Weighted
Average Seller UAN Cost = ***
|
|
For
purposes of calculating Weighted Average Net Sales Price and Weighted
Average Seller UAN Cost, an average will be used in which each amount to
be averaged is assigned a weight. The weight is determined by
the volume during the period.
|
Interim
Buyer Bonus:
On a
quarterly basis during a Fertilizer Year, an interim bonus (“Interim Buyer
Bonus”) on each Ton of Product sold to Buyer hereunder will be made to Buyer
based on the Seller Quarterly Margin, calculated as follows:
If the
Seller Quarterly Margin for the quarter ***, then the Interim Buyer Bonus shall
equal ***.
If the
Seller Quarterly Margin for the quarter ***, then the Interim Buyer Bonus shall
equal the product of (A) Seller Quarterly Margin for the quarter multiplied by (B) ***
per Ton.
Where:
The
Interim Buyer Bonus shall not exceed *** per Ton.
Seller
Quarterly Margin = ***
For
purposes of calculating Weighted Average Net Sales Price, Seller Gas Cost, and
Weighted Average Seller UAN Cost in the Interim Buyer Bonus calculation, the
parties will use the relevant amounts for the relevant quarter. An
average will be used in which each amount to be averaged is assigned a
weight. The weight is determined by the volume during the
period.
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH
REQUEST.
|
17
***Confidential***
Seller
will pay Buyer’s invoice for an Interim Buyer Bonus via wire transfer in
immediately available funds no later than thirty (30) days from the date of
Buyer’s invoice to Seller.
Annual
Reconciliation:
Within
forty-five (45) days after the end of each Fertilizer Year, the parties will
reconcile the (i) Interim Buyer Bonus amounts, if any, that were received by
Buyer during the preceding Fertilizer Year against (ii) Annual Buyer Bonus for
that Fertilizer Year, as follows:
If the
total of the Interim Buyer Bonus amounts > the Annual Buyer Bonus, the Buyer
must return the difference to the Seller.
If the
total of the Interim Buyer Bonus amounts < the Annual Buyer Bonus, the Seller
must pay the difference to the Buyer.
Each
party will pay the other party’s invoice for the amount due pursuant to the
annual reconciliation via wire transfer in immediately available funds no later
than thirty (30) days from the date of the invoice.
Example
#1:
During the first quarter of
the Fertilizer Year (Q1) –
In Q1,
66,000 Tons of Product is shipped from Seller’s Facility, with a Weighted
Average Net Sales Price of *** per
Ton. The
Seller Gas Cost for the Product shipped in Q1 (FIFO basis) was ***, prior to a
realized gas hedge gain of ***for the Product sold in Q1. The Interim
Buyer Bonus would be calculated as follows:
Seller
Gas Cost = ***
Weighted
Average Seller UAN Cost = ***
Seller
Quarterly Margin = ***
Interim
Buyer Bonus = ***
Maximum
Interim Buyer Bonus = ***
Since ***
is greater than **, Interim Buyer Bonus is calculated using the *** per
Ton
Total
Interim Buyer Bonus due to Buyer from Seller for Q1 = ** per Ton x 66,000 Tons =
***.
During the second quarter of
the Fertilizer Year (Q2) –
In Q2,
60,000 Tons of Product is shipped from Seller’s Facility, with a Weighted
Average Net Sales Price of *** per
Ton. The
Seller Gas Cost for the Product shipped in Q2 (FIFO basis) was ***, prior to a
realized gas hedge gain of *** for the Product sold in Q2. The
Interim Buyer Bonus would be calculated as follows:
Seller
Gas Cost = ***
Weighted
Average Seller UAN Cost = ***
Seller
Quarterly Margin = ***
Interim
Buyer Bonus = ***
Maximum
Interim Buyer Bonus = *** per Ton
Since ***
is less than ***, Interim Buyer Bonus is calculated using the *** per
Ton
Total
Interim Buyer Bonus due to Buyer from Seller for Q2 = *** per Ton x 60,000 Tons
= ***.
During the third quarter of
the Fertilizer Year (Q3) –
In Q3,
60,000 Tons of Product is shipped from Seller’s Facility, with a Weighted
Average Net Sales Price of *** per
Ton. The
Seller Gas Cost for the Product shipped in Q3 (FIFO basis) was ***, prior to a
realized gas hedge gain of *** for the Product sold in Q3. The
Interim Buyer Bonus would be calculated as follows:
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
|
18
***Confidential***
Seller
Gas Cost = ***
Weighted
Average Seller UAN Cost = ***
Seller
Quarterly Margin = ***
Interim
Buyer Bonus = ***
Total
Interim Buyer Bonus due to Buyer from Seller for Q3 = ***
During the fourth quarter of
the Fertilizer Year (Q4) -
In Q4,
same facts as Q3
Total
Interim Buyer Bonus due to Buyer from Seller for Q4 = ***
Annual Reconciliation
-
During
the Fertilizer Year:
246,000
Tons of Product was shipped from Seller’s Facility as follows: 66,000 Tons @ ***
for Q1; 60,000 Tons @ *** for Q2; 60,000 Tons @ *** for Q3; and 60,000 Tons @
*** for Q4.
Weighted
Average Net Sales Price = ***
Seller
Gas Cost = ***
Weighted
Average Seller UAN Cost = ***
Annual
Seller Margin = ***
Annual
Buyer Bonus = ***
Maximum
Annual Buyer Bonus = *** per Ton
Since ***
is less than ***, Annual Buyer Bonus is calculated using the ***.
Annual
Buyer Bonus due to Buyer from Seller for the Fertilizer Year = ***.
Total of
Interim Buyer Bonus = ***
Since the
total of the Interim Buyer Bonus amounts (***) > the Annual Buyer Bonus
(***), the Buyer must return the difference of *** to Seller.
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
|
19
***Confidential***
Appendix
IV
Reports
[attached
hereto]
20
***Confidential***
Appendix
V
Seller’s
Facility Operating Requirements
UAN Truck Loadout
Capacity. 4 trucks per 1-hour
period.
UAN Production
Capacity. 325,000 Tons per Fertilizer Year.
UAN Railcar Loadout
Capacity. 1-2 railcars per 1-hour period, subject to
adjustment by the railroad for railcar switches and railroad
schedule.
UAN Storage
Capacity. Seller shall provide Buyer with dedicated tank
storage capacity at the Seller’s Facility for Product of approximately 40,000
Tons, including heels.
Railcar Storage
Capacity. 45 railcars
Railcar
Switching/Week. 5 days per week (less holidays), subject to
adjustment by the railroad for railcar switches and railroad
schedule.
21
***Confidential***
Appendix
VI
Buyer
Shortfall Payment
If the
Buyer Shortfall Payment is due and owning pursuant to Section 20, it shall be
calculated as follows:
For each
day during which the unit at Seller’s Facility at which Product is produced is
shut-down or idled for the reasons described in Section 20, the product of (A)
857 Tons multiplied by (B) the
Buyer Shortfall.
Where:
Buyer
Shortfall = the difference of (a) the Weighted Average Net Sales
Price (described in Appendix III) for the seven (7) days prior to and including,
and seven (7) days after the commencement of a shut-down or idling of the unit
at Seller’s Facility at which Product is produced minus (b) the product
of ***. However, if there are no sales by Buyer during the time
period referred to in the preceding sentence, the thirty (30) days prior to and
including the commencement of a shut-down or idling of the unit at Seller’s
Facility at which Product is produced will be used. If there
are no sales during the time period referred to in the preceding sentence, the
Weekly Index Price for the thirty (30) days prior to and including the
commencement of a shut-down or idling of the unit at Seller’s Facility at which
Product is produced will be used.
***
If, after
the first Fertilizer Year (July 1, 2009 to June 30, 2010), if one party
believes, in good faith, that the 857 Tons used in the calculation of the Buyer
Shortfall Payment above does not accurately reflect the actual daily production
rate of Product at Seller’s Facility during the first (1st)
Fertilizer Year, then it may provide written notice to the other party to meet
to discuss an alternate amount. The parties shall meet promptly after
the date of such notice (in any event not later than fifteen (15) days after the
date of the notice) to discuss and attempt to agree upon such an alternate
amount. If the parties fail to agree on the appropriate adjustment to
the 857 Tons within thirty (30) days of the date of the original notice, then
the 857 Tons shall be used until an alternate amount is agreed upon in writing
by the parties. The intent of the parties is to reflect the actual
daily production rate of Product at Seller’s Facility for the first (1st)
Fertilizer Year as a proxy for subsequent Fertilizer Years in the calculation of
the Buyer Shortfall Payment above and Forward Sales Suspension Credit as set
forth in Section 31 above.
Example
#1:
Starting
October 15, 2012, Seller’s Facility is idled for 10 days because the 40,000 Tons
of storage is full and the Buyer failed to make rail shipments on existing
orders. From October 8th to
15th, there
was a Weighted Average Net Sales Price of *** per Ton on sales. From
October 16th to the
21st, there
was a Weighted Average Net Sales Price of *** per Ton on
sales. ***
The Buyer
Shortfall Payment would be calculated as follows:
***
***
***
*** total
Buyer Shortfall Payment for October 2012
Example #2 (with Forward
Sales Suspension Credit)
Assume
the same facts as Example #1. In addition, Seller previously issued a
Forward Sales Suspension for 12 days in May 2012 (May 1-12). Buyer
would be entitled to a Forward Sales Suspension Credit of 10,284 Tons (857 Tons
for 12 days)
that could be applied to Buyer Shortfall Payment due for October
2012. Buyer would also have a credit that could be applied to
another Buyer Shortfall Payment that occurred from May 13th to
November 9th (180
days after the Forward Sales Suspension is lifted).
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
|
22
***Confidential***
The Buyer
Shortfall Payment and credits would be calculated as follows:
***
***
***
***
*** = ***
total Buyer Shortfall Payment for October 2012
*** Tons
for future credit on Buyer Shortfall Payment
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
|
23
***Confidential***
Appendix
VII
Example
of Production Credit
Example
#1:
During
the 2nd quarter of 2012, April 1, 2012 through June 30, 2012, at Seller’s
Facility, Seller produced and made available to Buyer for delivery 42,000 Tons
of Product due to a variety of maintenance problems at the Seller’s Facility and
there was not a scheduled or notification of a turnaround. The Production Credit
would be calculated as follows:
***
Tons
*** of
Production Credit for the 2nd quarter of 2012.
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
|
24
***Confidential***
Appendix
VIII
Make-Whole
If the
Make-Whole is due and owning pursuant to Section 22, it shall be established
using the following:
If
the Net Third-Party Sales Price </= the Replacement Price, Seller shall pay
to Buyer an amount calculated as follows:
The
difference between the (A) amount of Product that was to be delivered to Buyer
hereunder to satisfy the requirements of its existing Third-Party Sales and (B)
actual amount of Product delivered to Buyer to satisfy such sales (the
“Deficiency Volume”) multiplied by the
positive difference, if any, obtained by subtracting the (i) Net Third-Party
Sales Price from (ii) Replacement Price.
Where:
“Replacement
Price” means the price at which Buyer, at its option, acting in a commercially
reasonable manner, either (i) purchases substitute Product to cover the
Deficiency Volume on a FOB, Seller’s Facility equivalent or (ii) absent such a
purchase, the amount of money paid to the Third-Party to satisfy the
requirements of a Third-Party Sale. It is expressly agreed that Buyer
shall not be required to enter into a replacement transaction in order to
determine the Replacement Price.
If,
during a quarter, Seller was obligated to provide Buyer a Production Credit as
set forth in Section 21 and pay Buyer a Make-Whole pursuant to Section 21, in
each case for occurrences during such quarter, the parties will add *** to the
“Net Third-Party Sales Price” in the calculation of the
Make-Whole. See Example #2.
Example
#1:
During
the 3rd quarter of 2012, the Buyer entered into Third-Party Sales for a total of
55,000 Tons of Product. However, Seller was only able to produce and
deliver to Buyer 50,000 Tons, thus the Deficiency Volume was 5,000
Tons. The Net Third-Party Sales Price was *** Ton. Buyer
was able to purchase 5,000 Tons for $175.00 per Ton (i.e., the Replacement
Price). The amount Seller would owe Buyer would be:
***
Example
#2:
Same
facts as Example #1, except that a Production Credit was also owed for the
3rd
quarter 2012. In addition to the Production Credit, the amount Seller
would owe Buyer would be:
***
If
the Net Third-Party Sales Price > the Replacement Price, Buyer shall pay to
Seller an amount calculated as follows:
The
difference between the (A) amount of Product that was to be delivered to Buyer
hereunder to satisfy the requirements of its existing Third-Party Sales and (B)
actual amount of Product delivered to Buyer to satisfy such sales (the
“Deficiency Volume”) multiplied by the
difference obtained by subtracting the (i) Replacement Price from
(ii) Net Third-Party Sales Price.
Example
#3:
Same
facts as Example #1, except that the Replacement Price was ***
Ton. The amount Buyer would owe Seller would be:
***
PORTIONS
OF THIS DOCUMENT HAVE BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
FOR PURPOSES OF SUCH REQUEST.
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.
25
***Confidential***
Appendix
IX
Railcar
Management Agreement
[attached
hereto]
26
***Confidential***
Appendix
X
Definitions
Unless
otherwise defined in the Agreement, capitalized or other terms used herein shall
have the following meanings:
A.
|
“Affiliate”
or “Affiliates” with respect to any specified Person means a Person that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such specified
Person. For this definition, “control” (and its derivatives)
means the possession, directly or indirectly, of 25% or more of the Equity
Interests of a Person, or the power, directly or indirectly, to vote 25%
or more of the voting Equity Interests of a
Person.
|
B.
|
“business
day” shall mean days other than Saturdays, Sundays and national
holidays.
|
C.
|
“day”
shall mean a calendar days, including Saturdays, Sundays and national
holidays.
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D.
|
“Equity
Interests” means (a) with respect to a corporation, as determined under
the laws of the jurisdiction of organization of such entity, shares of
capital stock; (b) with respect to a partnership, limited liability
company, trust or similar Person, as determined under the laws of the
jurisdiction of organization of such entity, units, interests, or other
partnership/limited liability company interests; or (c) any other direct
or indirect equity ownership or
participation.
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|
E.
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“Fertilizer
Year” shall mean from July 1st
of one year to June 30th
of the next year
|
.
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F.
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“month”
shall mean a calendar month.
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G.
|
"Person"
means any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, unincorporated organization, business, syndicate, sole
proprietorship, association, organization, other entity or governmental
body.
|
H.
|
"Seller’s
Representatives" shall include Seller and its Affiliates, and their
respective officers, directors, employees, attorneys, advisors,
accountants, agents and
representatives.
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|
I.
|
“Ton”
or “Tons” shall mean a U.S. short ton or 2000 pounds. A Ton is
the unit of measure for Product (UAN 32%) (or adjusted to a UAN 32%
basis).
|
|
J.
|
“quarter”
shall mean a calendar quarter.
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K.
|
“week”
shall mean a calendar week, commencing at 12:01 a.m. on the Monday of each
week.
|
|
L.
|
“year”
shall mean a calendar year.
|
Unless
the context of the Agreement otherwise requires (i) words of any gender are
deemed to include the other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
“hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to
this entire Agreement; (iv) the term “Section” refer to the specified Section of
the Agreement; (v) the term “including” and other forms of such term, with
respect to any matter or thing, means “including but not limited to” such matter
or thing; and (vi) all references to “dollars” or “$” refer to
currency of the United States.
27
***Confidential***
Appendix
XI
Terms
and Conditions
1. TERMS OF SALE. These
Terms and Conditions (“Terms”) shall apply
to the Urea Ammonium Nitrate Purchase and Sale Agreement to which these Terms
are attached or referenced (the “Agreement”) and
together with these Terms, the “Agreement”.
2. TAXES AND
DUTIES. Buyer shall be responsible for the amount of any
applicable sales, use or value added tax imposed on Product as a result of any
sale by Buyer hereunder that (a) state or local taxing authorities require
Seller to collect from Buyer, and (b) is not subject to an exemption
certificate, a direct pay permit or other exemption document. If any
sale is so subject to exemption, Buyer shall provide Seller with copies of such
documents or other appropriate evidence. Except to the extent
described above, Seller shall pay all Taxes which may now or hereafter be
imposed on or with respect to the manufacturing or production of the
Product. If Buyer is required to pay any Taxes that are Seller’s
responsibility hereunder, Seller shall reimburse Buyer for such Taxes within ten
(10) days of notice hereunder.
3. DELIVERIES. (a) Either
party may reject any rail cars, trucks, transports, containers or storage
presented for loading/unloading/transfer or refuse to load/unload, transfer or
handle any Product which in either case, in such party’s sole opinion, would
present an unsafe or potential unsafe situation. (b) To
the extent Buyer or its customers fail to offload or unload the entire quantity
of Product from a railcar utilized for shipment of Product because of (i) a
failure of mechanical equipment on the railcar, (ii) a failure of Product to
meet the Specifications, or (iii) because of temperature, the Product
crystallizes or “salts-out”, in each case, Seller will provide Buyer a credit
for the Heel. A “Heel” shall equal the weight of the railcar
returned by Buyer to Seller as measured by Seller at Seller’s Facility minus the
stenciled tare weight on the railcar. The credit will equal the Net
Sales Price (in US$ per Ton) multiplied by the Heel (in Tons). The
Heel shall be deemed to have been abandoned by Buyer for the beneficial use or
re-use by Seller.
4. COMPLIANCE WITH
LAW. Each party agrees to comply with all applicable laws,
treaties, conventions, directives, statutes, ordinances, rules, regulations,
orders, writs, judgments, injunctions or decrees of any governmental authority
having jurisdiction pertaining to the performance of its obligations under the
Agreement.
5. HAZARDOUS/TOXIC
SUBSTANCES. Seller warrants to Buyer that: no Product is or
will be the product, or by-product, of any hazardous or toxic waste as defined
by applicable law; and Seller will supply Buyer on a timely basis
with Material Safety Data Sheets (MSDS) for the Product, which MSDS will be
complete and accurate, including in the disclosing of risks and dangers of the
Product and of handling or processing the same.
6. WARRANTY AND
INDEMNIFICATION. (a) Seller warrants that at the time of
delivery, (i) the Product shall conform to the Specifications, (ii) Seller will
deliver good title to the Product and that the Product shall be delivered free
of liens or encumbrances; and (iii) Seller has complied in all respects with all
laws applicable to the production, handling, transportation and
delivery of the Product. SELLER DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR
FITNESS OF THE PRODUCT FOR A PARTICULAR PURPOSE.
(b) Seller
warrants that the production or sale of the Product delivered hereunder will not
infringe the claims of any patent or proprietary or intellectual property of any
third-party (a “Third-Party Intellectual
Property Right”). Seller shall indemnify, defend, and hold
Buyer (and its Affiliates and its and their respective officers, directors,
employees and representatives) harmless from and against any and all claims,
liabilities or losses arising from or in connection with any claim that the
Product or the sale of Product infringes or violates any Third-Party
Intellectual Property Right.
7. LIMITATIONS. Notwithstanding anything to the
contrary in this Agreement or applicable law, in no event will either party be
liable to the other party for any lost or prospective profits, indirect,
incidental, consequential, special, exemplary or punitive damages, including,
without limitation, lost earnings, lost profits or business interruption, under
any claim, whether based upon a party's negligence, breach of warranty, strict
liability, in tort or any other cause of action.
8. GOVERNING LAW/VENUE FOR
DISPUTES. The validity, performance, construction, and effect
and all matters arising out of or relating to the Agreement shall be interpreted
in accordance with the laws of the State of New York (U.S.A.), without regard to
its conflicts of law rules. The United Nations Convention on Contracts for the
International Sale of Goods or any subsequently enacted treaty or convention
shall not apply or govern the Agreement or the performance thereof or any aspect
of any dispute arising therefrom. Any action or proceeding between Buyer and
Seller relating to the Agreement shall be commenced and maintained exclusively
in the state or federal courts in the state of Delaware (U.S.A.), and Seller
submits itself unconditionally and irrevocably to the personal jurisdiction of
such courts. BUYER
AND SELLER EACH WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION, CLAIM OR
PROCEEDING RELATING TO THE AGREEMENT.
9. SUCCESSOR AND
ASSIGNS. The Agreement binds and inures to the benefit of
Buyer and Seller and their respective successors and assigns expressly permitted
by the Agreement. Neither party may assign any interest in, nor delegate any
obligation under the Agreement, by operation of law or otherwise, without the
other party’s prior written consent. Upon any such permitted assignment,
however, the assigning party shall not be relieved of any liability under the
Agreement. Any assignment or attempted assignment in contravention of
the foregoing shall be null and void, and shall be considered a breach of the
Agreement.
10. AMENDMENT. Neither
party shall claim any amendment, modification or release of any provisions
hereof unless the same is in writing and such writing: (i) specifically refers
to the Agreement; (ii) specifically identifies the term amended; and (iii) is
signed by duly authorized representatives of Seller and Buyer. No
salesperson is authorized to bind either party.
11. DEFAULT, LIABILITY AND
TERMINATION. Upon the occurrence of any of the following
events, (i) the failure of any party to perform any of its other obligations
under the Agreement and such failure is not excused or cured within thirty (30)
days after receipt of written notice from the other party, (ii) a default under
the Railcar Management Agreement (after giving effect to any applicable grace
periods), or (iii) upon the occurrence of a Bankruptcy Event (as defined below),
then the non-defaulting or non-bankrupt party, in its discretion and upon
written notice to the other party (provided no notice shall be required in the
event of a Bankruptcy Event), may do any one or more of the following in
addition to any other right or remedy it may have in the Agreement or under law
or in equity: (a) suspend performance under the Agreement or Railcar Management
Agreement; (b) terminate the Agreement or Railcar Management Agreement, whereby
any and all obligations of the defaulting or bankrupt party, including payments
or deliveries due, will, at the option of the terminating party, become
immediately due and payable or deliverable, as applicable; and/or (c) Set-off
against any amount that the terminating party owes to the defaulting or bankrupt
party under the Agreement or Railcar Management Agreement, in each case subject
to Section 7 of these Terms. “Bankruptcy Event”
means the occurrence of any of the following events with respect a party: (i)
filing of a petition or otherwise commencing, authorizing or acquiescesing in
the commencement of a proceeding or cause of action under any bankruptcy,
insolvency, reorganization or similar law; (ii) making of an assignment or any
general arrangement for the benefit of creditors; (iii) having a bankruptcy
petition filed against it and such petition is not withdrawn or dismissed within
thirty (30) days after such filing; (iv) otherwise becoming bankrupt or
insolvent (however evidenced); (v) having a liquidator, administrator,
custodian, receiver, trustee, conservator or similar official appointed with
respect to it or any substantial portion of its property or assets; or (vi)
being generally unable to pay its debts as they fall due.
28
***Confidential***
12. CONFIDENTIALITY. Except
as may be agreed to in writing on a case by case basis or as may be necessary to
perform its obligations herein, during the Term and for a period of one (1) year
thereafter, both parties shall maintain in confidence the terms of the Agreement
and all information concerning costs and price to be disclosed in connection
with the other’s performance under the Agreement. Such information
shall be disclosed to no one other than (i) Affiliates, employees and
representatives who need to know the same in connection with performance under
the Agreement, and who are advised of the confidential nature of such
information, or (ii) when disclosure is required by law. The obligations under
Section 12 of each party, as recipient, shall not apply to such information that
(a) was or is in the public domain through no fault of such recipient,
(b) was rightfully in recipient's possession free of any obligation of
confidence, (c) was developed by recipient independently of and without
reference to any confidential information communicated to such recipient by
discloser, or (d) was communicated by the discloser to an unaffiliated
third-party free of any obligation of confidence.
13. PUBLIC
ANNOUNCEMENTS. Neither party shall issue any press release or
public announcement concerning the Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed, unless, in the
judgment of Buyer or Seller, disclosure is otherwise required by law, provided
that, even in such circumstances, the party intending to make such release shall
use commercially reasonable efforts consistent with such law to consult with the
other party with respect to the text thereof.
14. INDEPENDENT
CONTRACTORS. Buyer and Seller are independent contractors only and are
not partners, master/servant, principal/agent or involved herein as parties to
any other similar legal relationship with respect to the transactions
contemplated under the Agreement or otherwise; and no fiduciary relationship,
nor any other relationship imposing vicarious liability shall exist between the
Parties under the Agreement or otherwise at law.
15. NOTICES. Any
notice given under the terms of the Agreement shall be in writing and shall be
either delivered by hand; mailed by first class, registered, or certified mail
with return receipt requested and postage prepaid; or sent by facsimile
transmission; or sent prepaid by overnight courier, to the address specified in
Section 3 and 5 of the Agreement or otherwise specified in a notice delivered by
a party under this Section 15; provided that, the
reports described in Section 14, 15 and 16 of the Agreement may be provided via
e-mail to personnel designated by the receiving party. Notice shall
be deemed received upon delivery personally or by fax on a business day of the
recipient with a notice of receipt or within seven (7) days if mailed by
registered or certified mail, return receipt requested.
16. SURVIVABILITY. The
Agreement, and all covenants, promises, agreements, conditions, warranties,
representations and understandings contained in this Agreement shall survive the
termination or expiration of the Term for purposes of enforcement of rights
occurring prior to such termination or expiration.
17. SET-OFF. Each
party reserves the right, at any time, to Set-off against any amount that the
other party owes to such party under this Agreement and/or the Railcar
Management Agreement. The party invoking the Set-off shall
provide written notice to the other party prior to doing so. "Set-off" means
set-off, offset, combination of accounts, netting of dollar amounts of monetary
obligations, right of retention or withholding or similar right to which such
party is entitled; provided, that it
arises under this Agreement and/or the Railcar Management
Agreement.
18. MISCELLANEOUS. These
Terms supersede any terms and conditions of previous dates, and if there is a
conflict between these Terms and the specific provisions contained in the
Agreement, the specific provisions contained in the Agreement shall
control. Capitalized terms not defined herein shall have the meanings
set forth in the Agreement. The captions and section headings set
forth in the Agreement are for convenience only and shall not be used in
defining or construction any of the terms and conditions of the
Agreement. Waiver by either party of any breach of the terms and
conditions contained in the Agreement will not be construed as a waiver of any
other or continuing breach. Except where specifically noted in this Agreement,
any right or remedy specified in the Agreement shall be in addition to, and not
excusive of, any other right or remedy of under contract, law or equity. The
invalidity or unenforceability of any provision of the Agreement shall not
affect the validity or enforceability of its other provisions. The
Agreement is solely for the benefit of Buyer and Seller and shall not be deemed
to confer upon or give to any third-party any right, claim, cause of action or
interest herein. Nothing in the Agreement shall be construed against either
party as the alleged drafter thereof. No course of dealing, course of
performance, or usage of trade shall be considered in the interpretation or
enforcement of the Agreement. The Agreement contains the entire understanding of
the parties hereto with regard to the subject matter contained herein. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one and the same
agreement.
29
***Confidential***