Exhibit 10.55
***OMITTED INFORMATION DENOTED BY ASTERISKS (***) HAS BEEN FILED SEPARATELY WITH
THE COMISSION AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.***
BUSINESS
CONFIDENTIAL
PRODUCT SUPPLY AGREEMENT
BETWEEN
PRAXAIR HYDROGEN SUPPLY, INC. AND
STERLING CHEMICALS, INC.
May 15, 1995
TABLE OF CONTENTS
ARTICLE 1 2
DEFINITIONS 2
Section 1.1 "Adjustable Facility Fee" 2
Section 1.2 "Affiliate" 2
Section 1.3 "Agreement" 2
Section 1.4 "Blend Gas" 2
Section 1.5 "Blend Gas Contract Volume" 2
Section 1.6 "Blend Gas Delivery Point" 3
Section 1.7 "Blend Gas Totalizer" 3
Section 1.8 "Buyer's Annual Grace Period" 3
Section 1.9 "Buyer's Blend Gas Requirements" 3
Section 1.10 "Buyer's Carbon Monoxide Requirements" 3
Section 1.11 "Buyer's Hydrogen Requirements" 3
Section 1.12 "Buyer's Pipelines" 4
Section 1.13 "Buyer's Plant" 4
Section 1.14 "Buyer's Required Rates" 4
Section 1.15 "Carbon Monoxide" 4
Section 1.16 "Carbon Monoxide Contract Volume" 4
Section 1.17 "Carbon Monoxide Delivery Point" 4
Section 1.18 "Carbon Monoxide Totalizer" 5
Section 1.19 "Confidential Information" 5
Section 1.20 "Contract Volume of Products" 5
Section 1.21 "Contract Year" 5
Section 1.22 "Cubic Foot" 5
Section 1.23 "Event of Default" 5
Section 1.24 "Excess Shutdown Period" 5
Section 1.25 "Facility Site" 5
Section 1.26 "Feed/Fuel Fee" 6
Section 1.27 "First Additional Term" 6
Section 1.28 "Fixed Facility Fee" 6
Section 1.29 "Force Majeure Event" 6
Section 1.30 "Ground Lease" 6
Section 1.31 "Guarantor" 6
Section 1.32 "Guaranty" 6
Section 1.33 "Hydrogen" 6
Section 1.34 "Hydrogen Contract Volume" 6
Section 1.35 "Hydrogen Delivery Point" 7
Section 1.36 "Hydrogen Totalizer" 7
Section 1.37 "Initial Term" 7
Section 1.38 "Maximum Shutdown Period" 7
Section 1.39 "Metering Equipment" 7
Section 1.40 "Month" 7
Section 1.41 "MSCF" 7
Section 1.42 "Natural Gas" 7
Section 1.43 "New NG Index" 7
Section 1.44 "New PPI Index" 7
Section 1.45 "NG Base" 7
Section 1.46 "PPI Base" 7
Section 1.47 "Products" 8
Section 1.48 "Proprietary Rights" 8
Section 1.49 "Second Additional Term" 8
Section 1.50 "Seller's Facility" 8
Section 1.51 "Startup" 8
Section 1.52 "Steam" 8
Section 1.53 "Steam Contract Volume" 8
Section 1.54 "Steam Delivery Point" 8
Section 1.55 "Steam Fee" 8
Section 1.56 "Steam Totalizer" 9
Section 1.57 "Supplemental ▇▇▇▇▇▇▇▇" ▇
Section 1.58 "Term" 9
Section 1.59 "Texaco Information" 9
Section 1.60 "Utilities Agreement" 9
ARTICLE 2 9
STARTUP 9
Section 2.1 Startup 9
Section 2.2 Seller's Penalty for Late Startup 10
Section 2.3 Exceptions to Seller's Penalty for Delay 10
Section 2.4 Buyer's Penalty for Late Startup 10
Section 2.5 Exceptions to Buyer's Penalty
for Late Startup 11
Section 2.6 Obligation to Deliver after Startup 11
Section 2.7 Covenant Regarding Delay 11
ARTICLE 3 11
DELIVERY OF CARBON MONOXIDE 11
Section 3.1 Obligation to Deliver Carbon Monoxide 11
Section 3.2 Carbon Monoxide Pressure 11
Section 3.3 Title to and Risk of Loss
of Carbon Monoxide 12
Section 3.4 Carbon Monoxide Volume 12
ARTICLE 4 13
DELIVERY OF BLEND GAS 13
Section 4.1 Obligation to Deliver Blend Gas 13
Section 4.2 Blend Gas Pressure 13
Section 4.3 Title to and Risk of Loss of Blend Gas 13
Section 4.4 Blend Gas Volume 13
ARTICLE 5 14
DELIVERY OF HYDROGEN AND SUPPLEMENTAL HYDROGEN 14
Section 5.1 Obligation to Deliver Hydrogen 14
Section 5.2 Delivery of Supplemental Hydrogen 14
Section 5.3 Hydrogen Pressure 14
Section 5.4 Title to and Risk of Loss 14
Section 5.5 Hydrogen Volume 14
ARTICLE 6 15
DELIVERY OF STEAM 15
Section 6.1 Steam Delivery Obligation 15
Section 6.2 Title to and Risk of Loss of Steam 16
ARTICLE 7 16
SHUTDOWNS, FAILURES TO DELIVER AND FAILURES TO TAKE 16
Section 7.1 Seller's Maximum Shutdown Period 16
Section 7.2 Seller's Failure to Deliver;
No Force Majeure 16
Section 7.3 Buyer's Failure to Take;
No Force Majeure 18
Section 7.4 Seller's Failure to Deliver;
Seller's Force Majeure 20
Section 7.5 Buyer's Failure to Take;
Buyer's Force Majeure 22
Section 7.6 Mandatory Shut Down 23
ARTICLE 8 23
PRICING AND PAYMENT 23
Section 8.1 Purchase Price for Products 23
Section 8.2 Fixed Facility Fee 24
Section 8.3 Adjustable Facility Fee;
Feed/Fuel and Steam Fees 24
Section 8.4 Supplemental Hydrogen 25
Section 8.5 Payment for Supplemental Hydrogen 26
Section 8.6 Terms of Payment 26
ARTICLE 9 27
TAXES 27
ARTICLE 10 28
FORCE MAJEURE 28
Section 10.1 Force Majeure Events 28
Section 10.2 Settlement of Strikes 29
Section 10.3 Notice of Force Majeure 30
ARTICLE 11 30
LIMITATION OF LIABILITY 30
Section 11.1 Acknowledgement of Hazards 30
Section 11.2 No Consequential Damages 31
ARTICLE 12 31
SELLER'S PRODUCT WARRANTIES; DISCLAIMERS 31
ARTICLE 13 34
REPRESENTATIONS AND WARRANTIES OF BUYER 34
Section 13.1 Organization, Good Standing and
Corporate Power 34
Section 13.2 Authority Relative to Agreement 34
Section 13.3 No Conflict with Other Instruments or
Proceedings 34
Section 13.4 No Litigation or Proceedings. 35
ARTICLE 14 35
REPRESENTATIONS AND WARRANTIES OF SELLER 35
Section 14.1 Organization, Good Standing
and Corporate Power 35
Section 14.2 Authority Relative to Agreement 36
Section 14.3 No Conflict with Other Instruments or
Proceedings 36
Section 14.4 No Litigation or Proceedings 36
Section 14.5 Compliance with Laws 37
Section 14.6 Proprietary Rights 37
ARTICLE 15 37
METERING EQUIPMENT 37
Section 15.1 Meter Testing 37
Section 15.2 Data Transmission 38
ARTICLE 16 39
ALTERNATIVE FEEDSTOCKS 39
ARTICLE 17 39
EXCESS PRODUCTION 39
ARTICLE 18 40
EVENTS OF DEFAULT; DISPUTE RESOLUTION 40
Section 18.1 Events of Default 40
Section 18.2 Dispute Resolution Meeting 41
Section 18.3 Failure to Resolve Dispute; Arbitration 42
Section 18.4 Right to Terminate Agreement 43
ARTICLE 19 43
ACCESS TO INFORMATION 43
Section 19.1 Access to Information 43
Section 19.2 Access to Seller's Facility 44
Section 19.3 Access to Seller's Personnel 44
Section 19.4 Limitations on Disclosure 44
ARTICLE 20 45
CAPACITY OF SELLER'S FACILITY 45
Section 20.1 Initial Capacity 45
Section 20.2 Capacity Expansion 45
ARTICLE 21 46
INITIAL AND ADDITIONAL TERMS 46
Section 21.1 Initial Term 46
Section 21.2 Additional Terms 46
ARTICLE 22 47
MISCELLANEOUS 47
Section 22.1 Assignment 47
Section 22.2 Confidentiality 48
Section 22.3 Applicable Law 51
Section 22.4 Notice 51
Section 22.5 Waiver 52
Section 22.6 Headings 52
Section 22.7 Entire Agreement 52
Section 22.8 Relationship between Parties 53
Section 22.9 Severability 53
Section 22.10 Amendment 54
Section 22.11 Pronouns and Plurals 54
Section 22.12 Section Numbers 54
EXHIBIT A: FEE CALCULATIONS A-1
EXHIBIT B: DESCRIPTION OF SELLER'S FACILITY B-1
EXHIBIT C: PRODUCT SPECIFICATIONS C-1
EXHIBIT D: NATURAL GAS SPECIFICATIONS D-1
PRODUCT SUPPLY AGREEMENT
THIS PRODUCT SUPPLY AGREEMENT made and entered into as of May 15, 1995, by
and between PRAXAIR HYDROGEN SUPPLY, INC., a Delaware corporation ("Seller"),
and STERLING CHEMICALS, INC., a Delaware corporation ("Buyer");
W I T N E S S E T H:
WHEREAS, Buyer requires substantial quantities of Carbon Monoxide,
Blend Gas, Hydrogen and Steam for use at Buyer's Plant, and has requested
Seller to supply such quantities of Carbon Monoxide, Blend Gas, Hydrogen and
Steam; and
WHEREAS, Seller has represented to Buyer that it is willing and able
to design, construct and operate, at Seller's expense and in accordance with
the terms of the Ground Lease, a facility for the production of Carbon
Monoxide, Blend Gas, Hydrogen and Steam on the Facility Site from which
Seller will be able to supply Carbon Monoxide, Blend Gas, Hydrogen and Steam
to Buyer on a reliable basis, achieving an average on-stream operating time of
(***) or better; and
WHEREAS, in reliance on such representation by Seller, Buyer is
willing to shut down its existing syngas plant, which currently
produces Buyer's requirements for Carbon Monoxide, Hydrogen and Blend Gas
for its acetic acid and oxoalcohol units, and rely exclusively on Seller's
Facility for its requirements of these Products;
NOW THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained and
the mutual benefits to be derived therefrom, Buyer and Seller agree as follows:
ARTICLE 1 - DEFINITIONS
Unless otherwise stated in this Agreement, the following terms
shall have the meanings ascribed to them below, and the following definitions
shall be equally applicable to both the singular and plural forms of any of the
terms herein defined:
Section 1.1 "Adjustable Facility Fee" means the variable fee
payable by Buyer to Seller as provided in Section 8.3.
Section 1.2 "Affiliate" of a party shall mean a corporation, at
least 50% of the voting securities of which is owned directly or indirectly by
such party; a corporation which owns directly or indirectly at least 50% of the
voting stock of such party; or a corporation, at least 50% of the voting
securities of which is owned directly by a corporation which owns directly or
indirectly at least 50% of the voting stock of such party.
Section 1.3 "Agreement" means this Product Supply Agreement, as
the same may be amended from time to time in accordance with its terms.
Section 1.4 "Blend Gas" means a gas mixture conforming to the
specifications set forth in Exhibit C, attached hereto and made a part hereof.
Section 1.5 "Blend Gas Contract Volume" means, during any
Month, Blend Gas containing an average of (***) of Hydrogen and Carbon
Monoxide produced by Seller's Facility, calculated by dividing the total
number of pounds delivered in any Month by the hours in such Month.
Section 1.6 "Blend Gas Delivery Point" means the flange where
Buyer's Pipelines will be connected to Seller's Facility at the Blend Gas
custody transfer point depicted in Exhibit B attached hereto and made a part
hereof.
Section 1.7 "Blend Gas Totalizer" means Seller's metering
equipment to be installed and maintained by Seller at Seller's Facility to
measure the quantities of Blend Gas delivered to Buyer hereunder.
Section 1.8 "Buyer's Annual Grace Period" shall have the
meaning ascribed to it in Section 7.3(b).
Section 1.9 "Buyer's Blend Gas Requirements" means Buyer's
total present and future requirements, in gaseous form, of Blend Gas, other
than that supplied in cylinders, for use at the oxoalcohol unit located
at Buyer's Plant up to the Blend Gas Contract Volume.
Section 1.10 "Buyer's Carbon Monoxide Requirements" means Buyer's
total present and future requirements, in gaseous form, of Carbon Monoxide,
other than Carbon Monoxide supplied in cylinders, for use at the acetic acid and
oxoalcohol units located at Buyer's Plant up to the Carbon Monoxide Contract
Volume.
Section 1.11 "Buyer's Hydrogen Requirements" means Buyer's total
present and future requirements, in gaseous form, of Hydrogen, other than that
supplied in cylinders, for use at the oxoalcohol unit located at Buyer's Plant
up to the Hydrogen Contract Volume.
Section 1.12 "Buyer's Pipelines" means the system of trunk and service
pipelines to be installed, owned and operated by Buyer for the transmission of
(i) feedstocks and utilities to Seller's Facility, and (ii) Carbon Monoxide,
Blend Gas, Hydrogen (and Supplemental Hydrogen) and Steam produced by Seller's
Facility from the respective points of connection of Buyer's Pipelines with
Seller's Facility. The points at which Buyer's Pipelines will connect with
Seller's Facility are depicted in Exhibit B.
Section 1.13 "Buyer's Plant" means Buyer's chemical plant in Texas
City, Texas and any additions or modifications thereto and replacements thereof.
Section 1.14 "Buyer's Required Rates" means the volume of any or all
of the Products required by Buyer, during any given Month, not to exceed the
Contract Volume of Products.
Section 1.15 "Carbon Monoxide" means carbon monoxide conforming to the
specifications set forth in Exhibit C.
Section 1.16 "Carbon Monoxide Contract Volume" means during any Month
an average of (***) of Carbon Monoxide produced by Seller's Facility, calculated
by dividing the total number of pounds delivered in any Month by the hours in
such Month.
Section 1.17 "Carbon Monoxide Delivery Point" means the flange where
Buyer's Pipelines will be connected to Seller's Facility at the Carbon Monoxide
custody transfer point depicted in Exhibit B.
Section 1.18 "Carbon Monoxide Totalizer" means Seller's metering
equipment to be installed and maintained by Seller at Seller's Facility to
measure the quantities of Carbon Monoxide delivered to Buyer hereunder.
Section 1.19 "Confidential Information" has the meaning ascribed to it
in Section 22.2.
Section 1.20 "Contract Volume of Products" means, collectively or
individually, as the context requires, 100% each of the Blend Gas Contract
Volume, the Carbon Monoxide Contract Volume and the Hydrogen Contract Volume.
Section 1.21 "Contract Year" means a period of one (1) year commencing
on the August 1 next following the date of Startup and on each subsequent
anniversary of such date during the Term; provided, however, that the period of
time commencing on the date of Startup and ending on the July 31 next following
the date of Startup shall also be a Contract Year, with appropriate prorations
to the extent such period is less than twelve months.
Section 1.22 "Cubic Foot" means the quantity of Carbon Monoxide, Blend
Gas or Hydrogen that would occupy a volume of one cubic foot at a temperature of
60 degrees Fahrenheit and 14.696 pounds per square inch absolute pressure.
Section 1.23 "Event of Default" shall have the meaning ascribed to it
in Section 18.1.
Section 1.24 "Excess Shutdown Period" shall have the meaning ascribed
to it in Section 7.2.
Section 1.25 "Facility Site" means the parcel of land that will be
leased by Buyer to Seller pursuant to the Ground Lease, as depicted on
Exhibit B.
Section 1.26 "Feed/Fuel Fee" means the fee payable by Buyer to Seller
for Natural Gas as provided in Section 8.3 or for any alternative feedstock as
provided in Article 16.
Section 1.27 "First Additional Term" has the meaning ascribed to it in
Section 21.2.
Section 1.28 "Fixed Facility Fee" means the fixed fee payable by Buyer
to Seller as provided in Section 8.2.
Section 1.29 "Force Majeure Event" has the meaning ascribed to it in
Section 10.1.
Section 1.30 "Ground Lease" means that certain Ground Lease Agreement
of even date herewith between Buyer as lessor and Seller as lessee, as same may
be amended from time to time in accordance with the provisions thereof.
Section 1.31 "Guarantor" means Praxair, Inc., a Delaware corporation,
and its successors and permitted assigns.
Section 1.32 "Guaranty" means that certain Guaranty Agreement of even
date herewith pursuant to which Guarantor, for the benefit of Buyer, has
unconditionally guaranteed the obligations of Seller hereunder and under the
Utilities Agreement and the Ground Lease.
Section 1.33 "Hydrogen" means hydrogen conforming to the
specifications set forth in Exhibit C.
Section 1.34 "Hydrogen Contract Volume" means during any Month an
average of (***) of Hydrogen produced by Seller's Facility, calculated by
dividing the total number of pounds delivered in any Month by the hours in such
Month.
Section 1.35 "Hydrogen Delivery Point" means the flange where Buyer's
Pipelines will be connected to Seller's Facility at the Hydrogen custody
transfer point depicted in Exhibit B.
Section 1.36 "Hydrogen Totalizer" means Seller's metering equipment to
be installed and maintained by Seller at Seller's Facility to measure the
quantities of Hydrogen (and Supplemental Hydrogen) delivered to Buyer hereunder
from Seller's Facility.
Section 1.37 "Initial Term" has the meaning ascribed to it in Section
21.1.
Section 1.38 "Maximum Shutdown Period" shall have the meaning ascribed
to it in Section 7.1.
Section 1.39 "Metering Equipment" shall have the meaning ascribed to
it in Section 15.1.
Section 1.40 "Month" means that period of time beginning at 12:01
a.m., Houston, Texas time on the first day of any calendar month and extending
to 12:01 a.m. Houston, Texas time on the first day of the following calendar
month.
Section 1.41 "MSCF" means one thousand (1,000) standard Cubic Feet.
Section 1.42 "Natural Gas" means natural gas delivered by Buyer to
Seller's Facility conforming to the specifications set forth in Exhibit D
attached hereto and made a part hereof.
Section 1.43 "New NG Index" shall have the meaning ascribed to it in
Section 8.4.
Section 1.44 "New PPI Index" shall have the meaning ascribed to it in
Section 8.4.
Section 1.45 "NG Base" shall have the meaning ascribed to it in
Section 8.4.
Section 1.46 "PPI Base" shall have the meaning ascribed to it in
Section 8.4.
Section 1.47 "Products" means Carbon Monoxide, Blend Gas,Hydrogen and
Steam, individually and collectively.
Section 1.48 "Proprietary Rights" shall have the meaning ascribed to
it in Section 14.6.
Section 1.49 "Second Additional Term" has the meaning ascribed to it
in Section 21.2.
Section 1.50 "Seller's Facility" means the facilities to be
constructed, owned and operated by Seller for the production and delivery of
Products for sale and delivery to Buyer pursuant to this
Agreement and for the sale of Hydrogen to third parties. The location of
Seller's Facility is depicted on Exhibit B.
Section 1.51 "Startup" means the date by which Seller initially has
produced Carbon Monoxide, Blend Gas, Hydrogen and Steam at Buyer's Required
Rates up to the Contract Volume of Products for a continuous period of 48 hours.
Section 1.52 "Steam" means steam produced by Seller's Facility
conforming to the specifications set forth in Exhibit C.
Section 1.53 "Steam Contract Volume" means the volume of steam
produced by Seller's Facility.
Section 1.54 "Steam Delivery Point" means the flange where Buyer's
Pipelines will be connected to Seller's Facility at the Steam custody transfer
point depicted in Exhibit B.
Section 1.55 "Steam Fee" means the fee payable by Buyer to Seller for
Steam sold hereunder as provided in Section 8.3.
Section 1.56 "Steam Totalizer" means Seller's metering equipment to be
installed and maintained by Seller at Seller's Facility to measure the
quantities of Steam delivered to Buyer hereunder.
Section 1.57 "Supplemental Hydrogen" means (i) all Hydrogen delivered
to Buyer hereunder at the Hydrogen Delivery Point from a source other than
Seller's Facility when Seller's Facility is not producing Hydrogen, and (ii)
when Seller's Facility is producing Hydrogen and Buyer's Hydrogen Requirements
exceed the Hydrogen Contract Volume, the volume of Hydrogen delivered to Buyer
at the Hydrogen Delivery Point in excess of the Hydrogen Contract Volume.
Section 1.58 "Term" has the meaning ascribed to it in Section 21.2.
Section 1.59 "Texaco Information" has the meaning ascribed to it in
Section 19.4.
Section 1.60 "Utilities Agreement" means that certain Utilities
Agreement of even date herewith between Seller and Buyer pursuant to which Buyer
will provide certain utilities to Seller for use at Seller's Facility, as same
may be amended from time to time in accordance with the provisions thereof.
ARTICLE 2 - STARTUP
Section 2.1 Startup. Seller shall use its best efforts to achieve
Startup by February 1, 1996. Seller shall give Buyer not less than two days'
notice prior to each attempt to achieve Startup and Buyer shall be entitled to
have its representatives present at Seller's Facility to observe each such
attempt and to verify that Startup has occurred. Subject to the limitations
contained in Section 19.4, Seller shall provide all data reasonably requested by
Buyer to help Buyer verify Startup.
Section 2.2 Seller's Penalty for Late Startup. Subject to Section 2.3,
Seller will pay to Buyer penalty payments in lump sums of (***) each if Startup
is not achieved by the following penalty dates: June 1, 1996, July 1, 1996,
August 1, 1996,
September 1, 1996 and October 1, 1996. If Startup is not achieved by October 1,
1996, Buyer may elect to initiate the dispute resolution procedures contained in
Article 18 hereof.
Section 2.3 Exceptions to Seller's Penalty for Delay. To the extent
that delay in Startup is caused by Buyer or by a Force Majeure Event, each
penalty date specified in Section 2.2 will be extended by the period of such
delay. Seller shall notify Buyer as soon as possible after the occurrence of any
act or omission by Buyer, or the occurrence of any Force Majeure Event, that
will cause a delay in Startup and the expected length of such delay.
Section 2.4 Buyer's Penalty for Late Startup. Subject to Section 2.5,
Buyer will pay to Seller penalty payments in lump sums of (***) each if Startup
is not achieved by the following penalty dates because Buyer has requested
Seller to delay Startup after Seller's Facility is mechanically complete and
technically capable of achieving Startup: June 1, 1996, July 1, 1996, August 1,
1996, September 1, 1996 and October 1, 1996. If Seller's Facility is
mechanically complete and technically capable of achieving Startup, and Startup
is not achieved by November 1, 1996 because Buyer has requested Seller to delay
Startup, Buyer shall pay the Fixed Facility Fee and (***) of the Adjustable
Facility Fee until Startup occurs.
Section 2.5 Exceptions to Buyer's Penalty for Late Startup. To the
extent that Buyer's request that Seller delay Startup is caused by Seller or by
a Force Majeure Event, each penalty date specified in Section 2.4 will be
extended by the period of such delay. Buyer shall notify Seller as soon as
possible after the occurrence of any act or omission by Seller, or the
occurrence of any Force Majeure Event, that will cause Buyer to request a delay
in Startup and the expected length of such delay.
Section 2.6 Obligation to Deliver after Startup. Except as otherwise
provided in this Agreement, after Startup Seller agrees to deliver the Products
to Buyer at Buyer's Required Rates during the Term, and Buyer agrees to pay for
Products delivered in accordance with the terms of this Agreement.
Section 2.7 Covenant Regarding Delay. Seller covenants that it will
not delay Startup for any reason (including, without limitation, the absence of
contracts with third parties for the sale of hydrogen produced at Seller's
Facility) once Seller's Facility is mechanically complete and it is technically
feasible to achieve Startup.
ARTICLE 3 - DELIVERY OF CARBON MONOXIDE
Section 3.1 Obligation to Deliver Carbon Monoxide. After Startup
Seller shall sell and deliver to Buyer and Buyer shall purchase and receive from
Seller, on the terms and conditions set forth herein, Buyer's Carbon Monoxide
Requirements.
Section 3.2 Carbon Monoxide Pressure. Carbon Monoxide will be
delivered to the Carbon Monoxide Delivery Point at a pressure of
not less than (***), or greater than (***), per square inch gauge pressure.
Buyer shall be responsible for installing and maintaining appropriate relief
devices on Buyer's Pipelines with respect to Buyer's receipt of Carbon Monoxide.
Section 3.3 Title to and Risk of Loss of Carbon Monoxide. Title to and
risk of loss of Carbon Monoxide shall pass to Buyer at the Carbon Monoxide
Delivery Point.
Section 3.4 Carbon Monoxide Volume. Seller will deliver Carbon
Monoxide to the Carbon Monoxide Delivery Point under as uniform conditions and
rates as possible and in a manner commensurate with good operating practices.
However, Seller will vary the volume of Carbon Monoxide delivered hereunder as
may be necessary to accommodate savings that may occur in the production of
acetic acid by Buyer's Plant of approximately (***). Seller represents and
warrants to Buyer that Seller's Facility has been designed to operate, and
following Startup can and will be operated, to deliver the Carbon Monoxide
Contract Volume in accordance with the terms of this Agreement.
ARTICLE 4 - DELIVERY OF BLEND GAS
Section 4.1 Obligation to Deliver Blend Gas. After Startup Seller
shall sell and deliver to Buyer and Buyer shall purchase and receive from
Seller, on the terms and conditions set forth herein, Buyer's Blend Gas
Requirements.
Section 4.2 Blend Gas Pressure. Blend Gas will be delivered to the
Blend Gas Delivery Point at a pressure of not less than (***), or greater than
(***), per square inch gauge pressure. Buyer shall be responsible for installing
and maintaining appropriate relief devices on Buyer's Pipelines with respect to
Buyer's receipt of Blend Gas.
Section 4.3 Title to and Risk of Loss of Blend Gas. Title to and risk
of loss of Blend Gas shall pass to Buyer at the Blend Gas Delivery Point.
Section 4.4 Blend Gas Volume. Seller will deliver Blend Gas to the
Blend Gas Delivery Point under as uniform conditions and rates as possible and
in a manner commensurate with good operating practices. However, Seller will
vary the volume of Blend Gas delivered hereunder from (***) of the Blend Gas
Contract Volume, as may be necessary to accommodate the operation of Buyer's
Plant. In addition, in order to accommodate the operation of Buyer's Plant,
Seller will vary the volume of Blend Gas delivered hereunder by as much as (***)
above or below the volume produced at Seller's Facility during steady state
operation in the ordinary course of the operation of Seller's Facility. Seller
represents and warrants to Buyer that Seller's Facility has been designed to
operate, and after Startup can and will be operated, to deliver the Blend Gas
Contract Volume in accordance with the terms of this Agreement.
ARTICLE 5 - DELIVERY OF HYDROGEN AND SUPPLEMENTAL HYDROGEN
Section 5.1 Obligation to Deliver Hydrogen. After Startup Seller shall
sell and deliver to Buyer and Buyer shall purchase and receive from Seller, on
the terms and conditions set forth herein, Buyer's Hydrogen Requirements.
Section 5.2 Delivery of Supplemental Hydrogen. After Startup Seller
will, from time to time at the request of Buyer, sell and deliver Supplemental
Hydrogen to Buyer, subject to Seller's prior commitments for the sale of
hydrogen to third parties. Buyer will purchase any Supplemental Hydrogen
received from Seller on the terms and conditions set forth herein.
Section 5.3 Hydrogen Pressure. Hydrogen and Supplemental Hydrogen will
be delivered to the Hydrogen Delivery Point at a pressure of not less than
(***), or greater than (***), per square inch gauge pressure. Buyer shall be
responsible for installing and maintaining appropriate relief devices on Buyer's
Pipelines with respect to Buyer's receipt of Hydrogen produced by Seller's
Facility and Supplemental Hydrogen.
Section 5.4 Title to and Risk of Loss. Title to and risk of loss of
Hydrogen (and Supplemental Hydrogen) shall pass to Buyer at the Hydrogen
Delivery Point.
Section 5.5 Hydrogen Volume. Seller will deliver Hydrogen (and, if any
Supplemental Hydrogen is sold and purchased hereunder, such Supplemental
Hydrogen) to the Hydrogen Delivery Point under as uniform conditions and rates
as possible and in a manner commensurate with good operating practices. However,
Seller agrees that it will vary the volume of Hydrogen delivered hereunder from
(***) of the Hydrogen Contract Volume, as may be necessary to accommodate the
operation of Buyer's Plant. In addition, in order to accommodate the operation
of Buyer's Plant, Seller will vary the volume of Hydrogen delivered hereunder by
as much as (***) above or below the steady state operation of Seller's Facility
during steady state operation in the ordinary course of the operation of
Seller's Facility. Seller represents and warrants to Buyer that Seller's
Facility has been designed to operate, and after Startup can and will be
operated, to deliver the Hydrogen Contract Volume in accordance with the terms
of this Agreement.
ARTICLE 6 - DELIVERY OF STEAM
Section 6.1 Steam Delivery Obligation. After Startup, Seller shall
deliver and Buyer shall accept the Steam Contract Volume at the Steam Delivery
Point at a pressure of not less than (***) pounds per square inch gauge
pressure, and at a temperature of (***) degrees Fahrenheit, and meeting the
specifications set forth in Exhibit C; provided, however, that the boiler
feedwater supplied by Buyer to Seller pursuant to the Utilities Agreement meets
the expected specifications set forth therein. The expected quantity of Steam
(in pounds per hour) that Seller's
Facility will produce at various operating rates (expressed as a percentage of
the Carbon Monoxide Contract Volume) is set forth on Attachment 1 to Exhibit C;
provided, however, Buyer shall be obligated to take all Steam produced by
Seller's Facility in quantities up to (***) of the quantities shown on
Attachment 1 to Exhibit C, but shall not be obligated to pay for Steam delivered
in quantities in excess of (***) of the quantities shown on Attachment 1 to
Exhibit C. Buyer shall be responsible for installing and maintaining appropriate
relief devices on Buyer's Pipelines with respect to Buyer's receipt of Steam.
Section 6.2 Title to and Risk of Loss of Steam. Title to and risk of
loss of Steam shall pass to Buyer at the Steam Delivery Point.
ARTICLE 7 - SHUTDOWNS, FAILURES TO DELIVER AND FAILURES TO TAKE
Section 7.1 Seller's Maximum Shutdown Period. After Startup, Seller
will have the right from time to time, upon 14 days (or such shorter period as
circumstances reasonably dictate) prior notice to Buyer, to shut down Seller's
Facility for up to a maximum of (***) hours during any Contract Year (the
"Maximum Shutdown Period") for the purpose of making ordinary repairs for
maintenance and/or thawing necessary and consistent with proper operation. For
purposes of calculating the Maximum Shutdown Period, any hour during which
Seller does not deliver the Products (or any one of them) at (***) of Buyer's
Required Rates shall be treated as an hour during which Seller has shut down
Seller's Facility even if no prior notice thereof was given by Seller to Buyer.
However, a shutdown of Seller's Facility (i) as a result of a Force Majeure
Event, or (ii) at a time when each of Buyer's Blend Gas Requirements, Hydrogen
Requirements and Carbon Monoxide Requirements is zero, shall not be included in
calculating the Maximum Shutdown Period.
Section 7.2 Seller's Failure to Deliver; No Force Majeure.
(a) If subsequent to Startup Seller delivers Products, but such
deliveries are at rates below Buyer's Required Rates for a period of time in
excess of the Maximum Shutdown Period for any reason other than a Force Majeure
Event (the "Excess Shutdown Period"), for the Excess Shutdown Period Buyer shall
pay a prorated Fixed Facility Fee and a prorated Adjustable Facility Fee based
upon the portion that the amount of Products actually delivered bears to Buyer's
Required Rates therefor. If Seller shall fail to deliver any Product during any
Contract Year for any Excess Shutdown Period, Buyer shall have no obligation to
pay any part of the Fixed Facility Fee or the Adjustable Facility Fee for the
Excess Shutdown Period.
(b) In the event that Buyer's Required Rates for any Product equal
the Contract Volume of Products and Seller shall be unable to supply the
Contract Volume of Products thereof after the expiration of the Maximum Shutdown
Period for any Contract Year for
any reason other than a Force Majeure Event, Seller shall give Buyer prompt
notice of Seller's inability to deliver the full Contract Volume of Products. In
such event, the authorized representatives of each of the parties shall be
obligated to meet within 24 hours after receipt by Buyer of such notice from
Seller. Seller shall be obligated to present, at such meeting, a plan to remedy
its failure to deliver. Additionally, Seller shall be obligated to restore
delivery of such Product to Buyer's Required Rates therefor within a reasonable
period of time, taking into account the scope of the technical requirements and
the correction period associated with the modifications required to so restore
delivery. Seller shall be obligated to use all reasonable commercial efforts to
achieve such result. In the event that delivery of Products is not restored to
Buyer's Required Rates within a reasonable period of time, Seller shall use its
best efforts to provide Products from a facility other than Seller's Facility to
satisfy Buyer's Required Rates up to the Contract Volume of Products, and Seller
shall provide such Products at the same cost to Buyer as it would have provided
Products from Seller's Facility; provided, however, that to the extent that the
cost of providing Products from another facility exceeds two times the amount
that Buyer would have paid for Products from Seller's Facility, Seller shall not
be obligated to pay (or bear the cost of) the amount of such excess. If,
however, Buyer shall agree to pay (or bear the cost of) the amount in excess of
two times the cost of providing Products from another facility, Seller shall be
obligated to continue to provide Products from such other location.
(c) In the event that Seller is unable to supply a Product at Buyer's
Required Rates therefor for any reason other than a Force Majeure Event, Buyer
may elect to purchase such Product from another supplier to the extent Seller is
unable to supply such Product up to Buyer's Required Rates therefor. In such
event, Seller will pay Buyer for the difference between the amount that Buyer
would have paid for Products delivered from Seller's Facility and the amount
actually paid for such Products by Buyer, up to two times the amount that Buyer
would have paid for Products delivered from Seller's Facility.
(d) Notwithstanding the other provisions of this Agreement, in the
event that Seller is unable to supply Products at Buyer's Required Rates on a
sustained basis for any reason other than a Force Majeure Event, and such
inability continues for a period of (***) consecutive days, Buyer may elect to
initiate the dispute resolution procedures contained in Article 18 hereof.
Section 7.3 Buyer's Failure to Take; No Force Majeure.
(a) Seller's Facility will be operated and maintained to accommodate
planned shutdowns of the acetic acid unit at Buyer's Plant. To the extent
practicable, Buyer and Seller will cooperate in scheduling planned shutdowns of
their respective plants.
(b) Following Startup, Buyer shall be entitled to a grace period of
eight days (plus such number of additional days during which Buyer and Seller
have jointly scheduled planned shutdowns) during any Contract Year ("Buyer's
Annual Grace Period") for planned shutdowns of its acetic acid unit. During
Buyer's Annual Grace Period, Buyer shall not be obligated to take Products from
Seller and Buyer shall be obligated to pay Seller only the Fixed Facility Fee.
(c) If after Buyer's Annual Grace Period during any Contract Year,
Buyer is unable to take at least (***) of the Carbon Monoxide Contract Volume
for any reason other than a Force Majeure Event of Buyer at a time when Seller
is able to provide at least (***) of the Carbon Monoxide Contract Volume, Buyer
shall pay the full amount of the Fixed Facility Fee and (***) of the Adjustable
Facility Fee. In such event, Buyer shall receive a credit equal to the
difference between the Adjustable Facility Fee paid and the cost of the Carbon
Monoxide actually taken; provided, however, that such credit will only be
applied to Carbon Monoxide taken in excess of the Carbon Monoxide Contract
Volume during the twelve-month period immediately following the period of
reduced purchase of Carbon Monoxide by Buyer.
(d) If Buyer's acetic acid unit is shut down but other operations at
Buyer's Plant require Blend Gas and Hydrogen, Seller will use reasonable efforts
to operate Seller's Facility as efficiently as possible at reduced production
rates to enable Seller's Facility to meet such requirements. Buyer acknowledges
that operating Seller's Facility in order to deliver Products at Buyer's
Required Rates that are less than (***) of the Carbon Monoxide Contract Volume
will be inefficient and Buyer agrees that if Seller so operates Seller's
Facility at Buyer's request, Seller and Buyer shall agree on an appropriate
adjustment to the Feed/Fuel Fee payable by Buyer hereunder for any Month in
which Seller's Facility is so operated to compensate Seller for such
inefficiency; provided, that Seller shall not be required to operate Seller's
Facility at rates below (***) of the Carbon Monoxide Contract Volume if
operating at such rates will result in a violation by Seller of its air
emissions permit with respect to Seller's Facility.
Section 7.4 Seller's Failure to Deliver; Seller's Force Majeure. (a)
If at any time after Startup Seller experiences a Force Majeure Event which
causes a total shutdown of Seller's Facility for a period of time in excess of
the Maximum Shutdown Period, Buyer shall pay (***) of the Fixed Facility Fee and
(***) of the Adjustable Facility Fee for such period, but not to exceed a total
of (***) days during the Initial Term, or a total of (***) days during each of
the First Additional Term and the Second Additional Term. To the extent that
prior to such Seller's Force Majeure Event, Buyer has purchased Carbon Monoxide
in excess of (***) of the Carbon Monoxide Contract Volume during the preceding
twelve months, Buyer may apply all amounts it paid in excess of (***) as a
credit against the Adjustable Facility Fee, thus reducing the payments required
from Buyer during Seller's Force Majeure Event. Buyer may
also apply such credit to payments for Carbon Monoxide after the termination of
a Seller's Force Majeure Event until such credit has been fully utilized.
(b) In the event of partial deliveries by Seller during a period in
which Seller's Force Majeure Event has occurred and is continuing, the period of
the Force Majeure Event shall be prorated in calculating the number of days of
Seller's Force Majeure Event and the amount of credit that Buyer may apply in
the manner set forth in Section 7.4(a) shall also be prorated.
(c) If the ▇▇▇▇ ▇▇▇▇▇▇'▇ Facility is shut down for Seller's Force
Majeure Events exceeds (***) days during the Initial Term ((***) days in the
case of each of the First Additional Term and the Second Additional Term), but
is less than (***) days ((***) days in the case of each of the First Additional
Term and the Second Additional Term), Buyer shall pay (***) of the Fixed
Facility Fee and (***) of the Adjustable Facility Fee for such period; provided,
however, that Buyer's obligation to pay (***) each of the Fixed Facility Fee and
the Adjustable Facility Fee shall be reduced by purchases of Carbon Monoxide in
excess of (***) of the Carbon Monoxide Contract Volume during the twelve months
preceding each Seller's Force Majeure Event and at any time during the remainder
of the Term, in order to reduce the amount that Buyer will have paid during a
Seller's Force Majeure Event to zero.
(d) If a Seller's Force Majeure Event causes a total shutdown of
Seller's Facility for a period in excess of (***) consecutive days, Seller will
use its best efforts to supply Products (other than Steam) to Buyer from a
source other than Seller's Facility; provided, however, that if the cost to
Seller of supplying such Products is greater than the price Buyer would have
paid for such Products had they been produced in Seller's Facility, Seller shall
only be required to pay the difference between the cost to Buyer of Products
supplied from Seller's Facility and Products supplied from elsewhere up to a
limit of (***) times the purchase price Buyer would have paid for the Products
as specified in Section 8.1.
If a Seller's Force Majeure Event causes a total shutdown of Seller's
Facility for a period in excess of (***) consecutive days, it is acknowledged
that Buyer may purchase Products (other than Steam) from third parties in order
to operate the oxoalcohol, acetic acid and other units at Buyer's Plant. If
Buyer so purchases any of such Products from a third party, Seller will
reimburse Buyer for the amount paid by Buyer in excess of the price that would
have been charged to Buyer for such Products supplied from Seller's Facility not
to exceed (***) the purchase price Buyer would have paid for such Products
hereof as specified in Section 8.1. Nothing herein shall be construed to
prohibit or restrict Buyer, in the event that Seller is unable to supply
Products at any time for any reason, from obtaining Products from
third parties to replace Products that Seller has failed or is unable to deliver
hereunder.
Section 7.5 Buyer's Failure to Take; Buyer's Force Majeure. If after
the expiration of Buyer's Annual Grace Period during any Contract Year as
specified in Section 7.3(b), Buyer does not purchase at least (***) of the
Carbon Monoxide Contract Volume as a result of a Force Majeure Event, Buyer
shall be obligated to pay the Fixed Facility Fee and (***) of the Adjustable
Facility Fee until such time as Buyer resumes purchasing at least (***) of the
Carbon Monoxide Contract Volume; provided, however, that such amounts shall be
credited to the account of Buyer and Buyer may apply such credit as payment for
purchases of Carbon Monoxide from Seller after July 31, 2016. In order to
utilize such credit against purchases of Products after July 31, 2016, Buyer
shall have the right to extend this Agreement on its then existing terms and
conditions for the amount of time necessary to fully utilize its credit, not to
exceed (***). If Buyer has credit remaining after the end of such twelve-month
extension, Seller must elect to either agree with Buyer to further extend the
Agreement to allow Buyer to fully utilize its credit, or to purchase the
remaining credit from Buyer. In the event Buyer discontinues its supply of any
utility to Seller as provided in Section 12.6 of the Utilities Agreement, the
Adjustable Facility Fee and the Feed/Fuel Fee shall be increased to offset any
costs Seller may incur as a result of such discontinuance, and in the event such
discontinuance causes any interruption in the operation of Seller's Facility,
such interruption shall be deemed to be a Force Majeure Event of Buyer.
Section 7.6 Mandatory Shut Down. In addition to the other provisions
on shutdowns contained in this Agreement, Seller agrees to shut down Seller's
Facility at any time that Buyer shuts down its acetic acid unit; provided,
however, that if Seller's Facility does not require any maintenance at the time
of such shutdown, Buyer will pay the Fixed Facility Fee and (***) of the
Adjustable Facility Fee during such shutdown, unless and to the extent that the
period of such shutdown is included in Buyer's Annual Grace Period.
ARTICLE 8 - PRICING AND PAYMENT
Section 8.1 Purchase Price for Products. The purchase price for all
Products purchased hereunder shall be the sum of the following:
(a) the Fixed Facility Fee;
(b) the Adjustable Facility Fee;
(c) the Feed/Fuel Fee;
(d) the Steam Fee;
(e) any charges for Supplemental Hydrogen as provided in
Section 8.4; and
(f) the amount of any applicable sales, use or other taxes.
Section 8.2 Fixed Facility Fee. In accordance with the procedures
established in Section 8.6, Buyer shall pay to Seller for each Month during the
Term, beginning with the Month in which the Startup occurs, a Fixed Facility Fee
in the amount of (***). The Fixed Facility Fee for the Month in which Startup
occurs shall be prorated in the event Startup occurs on a date other than the
first day of such Month. Except as otherwise provided in Article 7, Buyer shall
be obligated to pay the Fixed Facility Fee to Seller even if Buyer has no
requirements for Carbon Monoxide, Blend Gas or Hydrogen.
Section 8.3 Adjustable Facility Fee; Feed/Fuel and Steam Fees. As
promptly as possible after the end of each Month, Seller will read the Carbon
Monoxide Totalizer, the Blend Gas Totalizer, the Hydrogen Totalizer and the
Steam Totalizer to determine the volumes of Carbon Monoxide, Blend Gas, Hydrogen
and Steam delivered to Buyer from Seller's Facility during such Month. Based
upon such readings, Seller will invoice Buyer for and Buyer will pay to Seller
in accordance with the procedure established in Section 8.6 the following fees:
(i) the Adjustable Facility Fee, the Feed/Fuel Fee and the Steam Fee, calculated
in the manner prescribed in Exhibit A attached hereto and made a part hereof, in
each case as adjusted as provided in Exhibit A, and (ii) the amount of any
applicable sales, use or other excise taxes. In the event that the readings for
any Month show that the volume of Carbon Monoxide delivered to Buyer from
Seller's Facility during such Month is less than or is in excess of the Carbon
Monoxide Contract Volume, the Adjustable Facility Fee and the Feed/Fuel Fee
shall be adjusted as provided in Exhibit A.
Section 8.4 Supplemental Hydrogen. In the event Seller delivers
volumes of Supplemental Hydrogen to Buyer, Buyer shall pay Seller for such
volumes of Supplemental Hydrogen in accordance with the following formula:
(***)
where:
(***).
Section 8.5 Payment for Supplemental Hydrogen. As promptly as
possible after the end of each Month Seller will read the Hydrogen Totalizer to
determine the volume of Supplemental Hydrogen delivered to Buyer during such
Month. Based upon such readings, Seller will invoice Buyer and Buyer will pay
Seller for such volume a charge as provided in Section 8.6.
Section 8.6 Terms of Payment. (a) Terms of payment will be (***)
following Buyer's receipt of invoice. In the event Buyer is late in the making
of any payment hereunder, Buyer shall pay to Seller a late payment charge
against the unpaid portion of the invoiced amount equal to the lesser of (i) a
rate of (***) per annum or (ii) the maximum rate permitted by law of the unpaid
balance for each Month or partial Month that said invoice remains unpaid after
the
above-mentioned due date. Such interest shall be in addition to any other
rights of Seller arising as a result of Buyer's failure to make such payment or
part thereof within the time specified. Any and all payments to Seller hereunder
shall be made by Buyer to a location and/or account designated in writing by
Seller sufficiently in advance of the payment date to permit such payment, and
Buyer shall acknowledge such notice in writing.
(b) If Buyer has reason to dispute the accuracy of any invoice
submitted to it by Seller, Buyer will pay the part of the invoice that is not
disputed in accordance with the provisions of this Article 8 and, after such
dispute has been resolved, Buyer will pay the balance due to Seller, or Seller
will refund any amount due to Buyer, within (***) of the receipt of a
replacement invoice.
(c) Seller shall maintain business and accounting records and
production data in accordance with usual and customary practices and standards
in the chemical industry in respect of all matters referred to in this
Agreement. Subject to the limitations contained in Section 19.4, Seller shall
provide Buyer access to such records and data pursuant to the provisions of
Section 19.1 and 22.2 hereof.
(d) In the event that any invoice submitted by Seller to Buyer shall
contain terms and conditions that are inconsistent with this Agreement, the
terms of this Agreement shall control.
ARTICLE 9 - TAXES
If at any time during the Term, any governmental authority imposes a
tax (excluding federal income tax and state franchise tax) which increases
Seller's costs incurred in the production, sale or delivery of any Product to
Buyer hereunder, or if, due to a rate change, or other action of a governmental
authority, there is at any time during the term of this Agreement an increase in
any such tax presently existing, then Buyer and Seller will agree on an
appropriate adjustment to the Adjustable Facility Fee to keep Seller whole.
ARTICLE 10 - FORCE MAJEURE
Section 10.1 Force Majeure Events. (a) In the event either party is
rendered unable, wholly or in part, by a Force Majeure Event to perform its
obligations under this Agreement (other than an obligation to pay monies when
due), it is agreed that on such party promptly giving notice and reasonably full
particulars of such Force Majeure Event in writing in accordance with Section
10.3 to the other party, then the obligations of the party giving such notice,
so far as they are affected by such Force Majeure Event, shall be suspended
during the continuance of any inability so caused, but for no longer period, and
such cause shall so far as possible be remedied with all reasonable dispatch.
(b) The term "Force Majeure Event," as used in this Agreement, shall
mean any act of God, strikes, lockouts or other
industrial disturbances, acts of the public enemy, wars, blockades, embargoes,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
storms, floods, high water, washouts, arrests and restraints of government and
people, civil disturbances, explosions, breakage or accident to machinery,
equipment, lines of pipe or property, freezing of ▇▇▇▇▇, machines, equipment,
lines of pipe, or property, partial or entire extraordinary failure of any
machine, equipment, lines of pipe or other property, the occurrence of any
emission, discharge, release or threatened release of Hazardous Substances (as
that term is defined in the Ground Lease), the inability of Seller's Facility to
deliver Products (or any one of them) at 100% of Buyer's Required Rates because
of any remediation required to be done in, on, about or under the Facility Site
as provided in Section 5.8 of the Ground Lease (which inability shall be deemed
to be a Force Majeure Event of Buyer), and any other causes, whether of the kind
herein enumerated or otherwise, not reasonably within the control of the party
claiming suspension.
(c) Notwithstanding the provisions of this Section 10.1 the failure
by either party to perform any of its obligations under this Agreement shall be
deemed not to have been caused by circumstances reasonably outside its control
if such failure results from breakage or accident to machinery, equipment, lines
of pipe or other property or the partial or entire extraordinary failure thereof
or the necessity to make repairs or alterations thereto which result from (i)
normal wear and tear which would be reasonably anticipated by a reasonably
prudent operator or in circumstances where a reasonably prudent operator would
have standby equipment or spare parts or (ii) the lack of the proper operation,
maintenance, quality control, design,engineering and/or procurement of such
machinery, equipment, lines of pipe or other property.
Section 10.2 Settlement of Strikes. It is understood and agreed that
the settlement of strikes or lockouts shall be entirely within the discretion of
the party having the difficulty, and that the above requirement that any Force
Majeure Event shall be remedied with all reasonable dispatch shall not require
the settlement of strikes or lockouts by acceding to the demands of the opposing
party when such course is inadvisable in the discretion of the party having the
difficulty.
Section 10.3 Notice of Force Majeure. As soon as practicable after
occurrence of any Force Majeure Event, the party claiming force majeure shall
notify the other party in writing of the occurrence and nature of such Force
Majeure Event describing it in reasonable detail and, to the extent possible,
inform the other party of the suspected cause and the expected duration of the
Force Majeure Event and the performance to be affected by the suspension or
curtailment under this Agreement. After the termination of any Force Majeure
Event, as soon as practicable, the party claiming force majeure shall notify the
other party in writing
of the termination of such Force Majeure Event and its actual cause and
duration.
ARTICLE 11 - LIMITATION OF LIABILITY
Section 11.1 Acknowledgement of Hazards. Each party acknowledges that
there are hazards associated with the storage, use and handling of Carbon
Monoxide, Blend Gas, Hydrogen and Steam and each party agrees that its personnel
concerned therewith are aware of such hazards. Each party shall be responsible
for complying with all relevant reporting obligations under all laws applicable
thereto as the result of the presence at Buyer's Plant or at Seller's Facility,
as the case may be, of Carbon Monoxide, Blend Gas, Hydrogen and Steam supplied
under this Agreement, including but not limited to the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11049 ("EPCRA,"
also commonly known as Title III of the Superfund Amendments and Reauthorization
Act of 1986, ▇▇▇▇ Title III), as same may be amended. Each party to this
Agreement shall be responsible for warning and protecting its respective
employees, independent contractors and others exposed to the hazards posed by
such party's storage, use and handling of Carbon Monoxide, Blend Gas, Hydrogen
and Steam. As between Buyer and Seller, Buyer assumes all responsibility for the
suitability and the results of using Carbon Monoxide, Blend Gas, Hydrogen and
Steam delivered to Buyer hereunder alone or in combination with other articles
or substances and in any manufacturing or other process or procedures.
Section 11.2 No Consequential Damages. Neither party to this
Agreement shall be liable to the other party to this Agreement for any
incidental, consequential, indirect, or special damages. Seller will provide to
Buyer copies of Seller's documents containing Seller's safety and health
information pertaining to Carbon Monoxide, Blend Gas, Hydrogen and Steam
delivered hereunder including, without limitation, Seller's Material Safety Data
Sheet(s), and Buyer will incorporate such information into Buyer's safety
program.
ARTICLE 12 - SELLER'S PRODUCT WARRANTIES; DISCLAIMERS
Seller represents and warrants to, and covenants and agrees with,
Buyer that the Carbon Monoxide, Blend Gas, Hydrogen and Steam delivered
hereunder shall conform to the specifications set forth in Exhibit C. Any Carbon
Monoxide, Blend Gas, Hydrogen or Steam which does not conform to the foregoing
specifications may be rejected by Buyer by providing verbal notice to Seller's
Facility within two (2) hours and subsequent written confirmation within five
(5) days thereafter, no charge will be made for any Carbon Monoxide, Blend Gas,
Hydrogen or Steam so rejected and Buyer shall have no obligation to return any
Product which does not conform to specifications. Seller shall have the right to
confirm Buyer's data supporting such rejection. Since Seller will furnish Buyer
with
an analytical/isolation system that will be installed on Buyer's Pipelines,
and will have the capability of testing whether Carbon Monoxide, Blend Gas or
Hydrogen delivered hereunder meets the specifications set forth in Exhibit C,
and which will be maintained, operated and monitored by Buyer, and Buyer may
obtain other devices that have the capability of testing whether Carbon
Monoxide, Blend Gas or Hydrogen delivered hereunder meets the specifications set
forth on Exhibit C, no claim of any kind with respect to the conformance of
Carbon Monoxide, Blend Gas, Hydrogen or Steam to such specifications, whether or
not based on contract, warranty, negligence, indemnity, strict liability or
otherwise, shall be greater than the price of the quantity of the nonconforming
Product; provided, however, in the event (i) of Seller's negligence or willful
misconduct or (ii) the analytical/isolation systems at Seller's Facility related
to the delivery of Blend Gas, Carbon Monoxide or Hydrogen are damaged or
disabled by any intentional act of Seller, and such negligence, willful
misconduct or intentional act results in the delivery hereunder of Blend Gas,
Carbon Monoxide or Hydrogen that fails to meet such specifications and damages
any catalyst within Buyer's Plant, Seller shall be responsible to Buyer for any
direct damages caused to any catalyst within Buyer's Plant, including any costs
and expenses incurred by Buyer to repair or replace the damaged catalyst, to the
extent such negligence, willful misconduct or intentional act of Seller causes
such damages up to a maximum of (***) for each such claim; and provided further,
that said (***) limitation shall be adjusted semi-annually during the Term
effective as of January 1 and July 1 of each year to reflect changes in the
average Monthly Producer Price Index - Industrial Commodities (where the base is
1982=100) published by the United States Department of Labor, Bureau of Labor
Statistics, in accordance with the following formula:
(***)
Where:
(***)
If the Producer Price Index-Industrial Commodities index is revised and
published on some base other than 1982=100, the value thereof used in the
formula in this Article 12 will be adjusted to the new base in accordance with
such conversion schedule or factor as may be supplied by the publisher of the
index. Should the Producer Price Index-Industrial Commodities index cease to
exist, Seller and Buyer shall jointly select a new index which is based on
similar information. The foregoing shall constitute Buyer's exclusive remedy,
and Seller's sole obligation, hereunder with respect to each such claim. THERE
ARE NO EXPRESS WARRANTIES BY SELLER REGARDING THE CONFORMITY OF THE PRODUCTS TO
THE SPECIFICATIONS
OTHER THAN THOSE SPECIFIED IN THIS ARTICLE 12. NO WARRANTIES BY SELLER (OTHER
THAN WARRANTIES OF TITLE AND AGAINST INFRINGEMENT AS PROVIDED IN THE UNIFORM
COMMERCIAL CODE) SHALL BE IMPLIED OR OTHERWISE CREATED UNDER THE UNIFORM
COMMERCIAL CODE WITH RESPECT TO SUCH PRODUCTS, INCLUDING BUT NOT LIMITED TO THE
WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
ARTICLE 13 - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 13.1 Organization, Good Standing and Corporate Power. Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, is duly qualified as a foreign corporation in the
State of Texas, and has all requisite corporate power and authority to carry on
its business as presently conducted, to enter into this Agreement and perform
its obligations hereunder.
Section 13.2 Authority Relative to Agreement. The execution, delivery
and performance by Buyer of this Agreement have been duly and effectively
authorized by all necessary corporate action.
This Agreement has been duly executed and delivered by Buyer and is a
legal, valid and binding obligation of Buyer enforceable in accordance with its
terms, except insofar as enforcement may be limited by (i) bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally, and (ii) general principles of
equity.
Section 13.3 No Conflict with Other Instruments or Proceedings.
Neither the execution and delivery of this Agreement, nor the performance or
compliance with the terms and conditions hereof conflict with, or will result in
a breach by Buyer of, or constitute a default under, or result in the creation
of any lien, charge or encumbrance upon, any asset of Buyer pursuant to any of
the terms, conditions or provisions of (i) the Certificate of Incorporation or
Bylaws of Buyer, (ii) any material mortgage, deed of trust, lease, contract,
agreement or other instrument to which Buyer is a party or by which Buyer may be
bound or affected, or (iii) any writ, order, judgment, decree, statute,
ordinance, regulation or any other restriction of any kind or character, to
which Buyer is subject, or by which Buyer may be bound or affected.
Section 13.4 No Litigation or Proceedings. As of the date hereof,
there are no actions, suits, investigations or proceedings pending or, to
Buyer's knowledge, threatened against Buyer at law or in equity or before or by
any federal, state, municipal or other governmental or non-governmental
department, commission, board, bureau, agency or instrumentality seeking to
enjoin, restrain or otherwise prevent the execution and delivery of this
Agreement by Buyer.
ARTICLE 14 - REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
Section 14.1 Organization, Good Standing and Corporate Power. Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, is duly qualified as a foreign corporation in the
State of Texas, and has all requisite corporate power and authority to carry on
its business as presently conducted, to enter into this Agreement and perform
its obligations hereunder.
Section 14.2 Authority Relative to Agreement. The execution, delivery
and performance by Seller of this Agreement have been duly and effectively
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by Seller and is a legal, valid and binding obligation of
Seller enforceable in accordance with its terms, except insofar as enforcement
may be limited by (i) bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights generally, and
(ii) general principles of equity.
Section 14.3 No Conflict with Other Instruments or Proceedings.
Neither the execution and delivery of this Agreement, nor the performance or
compliance with the terms and conditions hereof conflict with, or will result in
a breach by Seller of, or constitute a default under, or result in the creation
of any lien, charge or encumbrance upon, any asset of Seller pursuant to any of
the terms conditions or provisions of (i) the Certificate of Incorporation or
Bylaws of Seller, (ii) any material mortgage, deed of trust, lease, contract,
agreement or other instrument to which Seller is a party or by which Seller may
be bound or affected, or (iii) any writ, order, judgment, decree, statute,
ordinance, regulation or any other restriction of any kind or character, to
which Buyer is subject, or by which Seller may be bound or affected.
Section 14.4 No Litigation or Proceedings. As of the date hereof,
there are no actions, suits, investigations or proceedings pending or, to
Seller's knowledge, threatened against Seller at law or in equity or before or
by any federal, state, municipal or other governmental or non-governmental
department, commission, board, bureau, agency or instrumentality seeking to
enjoin, restrain or otherwise prevent the execution and delivery of this
Agreement by Buyer.
Section 14.5 Compliance with Laws. Seller represents that Seller's
Facility will be operated in compliance with all applicable laws, and that the
Carbon Monoxide, Blend Gas, Hydrogen and Steam produced by Seller's Facility
will be produced in compliance with all applicable laws, including without
limitation the Fair Labor Standards Act of 1938, as amended.
Section 14.6 Proprietary Rights. Seller has, and after Startup and
throughout the Term will continue to have, full and sufficient rights to use and
practice all technology, proprietary information, know-how and patented ideas,
designs and inventions
required for the design, construction and operation of Seller's Facility (the
"Proprietary Rights"). None of the ownership, license, access to, use or
practice of the Proprietary Rights by Seller at Seller's Facility do or will
infringe on the rights of any third party and all Proprietary Rights are valid
and enforceable.
ARTICLE 15 - METERING EQUIPMENT
Section 15.1 Meter Testing. Seller, at its expense, will test and
calibrate the Blend Gas Totalizer, the Carbon Monoxide Totalizer, the Hydrogen
Totalizer and the Steam Totalizer (hereinafter collectively called the "Metering
Equipment") annually, and will perform a verification of pressure and transducer
calibration semi-annually. The Metering Equipment shall be calibrated to
Compressed Gas Association Standards. Seller will provide Buyer with written
notice so that Buyer may have its representatives present during such
calibrations and tests. Readings will be corrected to standard cubic feet
measured at 60 degrees Fahrenheit and 14.696 pounds per square inch absolute
pressure. At any time requested by Buyer, Seller will test the Metering
Equipment in the presence of Buyer's representatives and, if the Metering
Equipment is found on such test to be accurate, Buyer will pay Seller the cost
and expense of such test, but, if found on such test to be inaccurate, then the
cost and expense of such test and of correcting the inaccuracy in the Metering
Equipment will be borne by Seller. If, on any test or calibration the Metering
Equipment is found to be inaccurate, a correcting invoice will be tendered to
cover the actual amount of Carbon Monoxide, Blend Gas, Hydrogen, Supplemental
Hydrogen and Steam delivered to Buyer through the Metering Equipment for the
thirty (30) day period prior to the date on which such calibration or test was
made, or the period from the date such Metering Equipment was last tested and
considered accurate, whichever period is shorter. If, on any test of the
Metering Equipment, its accuracy is not in excess of two percent (2%) either
fast or slow, the Metering Equipment will be considered accurate.
ARTICLE 15 - Data Transmission. Seller will provide equipment, hardware and a
connection to the battery limits of Seller's Facility and Buyer will provide
equipment, hardware and a connection so as to permit the continuous transmission
of digital data relating to Product and utility metering by Seller, and the
reception thereof by Buyer. Buyer will only have access to Product and utility
metering information through the connection. Such access will be limited to
"read only" capability and Buyer will have no ability to control the operation
of Seller's Facility.
ARTICLE 16 - (***)
ARTICLE 17 - EXCESS PRODUCTION
In the event that excess Carbon Monoxide or Hydrogen is produced or
otherwise becomes available as the result of the production requirements of
Buyer's Plant or Seller's Facility, Buyer will, if it is economically feasible,
use its reasonable efforts to burn the excess Carbon Monoxide or Hydrogen, as
the case may be, in the off-gas fuel system of Buyer's Plant. To the extent, if
any, that Buyer is successful in so burning such excess Carbon Monoxide or
Hydrogen, Buyer will credit Seller for Buyer's avoided cost, if any, of fuel
that Buyer would have otherwise purchased. Buyer's determination of its avoided
cost shall be final and binding on Seller. During the Term Seller will not,
without the prior written consent of Buyer, sell or deliver any Carbon Monoxide
from Seller's Facility to any other person or entity.
ARTICLE 18 - EVENTS OF DEFAULT; DISPUTE RESOLUTION
Section 18.1 Events of Default. Each of the following shall be deemed
an "Event of Default" by the party to whom such event is applicable under this
Agreement:
(a) if either party shall fail to perform or observe any of the
terms, covenants, conditions, agreements or obligations of this Agreement
required to be observed and performed in this Agreement by such party, and such
failure shall continue for a period of thirty (30) days after notice thereof has
been delivered to such party; or
(b) if either party or the Guarantor shall make a general assignment
for the benefit of its creditors, or shall file a voluntary petition in
bankruptcy, or shall be adjudicated bankrupt or insolvent, or shall file any
petition or answer seeking, consenting to, or acquiescing in reorganization,
arrangement, adjustment, composition, liquidation, dissolution or similar relief
under any present or future statute, law or regulation, or shall file an answer
admitting or failing to deny the material allegations of a petition against it
for any such relief, or shall admit in writing its inability to pay its debts as
they mature; or
(c) if any proceeding against either party or the Guarantor seeking
any of the relief mentioned in clause (b) of this Article 18 shall have been
commenced and shall not have been stayed or dismissed within ninety (90) days
after commencement; or
(d) if a trustee, receiver or liquidator of either party or the
Guarantor or of any substantial part of the properties or assets of such party
or the Guarantor shall be appointed with the consent or acquiescence of such
party or the Guarantor, or if any such appointment, if not so consented to or
acquiesced in, shall remain unvacated or unstayed for a period of ninety (90)
days; or
(e) if either party or the Guarantor shall be liquidated or
dissolved, or shall begin proceedings toward such liquidation or dissolution; or
(f) if any of the material representations or
warranties made by either party in this Agreement proves to be untrue in any
material respect; or
(g) A default or Event of Default by either party occurs under the
Utilities Agreement or the Ground Lease Agreement, which default or Event of
Default is not cured within any applicable cure period.
Section 18.2 Dispute Resolution Meeting. In the event that a party to
this Agreement has reasonable grounds to believe that an Event of Default has
occurred and is continuing, or that its expectation of receiving due performance
under this Agreement may be impaired, such party will promptly notify the other
party in writing of the substance of its belief and, as appropriate, declare
that an Event of Default has occurred or demand adequate assurance of due
performance. The party receiving such notice and/or demand must respond in
writing within twenty (20) days of receipt of such notice and provide (i)
evidence of cure of and/or its ongoing best efforts to cure the condition
specified, (ii) an explanation of why it believes that its performance is in
accordance with the terms and conditions of this Agreement, and/or (iii)
adequate assurance of due performance, as required by the claiming party's
notice. Failure to respond within said twenty (20) day period shall be deemed an
admission that an Event of Default has occurred or that due performance is
impaired. The responding party shall also include in its written response three
(3) dates, all of which must be within thirty (30) days following the date of
such response, for a meeting to resolve the dispute and/or evaluate the adequacy
of the assurance of due performance. The party declaring an Event of Default or
seeking adequate assurance of performance will then select one (1) of the three
(3) dates, and a dispute resolution meeting will be held on such date. Either
party shall have the right to demand that individuals representing each of the
companies who have the authority to execute this Agreement, or amendments
hereto, or waivers hereof, and to authorize or agree to curative action, be in
attendance at such dispute resolution meeting.
Section 18.3 Failure to Resolve Dispute; Arbitration. (a) If the
parties cannot, in good faith discussions, resolve their dispute during the
dispute resolution required by Section 18.2, then either party may given notice
of a request for arbitration and subject to the provisions of Section 18.4 such
controversy shall be referred to and resolved by arbitration under the most
current version of the Commercial Arbitration Rules of the American Arbitration
Association. The board of arbitrators shall be composed of three arbitrators.
Each party shall choose an arbitrator and the third shall be chosen by the two
so chosen. If either party to the controversy fails to choose an arbitrator
within thirty (30) days after notice of commencement of arbitration, or if the
two arbitrators fail to choose a third arbitrator within thirty (30) days after
their appointment, the American Arbitration Association shall, upon the request
of either party, appoint the arbitrator or arbitrators to constitute or complete
the board. The place of
arbitration shall be Houston, Texas and the arbitration shall be held within
thirty (30) days after the appointment of the arbitration board. The arbitration
award shall be final and binding upon the parties to such arbitration and
judgment thereon may be entered in any court having jurisdiction.
(b) In connection with any such arbitration proceeding, the board of
arbitrators shall have the right to grant all remedies that such board deems
appropriate including, without limitation, monetary damages and/or the
termination of this Agreement, the Ground Lease and the Utilities Agreement. The
board of arbitrators shall also have the right to require the losing party to
reimburse the prevailing party for all reasonable attorneys' fees and costs
incurred in connection with all such proceedings.
Section 18.4 Right to Terminate Agreement. Notwithstanding the
provisions of Section 18.1 and 18.2, either party may decline to pursue
arbitration and elect to terminate this Agreement if any of Events of Default
specified in Section 8.1(b)-(e) shall have occurred.
ARTICLE 19 - ACCESS TO INFORMATION
Section 19.1 Access to Information. Upon written request by Buyer
from time to time, but subject to Section 19.4, Seller shall provide to Buyer,
its attorneys, accountants and other representatives, at reasonable times during
normal business hours, access to Seller's books, records and accounts in
connection with the operation of Seller's Facility as it relates to the
performance of Seller's obligations under this Agreement. Subject to the
provisions of Section 19.4, Buyer shall thereupon have the right to make copies
of and abstracts from such books, records and accounts, at Buyer's expense,
which copies may be removed from Seller's premises and retained by Buyer. All
information disclosed to Buyer pursuant to this Agreement shall be subject to
the confidentiality provisions of Section 22.2 hereof.
Section 19.2 Access to Seller's Facility. Subject to Section 19.4,
Seller agrees to permit representatives of Buyer, at Buyer's expense, to have
access to Seller's Facility at reasonable times and on reasonable notice to
obtain information relating to the present or proposed operations of Seller's
Facility so long as such access does not materially disrupt the operation of
Seller's Facility. Buyer will pay all costs incurred by Buyer relating to
Buyer's exercise of its rights under this Section 19.2.
Section 19.3 Access to Seller's Personnel. Subject to Section 19.4,
Seller shall make its employees and other representatives available to Buyer at
reasonable times on reasonable notice to discuss the present or proposed
operations of Seller's Facility so long as such availability does not materially
disrupt the operation of Seller's Facility.
Section 19.4 Limitations on Disclosure. Seller has represented to
Buyer that certain of the Proprietary Rights relating to Seller's
Facility have been provided to Seller by Texaco, Inc. pursuant to the terms of a
license agreement that prohibits Seller from disclosing the information provided
by Texaco, Inc. (the "Texaco Information") to Buyer. Nothing in this Agreement
shall be construed as requiring Seller to provide any of the Texaco Information
to Buyer.
ARTICLE 20 - CAPACITY OF SELLER'S FACILITY
Section 20.1 Initial Capacity. Seller represents and warrants to
Buyer that, at the time of Startup, the maximum instantaneous capacity of
Seller's Facility to produce Products shall be at least (***) greater than the
Contract Volume of Products. Buyer acknowledges that Seller has initially
configured Seller's Facility to operate efficiently at the Contract Volume of
Products and has been designed to produce up to (***) of the Contract Volume of
Products under certain ambient temperatures and operating conditions.
Section 20.2 Capacity Expansion. Seller represents and warrants to
Buyer that, at the time of Startup, the maximum instantaneous capacity of
Seller's Facility to produce Products may be increased to an ultimate
instantaneous capacity of at least (***) of the Contract Volume of Products.
Seller agrees that, upon not less than (***) advance written notice from Buyer,
Seller will at its sole cost and expense take the actions necessary to expand
the maximum instantaneous capacity of Seller's Facility to at least (***) of the
Contract Volume of Products (or such greater capacity as may be mutually
agreed). In exchange for such increase in the maximum instantaneous capacity of
Seller's Facility, Buyer agrees to increase the Fixed Fee to (***) (or such
lesser amount as may be mutually agreed). The parties acknowledge that such
capacity expansion will result in reductions in the usage of Natural Gas,
electricity and cooling water supplied by Buyer to Seller pursuant to the
Utilities Agreement at production rates above the Contract Volume of Products,
and may result in increases in the usage of Natural Gas, electricity and cooling
water supplied by Buyer to Seller pursuant to the Utilities Agreement at
production rates below the Contract Volume of Products.
ARTICLE 21 - INITIAL AND ADDITIONAL TERMS
Section 21.1 Initial Term. The term of this Agreement shall be for a
period commencing on the date of the execution of this Agreement and ending at
midnight on (***), unless earlier terminated as provided herein ("Initial
Term"); provided, that if either or both Buyer or Seller exercises its option to
extend this Agreement as provided in Section 7.5, the Initial Term shall include
the period of any such extensions.
Section 21.2 Additional Terms. Subject to the terms of this Section
21.2, Buyer shall have the option to extend this Agreement beyond the Initial
Term for up to two (2) additional
terms of five (5) years each. If this Agreement has not been terminated prior to
the end of the Initial Term, the option to extend this Agreement beyond the
Initial Term for an additional five (5) years shall be deemed to have been
exercised by Buyer, and the Initial Term shall be automatically extended for a
period of five (5) years after the end of the Initial Term (the "First
Additional Term"), unless Buyer shall have given Seller notice no later than one
(1) year prior to the expiration of the Initial Term that Buyer has elected not
to extend the Initial Term. If this Agreement has not been terminated prior to
the end of the First Additional Term, the option to extend this Agreement beyond
the First Additional Term for an additional five (5) year period shall be deemed
to have been exercised by Buyer, and the First Additional Term shall be
automatically extended for a period of five (5) years after the end of the First
Additional Term (the "Second Additional Term"), unless Buyer shall have given
Seller notice no later than one (1) year prior to the expiration of the First
Additional Term that Buyer has elected not to extend the First Additional Term.
The Initial Term, the First Additional Term (if any) and the Second Additional
Term (if any) are referred to in this Agreement as the "Term."
ARTICLE 22 - MISCELLANEOUS
Section 22.1 Assignment. (a) This Agreement shall inure to the
benefit of and bind the respective successors and permitted assigns of the
parties hereto. Except as expressly permitted hereby, neither party may assign
this Agreement or its rights under this Agreement, including its rights to
receive payments hereunder, to any other party without the consent of the other.
(b) Either party may assign this Agreement and all of its rights and
obligations hereunder to any subsidiary, Affiliate, partnership or venture, in
which such party (or its parent company) holds an interest of 50% or more.
(c) It is agreed that (i) the sale, transfer or conveyance by Buyer
or Seller of all or substantially all of its assets, or (ii) the merger,
consolidation, reorganization or recapitalization of Buyer or Seller with any
third party, or (iii) the change of control of Buyer or Seller, whether effected
by stock purchase, statutory share exchange, or otherwise, shall not constitute
an assignment of this Agreement by Buyer or Seller, but Buyer or Seller (as the
case may be) shall, as a condition precedent to the closing of any sale,
transfer or conveyance referred to in clause (i) above, require the purchaser or
transferee to assume all rights and obligations of Buyer or Seller (as the case
may be) under this Agreement, the Ground Lease and the Utilities Agreement. In
the event that Buyer sells or otherwise transfers or conveys all or
substantially all of the assets constituting Buyer's Plant, such sale, transfer
or conveyance shall not constitute an assignment of this Agreement by Buyer, but
Buyer shall, as a condition precedent to the closing
of such sale, transfer or conveyance, require the purchaser or transferee to
assume all rights and obligations of Buyer under this Agreement, the Ground
Lease and Utilities Agreement. In the event that Seller sells or otherwise
transfers or conveys all or substantially all of the assets constituting
Seller's Facility, such sale, transfer or conveyance shall not constitute an
assignment of this Agreement by Seller, but Seller shall, as a condition to the
closing of such sale, transfer or conveyance, require the purchaser or
transferee to assume all rights and obligations of Seller under this Agreement,
the Ground Lease and Utilities Agreement.
(d) No assignment, transfer or conveyance of this Agreement by either
party shall relieve the assigning party (or Guarantor) of any of its
obligations, liabilities or duties hereunder (or under the Guaranty), unless the
other party hereto shall agree otherwise.
(e) Any assignment of this Agreement by either party shall be
accompanied by the contemporaneous (i) assumption by the assignee of all rights
and obligations of assignor hereunder, and (ii) assignment of the Ground Lease
and the Utilities Agreement.
Section 22.2 Confidentiality. (a) In connection with this Agreement,
the parties hereto have exchanged and will continue to exchange certain
nonpublic, proprietary or confidential information of a technical, business or
financial nature (the "Confidential Information"). In order to facilitate
discussion between Buyer and Seller relating to the design, construction,
operation and maintenance of Seller's Facility and the purchase and sale of
Products pursuant to this Agreement, Buyer and Seller desire to provide each
other with assurances that Confidential Information will not be divulged.
(b) For purposes of this Agreement, Confidential Information shall
consist of this Agreement and all nonpublic, proprietary or confidential
information whether obtained from observation or from materials, information or
data submitted by the other party or from oral or written disclosures, and shall
include, without intent to limit, all plans (including marketing plans,
marketing information, sales information (including sales history and sales
projections), designs, specifications, prices, processes, compositions and the
like related to this Agreement, the Products, the operation of Seller's Facility
or Buyer's Plant, and believed by the disclosing party to be unpublished and the
disclosing party's private information at the time of its disclosure, and all
memoranda, notes or other documents prepared by the receiving party which embody
in whole or in part any of such information. However, the restrictions of this
Section 22.2 shall apply only to written information, drawings and other
tangible information and the like, as described above which are clearly marked
"Confidential" or designated confidential in writing given to the receiving
party orally, designated as confidential orally when revealed and confirmed in
writing within thirty (30) days of disclosure as "Confidential" referencing the
data and type of information
disclosed. All other information whether disclosed in writing, orally or
observed shall be considered as having been disclosed on a nonconfidential
basis.
(c) Each party agrees that it will treat the Confidential Information
of the other party as confidential and will use the same care and caution that
it affords its own proprietary information to protect such Confidential
Information received under this Agreement from disclosure to any third party.
Each party agrees to use the Confidential Information solely and exclusively for
purposes of this Agreement and agrees to disclose the Confidential Information
only to those individuals within its own organization who have a need to receive
the information and who will be bound by nondisclosure agreements with the
receiving party.
(d) The restrictions of this Agreement shall not apply to any
Confidential Information which (i) is now or hereafter becomes available to the
public without a breach by the receiving party of the terms stated in this
Agreement; (ii) is known to or in the possession of the receiving party as
evidenced by documentary material in its possession before disclosure hereunder
and the receiving party is not already obligated to the disclosing party to
maintain it in confidence; (iii) is disclosed to the receiving party by a third
party not under any obligation of secrecy or confidentiality to the disclosing
party at the time of such disclosure; (iv) can be shown by substantial evidence
was independently developed by employees of the receiving party who have not had
access to the Confidential Information of the disclosing party; or (v) the
receiving party is, in the opinion of its counsel, compelled by law to disclose;
provided that in such cases the disclosure will be limited to the minimum to the
extent possible without involving violation of applicable laws and the
disclosing party will be given at least forty-eight (48) hours prior notice of
the disclosure which is to be made.
(e) Unless otherwise agreed to by the parties, each party agrees that
it shall keep all Confidential Information confidential for a period which shall
expire five (5) years after the termination date of this Agreement.
Section 22.3 Applicable Law. This Agreement will be governed by the
laws of the State of Texas.
Section 22.4 Notice. Except as otherwise specifically provided in
this Agreement, all notices, requests, demands, invoices, directions, and other
communications under this Agreement shall be in writing signed by an authorized
representative of the party issuing same and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given or if delivered by facsimile transmission, or on the second day
after mailing if mailed to the party to whom notice is to be given by certified
or registered mail, postage prepaid, return receipt requested, and properly
addressed as follows:
In the case of Seller:
Praxair Hydrogen Supply, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Executive Director
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to:
Praxair Hydrogen Supply, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Facility Manager
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of Buyer:
Sterling Chemicals, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Business Director
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to:
Sterling Chemicals, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change its address for purposes of this Section by giving the
other party notice of its new address in the manner set forth above.
Section 22.5 Waiver. No consent or waiver, express or implied, by a
party, to or of any breach or default by the other party in the performance of
its obligations hereunder, shall be deemed or construed to be a consent or
waiver to or of any other breach or default in the performance by such other
party of the same or any other obligation of such party hereunder. Failure on
the part of any party to complain of any act or failure to act of the other
party or to declare the other party in breach or default irrespective of how
long such failure, breach or default continues, shall not constitute a waiver by
such party of its right hereunder.
Section 22.6 Headings. The headings and titles contained in this
Agreement are for convenience of reference only, and shall not affect the
meaning or interpretation of any provision hereof.
Section 22.7 Entire Agreement. This Agreement, the Ground Lease and
the Utilities Agreement constitute the entire agreement between the parties
hereto regarding the subject matter
thereof and supersede any and all prior agreements regarding the same subject
matter except as expressly provided herein or therein. This Agreement, the
Ground Lease and the Utilities Agreement are part of a single, integrated
transaction, and the provisions thereof shall be construed together in a
consistent manner and any termination of the Ground Lease or the Utilities
Agreement shall effect a termination of this Agreement. Other than the
provisions of the Ground Lease, the Utilities Agreement and the Guaranty, there
are no other promises, representations or warranties affecting this Agreement,
and any other or different terms and conditions appearing in any purchase orders
issued or accepted hereunder shall be deemed null and void.
Section 22.8 Relationship between Parties. The relationship between
Buyer and Seller created pursuant to this Agreement is an independent contractor
relationship and, subject to the terms and conditions of this Agreement, Seller
shall exercise the sole and exclusive right to control the ways, means and
manner of providing the Products to Buyer under this Agreement. Seller shall be
solely responsible for the selection, training, supervision and compensation of
the personnel used by Seller to provide Products to Buyer. This Agreement shall
not be construed as creating a partnership, joint venture, association or other
entity or business organization, or as creating a principal-agent or other
fiduciary relationship between Seller and Buyer.
Section 22.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision, to other persons or circumstances shall not be affected
thereby and shall be enforceable to the greatest extent permitted by law.
Section 22.10 Amendment. This Agreement may be amended only by
written amendment executed by both parties.
Section 22.11 Pronouns and Plurals. Whenever the context may require
any pronoun used in this Agreement shall include the corresponding masculine,
feminine, or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
Section 22.12 Section Numbers. Unless otherwise indicated, references
to section numbers are to sections of this Agreement. IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed as of the date first above
written.
PRAXAIR HYDROGEN SUPPLY, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
Name: ▇. ▇. ▇▇▇▇▇▇▇▇
Title: President
STERLING CHEMICALS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Operating Officer
EXHIBIT A
FEE CALCULATIONS
(***)
EXHIBIT B
TEXAS CITY SYNGAS PLANT
STERLING CHEMICALS SITE (***)
EXHIBIT C
SPECIFICATIONS FOR CARBON MONOXIDE,
BLEND GAS, HYDROGEN AND STEAM
(***)
EXHIBIT D
NATURAL GAS
DESIGN PROPERTIES
(***)
