EXHIBIT 10.2
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Lake River Terminals Site Mediation
Metropolitan Water Reclamation District v. North American Galvanizing &
Coatings, Inc. No. 03-C-0754 (U.S.D.C.N.D. IL)
AGREEMENT IN PRINCIPLE
The parties are the Metropolitan Water Reclamation District of Greater Chicago
(MWRD) and North American Galvanizing and Coatings, Inc. (NAGC). The party
representatives attending the mediation session held January 31, 2007 in
Chicago, IL concerning the above-captioned matter agreed to recommend to their
respective principals and clients the following terms for a settlement.
1. The parties agree that their common objective, expectation and desire is to
enroll the Lake River Terminals Site (Site) into the Illinois Environmental
Protection Agency (Illinois EPA) Voluntary Site Remediation Program (VSRP) (Cf.
35 I.A.C. Part 740), and to fund an investigation, study, remedy design and
report process (the Investigation) as required under the VSRP. The parties agree
to fund an Investigation to delineate the presence and extent of contaminants of
concern at the site and enable identification of what, if any, response action
appears necessary and appropriate at the Site in order to obtain a No Further
Remediation (NFR) determination from Illinois EPA allowing commercial or
industrial reuse of the Site and taking into consideration any semi-volatile
organic compounds (SVOCs), volatile organic compounds (VOCs), pesticides,
herbicides, poly-chlorinated biphenyls (PCBs) or metals that may be present at
the Site.
Funding Commitments
2. Funding Commitment
a) NAGC will contribute fifty percent (50%) of the costs of the Investigation
and enrollment of the Site (including Illinois EPA oversight fees), through and
including the approval or disapproval of a Remediation Action Plan by Illinois
EPA, up to a maximum of $350,000 in funding from NAGC.
b) NAGC has also agreed to fund 50% of the cost of the Remedial Action Work
(Work) required by the approved Site Remedial Action Plan, or by such other Work
as the parties may otherwise in writing hereafter agree upon, subject to a
maximum commitment of $1,000,000;
c) XXXX additionally commits to expend the funds needed to pay for the removal
of the Piping on Parcel 3, as per Paragraph 8 hereof.
3. The parties have had their respective consultants confer and have essentially
agreed on the basic elements of the Initial Minimum Investigation, which
consists of soil and groundwater sampling as delineated in plats and tables
separately initialed by the parties. The view of the consultants is that the
performance of the Initial Minimum Investigation should provide the basis for a
Remedial Investigation Report that is approvable by Illinois EPA. However, it is
possible that the actual investigation may turn up results that require
additional and more investigation, or that the Illinois EPA will not approve the
Remedial Investigation Report.
4. MWRD will have responsibility for contracting out and supervising the
Investigation. NAGC will be kept apprised of the Investigation work and results.
NAGC will have the right to review and consent to any and all reports submitted
to Illinois EPA, including specifically the final Remedial Investigation Report,
Remedial Action Objectives Report, and Site Remedial Action Plan or equivalent
documents under the Illinois VSRP. MWRD will require that the Investigation
contractor prepare a remediation cost estimate and cash flow projection prior to
enrollment and submittal of the Remediation Investigation Report, and will share
that projection with NAGC. Cost overruns for the Investigation and submittal
process in excess of $700,000 ($350,000 from each party) will be the
responsibility of MWRD. Each party will bear its own internal personnel and
administrative costs and expenses for the Investigation, including legal fees,
and such costs shall not count towards the shared Investigation funding.
5. The MWRD reserves the right to decline to enroll the property in the VSRP if
further study, remediation and VSRP costs after performance of the Initial
Minimum Investigation are reasonably anticipated to exceed $2,150,000.
Additionally, within 45 days of a disapproval (if any) by Illinois EPA of the
Remediation Investigation Report, the Remediation Objectives Report or the
Remediation Action Plan (as the case and stage of work may be), MWRD may elect
to reject the NAGC fifty percent Work commitment, provided it has the written
advice of an independent environmental consultant that the cost of the future
work entailed in likely receiving an NFR letter will exceed Two Million Dollars
($ 2,000,000). If MWRD declines or elects to reject as provided in this
Paragraph, the parties shall confer under Paragraph 7 below.
6. If MWRD elects to accept XXXX's fifty percent (50%) commitment to fund the
Work up to a $1,000,000 maximum, MWRD will be responsible for all Work costs in
excess of $2,000,0000 ($1,000,000 from each party). MWRD will have
responsibility for contracting out and supervising the Work. NAGC will be kept
apprised of the progress and results of the Work. MWRD will require that the
Work contractor prepare a remediation cost estimate and cash flow projection, to
be updated at least every six (6) months, and will share those projections with
NAGC upon receipt. MWRD will include NAGC as a Remediation Applicant on
correspondence with Illinois EPA, and will name NAGC as a party to be included
in the releases and protections of a NFR determination from Illinois EPA. Any
cost overruns for the Work in excess of $2,000,000 ($1,000,000 from each party)
will be the responsibility of MWRD. Each party will bear its own internal
personnel and administrative costs and expenses for the Work, including legal
fees, and such costs shall not count towards the shared Work funding.
7. If the projected cost of carrying out the Remedial Action Plan exceeds
$2,000,000, then MWRD may elect to reject the $1,000,000 maximum funding limit
for NAGC. In that event, MWRD shall so notify NAGC. In the event of such
notification: the parties may, but under this agreement are not required to,
negotiate an alternate agreement specifying how they will fund implementation of
the Remedial Action Plan or equivalent document approved by Illinois EPA for the
Site; and absent such an alternate agreement, neither party is required under
this agreement to implement the Remedial Action Plan or equivalent document
approved by Illinois EPA for the Site, and also absent such an alternate refiled
without any prejudice whatsoever to any party on account of this Agreement, the
passage of time thereunder, or otherwise, nunc pro tunc. Removal of Buildings
and Other Structures Prior to Remediation agreement, the litigation may be
reactivated or refiled without any prejudice whatsoever to any party on account
of this Agreement, the passage of time thereunder, or otherwise, nunc pro tunc.
Removal of Buildings and Other Structures Prior to Remediation
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8. NAGC agrees to remove or fund the removal of any "storage tanks, pumping
equipment, pipelines, boilers, steam lines and appurtenances thereto" (the
Piping) as described by appendix A (quote Conclusion No.2) in accordance with
the non-binding Mediator's Advisory Opinion from Xxx. Xxxxxxx X. Xxxxxxxx (Xxx.)
dated January 22,2007. The cost of this work is a funding commitment of NAGC
additional to and not included in the shared Investigation or Work costs or
funding limitations of Paragraph 2 (a) and (b). The parties may, but need not,
agree to have MWRD's contractor perform this obligation at NAGC's cost.
9. MWRD agrees to demolish and remove any buildings, tanks and other structures
that are intended to be removed from Parcels 1, 2, 4 and 5, and any buildings or
improvements other than the Piping from Parcel 3. MWRD will remove these
structures at no cost to NAGC and without including the expense of such work in
the shared funding commitments set out herein.
10. NAGC and MWRD will remove the structures identified in Paragraphs 8 and 9
above on a schedule to be included in the Final Remedial Action Plan submitted
to Illinois EPA, but not before MWRD has elected to accept NAGC's 50% funding
commitment. It is understood that such buildings and other structures should be
removed before Response Action Work is commenced to facilitate an efficient and
cost- effective remediation.
Disbursement Schedule and Financial Assurances
11. NAGC will pay 100% of the expenses incurred to implement the Remedial Action
Plan as due, up to $750,0001; subsequent disbursements will be paid at the rate
of 50% until its disbursement is equal to the lower of (1) 50% of the total
projected cost; or (2) $1,000,000.
12. Before any disbursements are made under Paragraph 11, both parties will
provide assurances that each has funds available to complete the Work and to pay
for its own share in a timely manner when due. A letter of credit from a
national bank and trust company with total assets exceeding five billion
dollars, escrow of funds in trust, or other secured financial assurance of the
amount of each party's financial obligations hereunder reasonably acceptable to
the other party shall fulfill this requirement. MWRD will also provide written
assurances to NAGC that MWRD will actually complete the work described in the
Remedial Action Plan, and such assurances will include an indemnity against
liabilities arising from any failure by MWRD to complete the Remedial Action
Plan.
13. If MWRD has accepted the commitment of remedial work funds from NAGC per
Paragraph 6, MWRD will dismiss the above-captioned litigation with prejudice
within 14 days of MWRD's receipt of the final disbursement from NAGC of moneys
owed per its commitment.
1 However, in no event will NAGC pay greater than 50% of the project cost.
Stay of Litigation
14. The parties agree to seek a stay of the above-captioned litigation from the
\ Court until such time as MWRD accepts or rejects the funding commitment
hereunder from NAGC. In the event the Court declines to grant the requested stay
and requires the parties to dismiss the litigation, the parties agree to
negotiate and sign a tolling agreement or other claims-preservation
documentation which will allow them, if necessary, to refile the claims which
they asserted against each other in the above-captioned litigation as a new
action.
If MWRD elects to accept the NAGC commitment and agrees to complete the
remediation, the
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parties will advise the Court that a full settlement of this litigation has been
achieved covering all persons (including Lake River Corporation, Kinark
Corporation and the Sanitary District of Chicago) and all claims which are,
were, or could have been included or asserted in the litigation, and will draft
and file appropriate settlement or dismissal papers with the Court.
If MWRD elects to reject the NAGC commitment and the parties are unable to
negotiate an alternate settlement within 60 days or such longer time as they
shall both agree upon, the parties will advise the Court that settlement has
failed and proceed to reactivate the litigation. If the Court required the
parties to dismiss the litigation, then the parties may use the tolling or other
claims-preservation documentation to refile the claims they asserted against
each other in the litigation as a new action.
Drafting. Review and Approval
15. This Agreement in Principle is subject to drafting, negotiation and
execution of a complete Settlement Agreement between the parties which
incorporates the terms set out here and additional standard settlement terms,
including without limitation, disclaimers of liability or admissions,
reservations of rights, confidentiality, enforceability in court, and
applicability to successors and assigns.
16. Any Settlement Agreement between the parties is subject to approval by the
Board of Commissioners of the Metropolitan Water District of Greater Chicago and
the Board of Directors for North American Galvanizing and Coatings, Inc. The
representatives signing this Agreement in Principle agree to recommend this
agreement and a full settlement to their respective clients and Boards, but the
parties acknowledge that the representatives signing below cannot bind their
organizations to a complete Settlement Agreement absent approval by their
respective Boards.
FOR METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO
XXXXXX X. XXXXXX
APRIL 11, 2007
FOR NORTH AMERICAN GALVANIZING & COATINGS, INC.
XXXXXX X. XXXXX
APRIL 11, 2007
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