ANHYDROUS AMMONIA SALES AGREEMENT*
THIS AGREEMENT is entered into as of the 12th day of January,
2000, to be effective October 1, 1999, between KOCH NITROGEN
COMPANY, a Nebraska corporation, with principal offices at 4111
East 37th Street North, Wichita, Kansas 67220 (herein called
"Koch") and EL DORADO CHEMICAL COMPANY, an Oklahoma corporation,
with principal offices at 16 S. Pennsylvania, Oklahoma City,
Oklahoma 73107 (herein called "Buyer");
WITNESSETH:
WHEREAS, the parties entered into a previous agreement dated
May 29, 1997, ("Previous Agreement") and it is their intent to
terminate that Previous Agreement (except as specifically set
forth herein) and replace it with this agreement ("Agreement");
and
WHEREAS, as specified in this Agreement, Buyer and Koch desire to
enter into an anhydrous ammonia sales agreement under which Koch
agrees to supply to Buyer and Buyer agrees to purchase 50% of its
anhydrous ammonia Product Requirements, as defined herein, from
Seller; and
WHEREAS, as specified in this Agreement; Buyer will purchase
96,000 Tons of its Product Requirements by taking and paying for
them, or paying for them if not taken during the Month required
to be taken, during the term of this agreement, in addition to
purchasing at a Nola Index price from Seller the difference
between such 96,000 Tons and 50% of its Product Requirements; and
WHEREAS, as specified in this Agreement. Buyer will take
delivery of, or pay for if not taken, the Required Yearly
Quantity in approximately equal monthly quantities throughout the
term of this Agreement; and
WHEREAS, as specified in this Agreement. Koch shall charge Buyer
a price for each Ton based upon the pricing formulas set out in
this Agreement; and
*INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS PUBLIC
FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
WHEREAS, as specified in this Agreement, Buyer shall be
responsible for all Taxes related to such quantities of anhydrous
ammonia and for all transportation charges beyond the Delivery
Point hereunder; and
WHEREAS, the parties desire to state their agreements in writing;
NOW THEREFORE, in consideration of the mutual promises herein
contained, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
I. DEFINITIONS
Whenever used in this Agreement. the following term shall have
the following respective meanings:
A. "Additional Monthly Quantity" shall mean the
diff6rence between (i) fifty percent (50%) of the
Product Requirements for the Month and (ii) the
Required Yearly Quantity divided by 12.
B. Additional Yearly Quantity" shall mean the
difference between (i) fifty percent (50%) of the
Product Requirements for the Contract Year and (ii) the
Required Yearly Quantity.
C. "Agreement" shall mean this Anhydrous Ammonia
Sales Agreement between Koch and Buyer.
D. "Alpha" shall mean the adjustment to the Nola
Index Price as stated in Article VI, Section G.
E. "Ammonia Pipeline Transportation Charge" shall
mean Koch's actual Product pipeline transportation cost
from Koch's Sterlington, Louisiana ammonia production
facility to the pipeline Delivery Point.
F. "Contract Price" shall mean the price stated in
Article VI, Section B.
G. "Contract Year" shall mean: (i) the three (3)
Month period from October 1, 1999 to December 31, 1999
and (ii) each of the three (3) twelve (12) Month
periods during the term hereof, the first of which
shall begin on January 1, 2000 and shall end on
December 31, 2000 and the following two (2) twelve (12)
Month periods until December 31, 2002.
H. "Conversion Factor" shall mean *** and reflects
the agreed to amount of natural gas necessary to
produce or procure and supply one Ton of Product.
I. "Deficiency Volumes" shall mean the definition stated
in Article III, Section C.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
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J. "Delivery Point" shall mean (i) for pipeline
deliveries, the discharge side of the Product meter
owned by Koch Pipeline Company, L.P. at Buyer's
El Dorado, Arkansas chemical production facility, or
(ii) for rail or trucking deliveries, the point at
Buyer's facility where the truck or rail cars come to
rest, or (iii) another delivery point along Koch
Pipeline Company, L.P.'s ammonia pipeline, provided
Buyer gives Koch at least forty-five (45) days written
notice prior to the date it wishes to begin delivery at
such alternate delivery point.
K "Effective Date" shall mean October 1, 1999.
L. "Fixed Charge" shall mean ***, and any subsequent
instruments pursuant to Article VI, Section E below.
M. "Gas Price" shall mean (MMBTU Price + Transportation
Charge) multiplied by the Conversion Factor.
N. "GM Nola Low Average Price" shall mean the monthly
average of the weekly lows of the ranges for Ammonia in
the U.S. Gulf (NOLA) as published in "Green Markets"
Price Scan during the Month in which delivery occurs.
For deliveries made from the 1st through the 15th of
the Month and for purposes of preparing the mid-Month
invoice, a "Provisional GM Nola Low Average Price"
shall mean the average of the weekly lows of the ranges
as stated above and published during this fifteen (15)
day time period. At the end of the Month, if the GM
Nola Low Average Price is higher or lower than the
Provisional GM Nola Low Average Price, an adjustment
shall be made in the end of Month invoice to correct
for any difference between the GM Nola Low Average
Price and the Provisional GM Nola Low Average Price.
For deliveries made from the 16th through the end of a
Month, the GM Nola Low Average Price, as defined above
for the entire Month, shall apply. In the event such
prices cease to be published, or are no longer an
accurate indicator of U.S. Gulf Coast market price,
then Buyer and Koch will negotiate in good faith to
agree upon an alternate published index which
accurately indicates U.S. Gulf Coast market price.
O. "Koch Facility" shall mean Koch's anhydrous ammonia
production facility at Sterlington, Louisiana.
P. "MMBTU Price" shall mean the "Henry Hub" Index price in
MMBTU's reported under the table entitled "Market
Center Spot-Gas Prices" in the first issue of Inside
FERC's Gas
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
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Market Report for the Month of delivery. If inside
Inside FERC's Gas Market Report and/or the "Henry Hub"
Index price am no longer published, the parties shall
meet within 30 days of the date such publication ceases
to determine a new publication and/or index.
Q. "Month" shall mean a calendar Month.
R. "Monthly Quantity" for any given Month during the term
of this Agreement shall mean 50% of Buyer's Product
Requirements.
S. "Nola index Price" shall mean the price stated in
Article VI, Section C.
T. "Product" shall mean commercial anhydrous ammonia
having the following specifications:
Ammnia (NH3) Content: 99.5% by weight minimum
Oil: 5 ppm maximum by weight
Water: 0.2% by weight minimum; 0.5%
by Weight Maximum
Inerts: 0.5 cc per gram maximum
U. "PPI" shall mean the Producer Price Index for Chemicals
and Allied Products published by the United States
Department of Labor.
V. "Product Requirements" shall mean the Product purchased
by Buyer for its El Dorado, Arkansas facility for
processing either directly to Buyers account or for
processing, tolling, or other similar arrangements for
the account of third parties. Such amounts are
expected to be 160,000 - 240,000 Tons per year.
Product delivered to Buyer by third parties for tolling
but which is not purchased by Buyer would not be
included as part of Buyer's requirements or Product
Requirements.
W "Required Monthly Quantity" shall mean two thousand
(2,000) Tons per Month during Contract Year 2000 and
three thousand (3,000) Tons per Month during Contract
Years 2001 and 2002.
X. "Required Yearly Quantity" shall mean twenty-four
thousand (24,000) Tons in Contract Year 2000 and thirty-
six thousand (36,000) Tons in Contract Years 2001 and
2002.
Y. "Taxes" shall mean the definition set forth in Article
IX, Section A.
Z. "Ton" shall mean a short ton of two thousand (2,000)
pounds avoirdupois. As used herein, the term Ton shall
refer to a quantity of Product.
4
AA. "Transportation Charge" shall mean Koch's actual
natural gas transportation charge, including fuel, from
Henry Hub to Koch's Sterlington, Louisiana ammonia
facility, which as of the Effective Date of this
Agreement is ***, subject to adjustments under Article
VI, Section D, below.
BB. "Yearly Contract Price" for 1999 shall mean (i) the
twelve (12) Month average of the Gas Price for January
through December for 1999, plus (ii) the Fixed Charge
for 1999, plus (iii) Ammonia Pipeline Transportation
Charge, plus (iv) Taxes; and the "Yearly Contract
Price" for 2000 shall mean (a) the four (4) Month
average of the Gas Price for January through April
2000, plus (b) the Fixed Charge for 2000, plus (a)
Ammonia Pipeline Transportation Charge, plus (d) Taxes.
II. TERM
This Agreement shall continue and remain in full force and
effect for a term of thirty-nine (39) Months commencing on
the Effective Date and ending December 31, 2002.
III. QUANTITY TO BE SOLD AND PURCHASED
A. Purchase Obligation for October 1 through December 31,
1999. During the Contract Year from October 1, 1999
through December 31, 1999 Koch agrees to sell and
deliver to Buyer and Buyer agrees to purchase 100% of
Buyer's Product Requirements from Koch. The projected
minimum product Requirements for this time period shall
be as follows: 3,000 Tons in October; 1,000 Tons in
November, and 9,000 Tons in December. During this time
period, Koch agrees to deliver 7,844.5 Tons (Deficiency
Volume from 1999 under the Previous Agreement) to
Buyer, for which Buyer has previously paid but not
taken delivery; provided, (i) Buyer shall have put in
place an additional letter of credit in an amount of
*** as stated in Article VI, Section K prior to
delivery, (ii) Buyer pays the Contract Price Supplement
as defined in Article VI, Section A.1.a), and (iii)
Buyer pays the Ammonia Pipeline Transportation Charge
for the 7,844.5 Tons when delivered. The parties
acknowledge that the obligations of the parties under
Article III, Section A have been fulfilled as of the
date of execution of this Agreement.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
5
B. Purchase Obligation for January 1, 2000 through
December 31, 2002. For the Contract Years commencing
on January 1, 2000, January 1, 2001 and January 1,
2002, Koch agrees to sell and deliver to Buyer and
Buyer agrees to purchase 50% of Buyer's Product
Requirements from Koch. Buyer agrees to make
reasonable commercial efforts to purchase above 50% of
Buyer's Product Requirements from Koch during this
period. If Koch and Buyer agree to sell and buy
(respectively) such Tons, the price for such Tons shall
be as mutually agreed upon by the parties and all non-
price provisions of this Agreement shall apply to such
Tons. Such Tons shall not count toward the 204,000
Tons named in Article III Section B.2, below. Under
this Agreement, Koch will have no obligation to deliver
more than 120,000 Tons in any Contract Year. Buyer's
total purchase obligation during each Contract Year
shall be comprised of (i) the Required Yearly Quantity
and (ii) the Additional Yearly Quantity. In addition,
Buyer's total purchase obligation during each Month
shall be comprised of (i) the Required Monthly Quantity
and (ii) the Additional Monthly Quantity.
B.1 Required Purchase Obligation. Subject to Article
III, Section C, Article VII, Section A and
Article X below, during each month of each
Contract Year, Koch agrees to sell and deliver to
Buyer and Buyer agrees to take and pay for, or pay
Koch the Contract Price if not taken during the
Month required to be taken, the Required Monthly
Quantity of Product The total Required Yearly
Quantity during the term of this agreement shall
total 96,000 Tons.
B.2 Additional Purchase Obligation. During each
Contract Year from January 1, 2000 through
December 31, 2002, in addition to the volumes set
forth in Section B.1 above, Koch agrees to sell
and deliver to Buyer and Buyer agrees to purchase
and pay Koch the Nola Index Price for the
Additional Yearly Quantity of Product. In the
event that the Additional Yearly Quantity
purchased by Buyer for all Contract Years is less
than *** in total, then Buyer agrees to make an
End of Term Payment to Koch, in accordance with
Article VI, Section J.
C. Make-up Rights. Subject to Article VII, Section B
below, if during any of the last three Contract Years
Buyer fails to take the Required Monthly Quantity (the
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
6
difference between the Required Monthly Quantity and
the quantity actually taken during the Month, under
Article III, Section B.1 above, shall be referred to
hereafter as the "Deficiency Volumes"), Buyer shall
have the fight to take delivery of the Deficiency
Volumes during the twenty-four (24) months following
the Contract Month it failed to take such Deficiency
Volumes, including the time period after the term of
this Agreement expires. Buyer's take of any Deficiency
Volumes shall be in addition to its take obligations of
the Required Monthly Quantity for the subject Contract
Year. If Buyer elects to take delivery of Deficiency
Volumes during the twenty-four (24) months following
the Contract Month it failed to take the Deficiency
Volumes, in addition to the Contract Price paid in the
Contract Month it failed to take the Deficiency
Volumes, Buyer shall pay Koch the product of the (i)
difference between the Contract Price for the Month
Buyer actually takes delivery of Deficiency Volumes and
the Contract Price paid by Buyer in the Contract Month
it failed to take the Deficiency Volumes multiplied by
(ii) the Tons of Deficiency Volumes actually taken in
the subject Month. If Buyer elects to take Deficiency
Volumes after this Agreement's term expires, Buyer
shall pay Koch, in addition to the Contract Price paid
in the Contract Month it failed to take the Deficiency
Volumes, the product of (i) the difference between the
Contract Price for the Month it actually takes delivery
of any Deficiency Volumes calculated as if the term of
this Agreement had been extended to such Month and the
Contract Price paid by Buyer in the Contract Month it
failed to take the Deficiency Volumes multiplied by
(ii) the Tons of Deficiency Volumes actually taken
during the subject Month after this Agreement's term
expires. If Buyer elects not to take Deficiency
volumes as set forth in this Section C, it waives any
rights to take the Deficiency Volumes at a later date.
D. No Duty to Mitigate. It is understood and agreed by
Buyer that its obligation to pay for any Required
Monthly Quantity or any Required Yearly Quantity it
elects not to take during any Contract Year is not in
the nature of damages. Rather, such a payment
constitutes an alternative measure of performance
elected by Buyer. This alternative measure is designed
to compensate Koch for the risk of producing, procuring
and supplying the Required Monthly Quantity and
Required Yearly Quantity, while it is expressly
understood that Buyer has accepted the market risk
associated with such a contract. Therefore, if Buyer
fails to take or to pay for the
7
Required Yearly Quantity or Required Monthly Quantity
not taken in any Contract Year or Month respectively,
Koch shall have no duty or obligation to resell or
otherwise mitigate its potential losses arising from
Buyer's failure to perform its contractual obligations.
E. Measurement. The quantity of Product delivered
hereunder to Buyer by pipeline shall be governed by the
weights and measures taken by meters owned by Koch
Pipeline Company, L.P. at the Delivery Point pursuant
to Koch Pipeline Company, L.P.'s tariff in effect on
the date of delivery, For trucking or rail deliveries,
the quantity of Product delivered to Buyer shall be
governed by the weights and measures taken as the
trucks or rail cars are loaded at the Koch Facility.
The foregoing measurements of said quantities shall be
final and conclusive, unless proven to be in error.
F. Verification of Product Requirements. If requested by
Koch, Buyer shall provide proper documentation to Koch
to verify that fifty percent (50%) of Buyer's Product
Requirements have been purchased from Koch. If such
documentation is not satisfactory to Koch, the parties
will mutually agree to an independent auditor which
will be allowed to audit Buyer's books and records to
verify that fifty percent (50%) of Buyer's Product
Requirements have been purchased from Koch.
IV. QUALITY
All Product delivered hereunder shall conform to the
specifications set forth in Section T of Article I. All
claims by Buyer that any Product delivered hereunder does
not conform to the specifications set forth in said Section
T, shall be made in writing and sent within thirty (30) days
of Koch's delivery of such Product to the Delivery Point.
Failure to give written notice of such claim within the
specified time shall constitute a waiver and bar of and to
such claim, and Buyer shall be precluded from relying on
defects which are not stated in such notice as a basis for
rejection or assertion of a breach.
8
V. WARRANTIES
A. Koch makes no warranty of any kind, express or implied,
except that Product sold hereunder shall conform to the
specifications set forth in Section T of Article I and
that Koch will convey good title thereto, free from any
lien or security interest. KOCH ASSUMES NO OTHER
LIABILITY WITH RESPECT TO PRODUCT AND MAKES NO OTHER
WARRANTY WHETHER OF NONMERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR OTHERWISE, EXPRESSED OR IMPLIED,
WITH RESPECT THERETO.
B. Neither party shall be liable, under any circumstances,
for any special, indirect, incidental, consequential
(including but not limited to, loss of profits or any
similar damages) or punitive or exemplary damages
arising out of this Agreement, except for third party
personal injuries and property damage which are deemed
by applicable law to be consequential damages. In no
event shall the amount of any claim by Buyer, whether
for failure to meet the specifications for non-
delivery, or for any other reason, be greater than the
actual replacement costs of the Product for the
particular shipment. In this regard, Buyer's sole and
exclusive remedy for any breach of this Agreement by
Koch shall be, at Koch's option, replacement of any
nonconforming product at the Delivery Point or payment
not to exceed the replacement price of the Product
Buyer shall use reasonable efforts to obtain reasonably
priced replacement Product.
VI. PRICE AND PAYMENT
A. For each Ton of Product sold to Buyer hereunder or
provided as Deficiency Volumes, as appropriate, Koch
shall charge, and Buyer shall pay Koch based on the
following:
1) Contract Year: October 1 through December 31,
1999:
Quantity Per Month Price Basis
__________________ ____________
October (3,054.79 tons) Contract Price Supplement
November (7,000 tons) Contract Price Supplement
for first
4,789.71 Tons and Nola
Index Price for the
remaining Tons
December (9,000 tons) Nola Index
Price
a) Contract Price Supplement shall
equal (i) *** per Ton multiplied by (ii) 7,944.5
Tons (the Deficiency Volume).
2) Contract Year: 2000:
Quantity Per Month Price Basis
__________________ ___________
First 2,000 tons Contract Price
2,001 to 10,000 tons Nola Index Price
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
9
3) Contract Year: 2001:
Quantity Per Month Price Basis
___________________ ____________
First 3,000 tons Higher of
Contract Price for Month
or Yearly Contract Price
3,001 to 10,000
tons Nola Index
Price
a) The yearly Contract Price shall be bond on
the Yearly Contract Price for 1999.
4) Contract Year: 2002:
Quantity Per
Month Price
Basis
__________________ ____________
First 3,000
tons Higher of
Contract Price for Month
or Yearly Contract Price
3,001 to 10,000
tons Nola Index Price
a) The Yearly Contract Price for the first
20,000 Tons purchased during Contract Year 2002
shall be based on the Yearly Contract Price for
1999 and the remaining 16,000 Tons purchased
during Contract Year 2002 shall be based on the
Yearly Contract Price for Contract Year 2000.
B. Contract Price. For each Ton of Required Yearly
Quantity to be sold to Buyer hereunder, Koch shall
charge and Buyer shall pay to Koch the following
Contract Price:
Contract Price = Gas Price + Fixed charge +
Ammonia Pipeline Transportation Charge+ Taxes
C. Nola Index Price. For each Ton of Additional Yearly
Quantity sold to Buyer hereunder, Koch shall charge,
and Buyer shall pay Koch the following Nola Index
Price:
Nola Index Price = ***
D. Transportation Charge Adjustment. The Transportation
Charge component of the Gas Price shall be increased or
decreased whenever Koch incurs a cost change to reflect
Koch's actual natural gas transportation costs
(including fuel) from Henry Hub to Koch's Facility.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
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F. Fixed Charge Adjustment. The Fixed Charge shall be
adjusted annually beginning January 1, 2000, based on
the annual percentage change between the PPI as it
existed on January 1 of the year that just ended
(Subject Contract Year), and the PPI as it existed on
January 1 of the year prior to the year that just ended
(Preceding Contract Year) and shall be adjusted on
January 1 of each calendar year. To calculate each
annual adjustment, Buyer and Koch agree to take the
difference in the PPI for the Subject Contract Year and
the Preceding Contract Year and then divide by the
Preceding Contract Year's PPI, which will yield the
annual PPI percentage change. The annual PPI
percentage change shall then be multiplied by the
current Fixed Charge to get the Fixed Charge Adjustment
rounded to the nearest cent. The Fixed Charge
Adjustment will then be added to or subtracted, from
the current Fixed Charge to establish the now Fixed
Charge. For an example of such calculation, see
Addendum A for calculations used in determining the
Fixed Charge Adjustment for 1999. A Preliminary PPI
Annual number, for the Subject Contract Year, may be
used to calculate the Fixed Charge Adjustment until the
Actual Annual PPI number, for the Subject Contract
Year, is known. Once actualized, then credits/debits
would be made accordingly and the actual new Fixed
Charge would apply.
F. Ammonia Pipeline Transportation Charge Adjustment. The
Ammonia Pipeline Transportation Charge shall be
increased or decreased whenever Koch incurs a cost
change to reflect Koch's actual Product transportation
costs from Koch's Facility to the Delivery Point.
G. Alpha.
Alpha shall be defined as follows:
1) October 1, 1999 through December 31,
1999:
Additional Monthly Quantity Alpha,
$/Ton
___________________________ ____________
***
2) January 1, 2000 through December 31,
2000:
Additional Monthly Quantity Alpha,
$/Ton
___________________________ ____________
***
3) January 1, 2001 through December 31,
2002:
Additional Monthly Quantity Alpha,
$/Ton
___________________________ ____________
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
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***
H. Rail or Truck Transportation Costs. Notwithstanding
any other provision of this Agreement, if ammonia
pipeline transportation service is interrupted or
curtailed, preventing Koch from making all or a portion
of the required deliveries of Product hereunder, Koch
shall use reasonable efforts to arrange rail or
trucking transportation service from Koch's Facility to
Buyer's Facility. Buyer shall be responsible for and
reimburse Koch for all rail and/or trucking
transportation costs incurred by Koch for deliveries of
Product hereunder, including without limitation,
demurrage charges. However, if Buyer is forced to pay
a trucking and/or rail transportation rate that is
higher than the Pipeline Transportation Charge and the
increased transportation rate makes it uneconomical for
Buyer to operate Buyer's Facility, forcing Buyer to
shut down such facility, then Buyer shall have the
right to suspend its performance hereunder by providing
Koch with thirty (30) days written notice. However,
Buyer shall not be allowed to suspend its performance
hereunder if Koch, within its sole discretion, elects
to pay the difference between the Ammonia Pipeline
Transportation Charge and the trucking and/or rail
transportation charges to the Delivery Point. If it
remains uneconomical for Buyer to operate Buyer's
Facility for sixty (60) consecutive days from the date
Buyer gives Company notice solely because of the
interruption or curtailment of pipeline Product
deliveries hereunder and Koch elects not to pay the
transportation differential, then Buyer shall have the
right to terminate this Agreement by providing Koch
with written notice within five (5) days of the end of
the sixty (60) day period.
I. Payment Term. ***
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
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***. Koch shall also invoice Buyer for any additional
amounts or refund any amounts as required by the terms
set forth in Article I, Section N. *** Buyer agrees to
accept facsimile copies of invoices from Koch.
J. End of Term Payment. In the event Buyer has not
purchased all Additional Yearly Quantity amounts, as
defined in Article III, Section B.2, by December 31,
2002, Buyer shall make an "End of Term Payment" to Koch
in the amount equal to (i) the difference between ***
Tons and the sum of the Additional Monthly Quantity
amounts taken, multiplied by (ii) $*** per Ton. In
such case Koch shall invoice Buyer within thirty (30)
days after December 31, 2002, and Buyer shall pay Koch
the foregoing amount within two (2) days of the invoice
date by Koch debiting Buyer's account, by using EFT.
K. Letter of Credit. As assurance to Koch for Buyer's
performance hereunder, Buyer agrees (i) to maintain the
existing irrevocable standby letter of credit issued
pursuant to the Previous Agreement in the amount of ***
(the "LC") or an amended version of that LC in the
amount of *** and (ii) at least one business day prior
to the delivery by Koch of the 1998 Deficiency Volumes
or execution of this Agreement, to deliver to Koch an
additional Irrevocable standby letter of credit In the
amount of ***
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
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(the "Additional LC") issued by a bank or other
financial institution acceptable to the Credit
Department of Koch. Such LC(s) shall be in the form of
Addendum B attached hereto and made a part hereof.
Buyer shall annually renew or cause the renewal or the
letters of credit at least thirty (30) days prior to
their respective expiration dates. Buyer shall
maintain such letters of credit in the total amount of
*** until such time the projected amount of the Unpaid
Premium, as defined in Section L below, is less than
*** at which time Koch shall allow Buyer to reduce the
value of the letters of credit as the projected amount
of Unpaid Premium is reduced, on a dollar for dollar
basis. Subject to the foregoing, the letters of credit
shall remain effective until 30 days after the term of
this Agreement expires. If the bank or financial
institution issuing one of the letters of credit shall
at any time cease to be acceptable to the Credit
Department of Koch as determined in its sole
discretion, then within fifteen (15) calendar days
after written notice from Koch, Buyer agrees it shall
deliver to Koch a substitute irrevocable standby LC
issued by a bank or other financial institution
satisfactory to Koch, without terminating the original
or then outstanding LC until such substitute LC has
been delivered to Koch. If Buyer fails or refuses to
cause the renewal of an existing LC or the delivery of
a substitute LC within the required time period, such
failure or refusal shall constitute a material breach
of this Agreement entitling Koch to collect damages and
to draw on the original or then outstanding letter of
credit. In such event, Buyer shall have ten (10) days
in which to cure such default and if such default is
not cured within that time period, Koch may draw down
on all or part of the Letter(s) of Credit, in addition
to any other remedies Koch may be entitled to under
this Agreement or at law or in equity. Koch shall give
Buyer five (5) days notice prior to drawing on the LC.
The parties specifically agree that in such case, if
Koch chooses to draw down on the Letter(s) of Credit in
an amount greater than any amount then due and owing
under this Agreement, adequate consideration for Koch
doing so exists due to Koch foregoing its rights to
collect amounts due and owing under the Previous
Agreement and instead entering into this Agreement with
Buyer.
L. Basis for Letter of Credit Reduction. Koch shall
notify Buyer ninety (90) days in advance when the
projected amount of the Unpaid Premium shall be
expected to be less than ***. The "Unpaid Premium"
shall be an amount equal
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
14
to (i) the difference between 96,000 Tons and the sum
of all Required Monthly Quantity Amounts paid for by
Buyer multiplied by (ii) ***. Current projections
indicate this should occur around the end of March
2001. When the Unpaid Premium is less than ***, Buyer
shall be allowed to reduce the total value of the
letters of credit by the amount the Unpaid Premium is
less than ***; provided the letters of credit at the
beginning of any Month covers 100 percent of the Unpaid
Premium. In reducing letter(s) of credit pursuant to
the above, Buyer agrees to first reduce entirely the
most recently issued letter of credit before reducing
the letter of credit issued earlier.
M. Additional Credit. Koch may from time to time demand
different terms of payment or additional assurance of
payment, or other credit terms whenever Koch within its
good faith discretion deems itself insecure because the
prospect for payment or performance reasonably appears
impaired. In any such event, and upon written notice
specifying the event warranting the change in terms of
payment, additional assurance of payment, or credit,
Koch may suspend further deliveries pending agreement
to the revised terms, including, but not limited to,
pending agreement of Buyer to the posting of an
appropriate bond, an additional letter of credit or
other security acceptable to Koch to further secure
Buyer's obligations hereunder. If Buyer fails or
refuses to give adequate assurance of performance or
payment upon demand therefor, Koch may treat such
failure or refusal as a repudiation and breach of this
Agreement, thereby entitling Koch to exercise all
remedies provided for under this Agreement and any
other remedy it may have at law or in equity.
VII. DELIVERY
A. Required Yearly Quantity. Subject to variations as may
be necessitated due to a Force Majeure event as set out
in Article X Koch shall deliver the Required Yearly
Quantity, and Buyer shall take delivery of the Required
Yearly Quantity in equal quantities of two thousand
(2,000) Tons per Month during Contract Year 2000 and
three thousand (3,000) Tons per Month during Contract
Years 2001 and 2002. Buyer shall notify Koch no later
than the 1st calendar day of the Month immediately
prior to the Month of delivery of the number of Product
Tons it wishes to receive for such Month of delivery.
Buyer shall promptly notify Koch in writing of any
known or anticipated changes that will not permit Buyer
to receive the Monthly Quantity.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
15
B. Deficiency Volumes. If Buyer elects to take delivery
of Deficiency Volumes in a subsequent Contract Year or
after the term of this Agreement expires as set forth
in Article III, Section C above, it shall give Koch
Fifteen (15) days written notice prior to the first day
of the requested Month of delivery. Unless otherwise
agreed to by Koch, Buyer shall take delivery of such
Deficiency Volumes in approximately equal quantities
during each Month of the subsequent Contract Year or
the twelve (12) Month period after the term of this
Agreement expires, unless otherwise agreed to by Koch
in writing. However, in no event shall Koch be
required to deliver more than three thousand (3,000)
Tons of Deficiency Volumes in any given Month.
C. Title and Risk of Loss. Koch shall deliver the
Product hereunder to Buyer at the Delivery Point, and
upon the passing of said title to Buyer, Buyer shall be
deemed to have exclusive ownership and control of said
Product and shall be responsible for any injuries or
damages caused thereby.
VIII. CONTRACT BUYOUT OPTION
A. Buyer Sells Business. In the event Buyer sells its
El Dorado, Arkansas facility to a third Party, Buyer
shall make reasonable commercial efforts to have this
Agreement assigned to the new buyer. In the event the
new buyer does not accept such an assignment, Buyer
shall have the option to either (i) continue to be
bound by this Agreement or (ii) make a Buy Out Payment
to Koch, as defined in Section C below.
Notwithstanding anything seemingly to the contrary
herein, if Buyer makes a Buyout Payment, this Agreement
shall be deemed automatically terminated except for
Articles IV and V and except for the return to Buyer of
any undrawn or partially undrawn Letters of Credit
B. Buyer Forms Joint Venture or Alliance with Third Party.
In the event Buyer forms a joint venture with another
company to produce or market ammonium nitrate or
concentrated nitric acid, Buyer shall have the option
to (i) continue to be bound by this Agreement or (ii)
make a Buyout Payment to Koch, as defined per Section C
below. Notwithstanding anything seemingly to the
contrary herein, if Buyer makes a Buyout Payment, this
Agreement shall be deemed automatically terminated
except for Articles IV and V and except for the return
to Buyer of any undrawn or partially undrawn Letters of
Credit.
16
C. Buy Out Payment. In the event a Buy Out Payment is
called for as set forth above, Koch shall send an
invoice to Buyer for the payment in an amount equal to
***. Buyer shall pay Koch the foregoing amount within
two (2) days of the invoice date by Koch debiting
Buyer's bank account using EFT.
IX. TAXES
A. All present and future taxes, including, but not
limited to, the Superfund Tax, (referred to herein as
"Taxes") relating to the Product delivered hereunder,
including all new taxes or increases in existing taxes
including excise taxes (but excluding Koch's net
income, excess profits, or corporate franchise taxes)
imposed by any governmental authority upon the
manufacture, use, sale, or delivery of the Product,
shall be for Buyer's account, unless Buyer delivers to
Koch current exemption certificates evidencing Buyer's
exemption from paying such Taxes.
B. Buyer agrees to indemnify and hold harmless Koch
and its successors and assigns from and against any and
all excise taxes (but not including net income, excess
profits, or corporate franchise taxes), inclusive of
any penalty and interest, assessed at a future date
against Koch by any governmental authority upon the
manufacture, use, sale, or delivery of the Required
Yearly Quantity and/or Additional Yearly Quantity,
whether taken or not.
X. FORCE MAJEURE
A. Neither Koch, nor Buyer, shall be liable for any
failure or delay in performance under this Agreement,
except for the obligation to make money payments due
hereunder for Product already purchased, due to a Force
Majeure event. "Force Majeure," as used herein shall
mean any event which may be due in whole or in part to
any contingency, delay, failure, cause or other
occurrence of any nature beyond a party's reasonable
control, whether it is presently occurring or occurs in
the future, which (i) prevents Koch from producing,
selling, purchasing or
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
17
transporting the Product or (ii) which prevents Product
from being used at Buyer's chemical facility in
El Dorado, Arkansas (referred to hereafter as Buyer's
Facility).
B. The term "Force Majeure" shall not include (i) an
event caused by a party's sole or contributory
negligence; (ii) Koch's ability to sell or Buyer's
ability to purchase Product at a price more
advantageous than the Contract Price; (iii) Buyer's
loss of markets for products produced at Buyer's
Facility; (iv) shutdown of Seller's Facility or Buyer's
Facility for reasons other than a Force Majeure event
and (v) routine or scheduled maintenance at Seller's
Facility or Buyer's Facility.
C. If a Force Majeure event occurs, the declaring
party may exercise its right under this Article by
giving timely notice thereof to the other party setting
forth with reasonable particularity the nature of the
Force Majeure event. The declaring party shall use
reasonable efforts to remedy the situation as quickly
as possible and shall only be excused from performance
hereunder during the duration of the Force Majeure
event. The declaring party shall give the other party
prompt notice of when the Force Majeure event ends. If
Koch's deliveries of Product to Buyer are impeded due
to a Force Majeure event, Koch shall have the right to
apportion deliveries among its present and future
customers (including regular customers not then under
contract) and Koch's own requirements on such basis as
may appear to Koch to be appropriate and equitable.
Koch shall not be obligated to take any action which
would result in increasing its performance costs under
this Agreement beyond the costs which it would have
incurred in the absence of such occurrence, delay or
cause. In this regard, should Koch be required to
operate the Koch Facility in a manner that results in
Koch violating an operational flow order or similar gas
pipeline order in order to meet its obligations under
this Agreement, and the violation triggers a penalty or
other charge to be incurred by Koch, Koch shall have
the right to invoice Buyer for such charge on a per Ton
basis as follows: ([the dollar amount per MMBTU of
such a charge x Conversion Factor] x the number of Tons
of Product produced using natural gas to which such
charge applies). Buyer agrees to pay such charge in
addition to the Contract Price per Ton and all other
charges to be paid by Buyer to Koch for Product under
this Agreement until such penalty or charge is
curtailed as against Koch, provided, that in any such
event, Buyer will have the option of declining to take
18
Product that is subject to such penalty or charge. The
Required Yearly Quantity for the subject Contract Year
shall be reduced by the Tons of Product Buyer declines
to take under the preceding sentence.
D. If a Force Majeure event occurs, Koch shall have
the option, but not the obligation, to reduce the
number of Tons of Product that it is required to
deliver and Buyer is required to take or pay for
hereunder; provided, that such reduction shall not
affect the obligation of Koch to deliver, nor the
obligation of Buyer (except as provided for herein) to
take or pay for, the remaining Tons to be taken or paid
for hereunder. If Koch elects to reduce the number of
Tons Buyer is obligated to take or pay for in a
particular Contract Year due to a Force Majeure event,
or if the Force Majeure event continues into a
subsequent Contract Year, Buyer's Required Yearly
Quantity shall be reduced by number of Tons canceled by
Koch due to the Force Majeure event. Koch's exercise
of its option to cancel such affected Tons must be made
by notice in writing by Koch to Buyer no later than
thirty (30) days after the Force Majeure event no
longer exists. If Koch does not exercise such option,
the quantity of Product which was not delivered and
received during the occurrence shall be delivered by
Koch and received by Buyer after the Force Majeure
event no longer exists during the term of this
Agreement or within a reasonable period immediately
following the expiration of this Agreement depending
upon when Koch has Product available. If Koch delivers
the Product after the Force Majeure event no longer
exists during the term hereof, the Contract Price per
Ton, or the Nola Index Price per Ton, whichever is
applicable, for such Product shall be as set forth in
Article VI calculated for the Month Koch actually
delivers the Product. If, however, Koch delivers the
Product after the end of this Agreement's term, the
price for such Product shall be the Contract Price per
Ton or the Nola Index price per Ton, whichever is
applicable, according to the formula contained in
Article VI and the definitions contained in Article I
that would have been charged during the Month the
Product is actually delivered if the term of this
Agreement had continued in effect. If a Force Majeure
event exists for a period of sixty (60) days or longer,
or the declaring party gives notice that such event
will last more than sixty (60) days, the non-declaring
party shall have the option to terminate this Agreement
by written notice to the other. Upon such termination,
all obligations of the
19
parties hereunder shall terminate without liability to
the other party, except for obligations which accrued
prior to the effective date of the termination.
E. If, at any time during this Agreement's term, any
regulatory or governmental body adopts, issues, or
publishes any action, rule, or order which directly or
indirectly materially and adversely affects the rights
or obligations of Koch under this Agreement or (each of
the events described in hereafter referred to as
"Adverse Action"), Koch shall notify Buyer in writing
of the Adverse Action and the parties shall enter into
negotiations to modify this Agreement. If negotiations
regarding the Adverse Action do not result in Koch and
Buyer agreeing on the terms of a modification to this
Agreement within sixty (60) days of Koch's notice to
Buyer, Koch shall have the right, but not the
obligation, to suspend its performance hereunder until
such time, if any, as the parties reach agreement on
such a modification to this Agreement. In the event
such Adverse Action continues for a period of one
hundred twenty (120) days after Koch notifies Buyer of
the same and the parties have not resolved the handling
of the Adverse Action, either party may, but is not
required to, terminate this Agreement upon thirty (30)
days written notice to the other party within one
hundred eighty (180) days of when Koch first notified
buyer of the Adverse Action. Upon termination, all
obligations by either party shall cease, except
obligations to remit money due and payable. In the
event of Adverse Action, upon written request, Koch
shall provide Buyer with data or information reasonably
necessary for Buyer to determine that such Adverse
Action exists, subject to the confidentiality
obligations of Article XVI of this Agreement.
XI. REMEDIES FOR PAYMENT BREACH
A. If Buyer is late in making any payment due to Koch
under Article VI hereof, or otherwise, Koch may at its
sole discretion by notice to Buyer elect one or more of
the following courses of action:
1. Cease to make any further deliveries
hereunder until Buyer has made the late payment
and has taken steps to assure Koch that there
shall be no such delinquencies in the future;
2. Refuse to make any further deliveries
hereunder except upon cash payments before
delivery;
3. Stop delivery of goods in the possession
of a carrier or other bailee as provided by law;
20
4. Resell any Product concerned without further
notice to Buyer and without affecting or abating Buyer's other
obligations under this Agreement;
5. Set off any obligations Koch may have to
Buyer against the payments due Koch hereunder; or
6. Draw upon any letter(s) of credit and/or
other security provided by Buyer hereunder,
provided any draw by Koch shall not exceed the
amounts due and payable.
If Buyer has not remedied late payments to the
reasonable satisfaction of Koch within ten (10) days of
such notice, Koch may at its option by notice to Buyer
terminate this Agreement (without discharging any claim
for breach), provided Koch shall not be allowed to
terminate this Agreement if the amount of Buyer's
liability to Koch does not exceed the outstanding LC
amounts and Buyer makes up the amount drawn by Koch
under the LC(s) within five (5) days of the date Koch
draws on the LC(s); however, Koch shall have the right
to suspend performance until Buyer replenishes the
LC(s). The election by Koch of any of the courses of
action hereto shall in no way limit any other remedies
available to Koch under this Agreement or otherwise at
law or in equity.
B. If either party:
1. Voluntarily petitions under or otherwise
seeks the benefit of any bankruptcy,
reorganization, arrangement or insolvency law; or
2. Makes a general assignment for the
benefit of creditors; or
3. Is adjudicated bankrupt or becomes
insolvent; or
4. Allows a receiver or trustee of the
business to be appointed; or
5. Fails to perform any part of this
Agreement (other than provided for in Section A.
of this Article) and upon written notice of such
failure by the other party fails to remedy the
same within thirty (30) days of such notice, or in
the event such failure cannot reasonably be cured
within thirty (30) days, does not initiate and
pursue reasonable corrective action within said
period of time, then, in any of said events, this
Agreement may be terminated forthwith by written
notice at the option of the other party with such
other party retaining all its other rights and
remedies at law or in equity.
21
XII. RIGHTS NOT WAIVED
The waiver by either party hereto of any breach of this
Agreement by the other party hereto shall not be deemed to
be a waiver of any successive or other breach of this
Agreement. Each and every right, power and remedy may be
excused from time to time and so often and in such order as
may be deemed expedient by the party, and the exercise of
any such right, power or remedy shall not be deemed a waiver
of the right to exercise at the same time or thereafter, any
other right, power or remedy.
XIII. NOTICES
Any notices, requests or other communications required or
permitted by any provision of this Agreement shall be in
writing and shall be deemed delivered if delivered by hand,
facsimile or mailed by U.S. Postal Service, postage prepaid,
by registered or certified mail, and if to Koch, addressed
to:
Koch Nitrogen Company
4111 East 37th Street North
P.O. Box 2256
Wichita, KS 67201
Attention: President
Secretary,
Koch Nitrogen Company
c/o Legal Department
4111 East 37th Street North
P.O. Box 2256
Wichita, KS 67201
or, if to Buyer, addressed to:
El Dorado Chemical Company
16 S. Pennsylvania
Oklahoma City, OK 73107
Attn: President
El Dorado Chemical Company
16 S. Pennsylvania
Oklahoma City, OK 73107
Attn: General Counsel
Any party may change the address to which notices are to be
given by mailing written notice thereof to the other party
as provided above.
22
XIV. ASSIGNMENT
Notwithstanding any prior provision, neither party shall
assign or delegate, or permit by assignment or delegation,
by operation of law or otherwise any of its rights and
obligations under this Agreement to any third party without
first obtaining the prior written consent of the other
party, which shall not be unreasonably withheld.
Notwithstanding the foregoing, either party shall be allowed
to assign this Agreement to an Affiliate upon providing
written notice to the other party, provided no such transfer
shall operate to relieve the relieve the transfer party of
its obligations hereunder. For purposes of this Agreement
"Affiliate" shall mean any corporation or other business
enterprise which directly or indirectly controls, is
controlled by, or is under common control with a party
hereunder; and for the purpose of this definition "control"
shall mean the ability to directly or indirectly vote fifty
percent (50%) or more of the shares or other securities at
the time entitled to vote for the election of directors.
Any assignment or delegation, or attempted assignment or
delegation, in violation of this Article XIV shall be null
and void, shall be considered a material breach of this
Agreement and shall permit the other party in addition to
any other rights which it may hereunder or at law or in
equity to terminate this Agreement and exercise any remedies
available to the non-breaching party hereunder or at law or
in equity.
XV. ENTIRE AGREEMENT; AMENDMENT
This Agreement constitutes the final and complete Agreement
between the parties relative to the transactions
contemplated hereby and supersedes any and all prior or
contemporaneous agreements, understandings, correspondence
or other agreements relating to the subject matter hereof.
This Agreement may be amended only by a written document
signed by duly authorized representatives or employees of
each of the parties hereto. Any printed term or conditions
contained in any printed form used in placing or
acknowledging orders hereunder, or otherwise used in any way
in connection with the sale and purchase provided for in
this Agreement shall not have the effect of modifying or
amending this Agreement in any respect unless specifically
identified and accepted in writing by a duly authorized
representative of both parties.
23
XVI. CONFIDENTIALITY
If an Adverse Action, as defined in Section E of Article X
results in Koch's suspension of its performance hereunder,
Koch may, as provided for in said Section, provide Buyer
with certain information ("Adverse Action Information").
Koch and Buyer may also, in connection with their respective
performance of this Agreement, communicate information, give
notices and exchange documents ("Contract Related
Information"). Buyer shall maintain in confidence the
Adverse Action Information and the Contract Related
Information, and Koch shall maintain in confidence the
Contract Related Information, and such information shall be
disclosed to no one other than (i) the receiving party's
officers, directors, agents and other personnel who need to
know the same in connection with this Agreement, and such
officers, directors, agents and other personnel shall be
advised of and bound by the confidential nature of such
information or (ii) when disclosure is required by law or
pursuant to a court or administrative order. For
disclosures required under sub-item (ii), the disclosing
party shall immediately notify the other party of the
required disclosure so that the other party may seek an
appropriate protective order or other remedy and use
reasonable efforts to limit the scope of the disclosure so
required. If a protective order or other remedy is not
obtained, the disclosing party shall only furnish such
portion or portions of the Confidential Information as it is
legally required to furnish. Koch and Buyer shall take all
proper precautions to prevent such information from being
acquired by any unauthorized person, firm, company or other
entity. In this regard, Koch and Buyer acknowledge
specifically, but without limitation, that both injunctive
relief and monetary damages, alone or in combination, am
appropriate remedies for any breach of this Article XVI by
Koch or. Buyer or any person, firm, company or other entity
obtaining such information through the recipient thereof.
The confidentiality obligations hereunder shall continue for
a period of seven (7) years after the termination of this
Agreement. Koch shall have no obligation to provide, and
Buyer shall have no right to obtain, information regarding
Koch's Product supply costs.
24
XVII. ARTICLE HEADINGS
Article headings are for the convenience of the parties and
am not considered parts of the Agreement, it being
stipulated that any headings in conflict with the
substantive provisions of the Agreement shall have no force
and effect.
XVIII. GOVERNING LAW
This Agreement shall be governed exclusively by the laws of
the State of Kansas both with respect to interpretation and
performance without giving effect to any provision which
would direct application of the laws of another
jurisdiction. Koch and Buyer agree that venue and
jurisdiction of any action or cause of action wising
hereunder shall be exclusively in the United States District
Court for the District of Kansas.
IX. SEVERABILITY
The provisions of this Agreement are severable and, if any
provisions am determined to be void or unenforceable in
whole or in part, the remaining provisions shall remain
unaffected and shall be binding and enforceable in
accordance with the terms hereof.
XX. AUTHORITY
A. Buyer warrants and represents that it is a corporation
duly organized and validly existing and in good
standing under the laws of the State of Oklahoma and
has all requisite power and authority to lawfully carry
on its business as now being conducted and
specifically, that it has all requisite power and
authority to make, execute, deliver and perform this
Agreement.
B. Koch warrants and represents that it is a corporation
duly organized and validly existing and in good
standing under the laws of the State of Nebraska and
has all requisite power and authority to lawfully carry
on its business as now being conducted and
specifically, that it has all requisite power and
authority to make, execute, deliver and perform this
Agreement.
25
XXI. LEGAL COMPLIANCE
Each party shall be subject to all applicable laws, rules,
regulations and ordinances issued by any national, state, or
local regulatory or governing body and may act in accordance
therewith until such time as the same may be hold invalid by
final judgment in it court of competent jurisdiction.
XXII. TERMINATION OF PREVIOUS AGREEMENT
Buyer and Koch agree that ft Previous Agreement shall be
terminated in its entirety, except for Articles V and VIII,
which shall survive.
IN WITNESS WHEREOF, the parties have executed this Agreement
to be effective on the Effective Date by their respective
officers thereunto duly authorized.
("Koch")
KOCH NITROGEN COMPANY
By:
/s/ Randy J. Morris
___________________________
Title: Director Industrial/
Chemical Sales
________________________
Attest:
/s/ Vicki D. Hill/Stuart R. Collin
__________________________________
Secretary/Assistant Secretary
("Buyer")
EL DORADO CHEMICAL COMPANY
By: /s/ James L. Wewers
___________________________
Title: President
________________________
Attest:
/s/ David M. Shear
_____________________________
Secretary
26
STATE OF KANSAS )
COUNTY OF SEDGWICK )
BEFORE ME, the undersigned, a Notary Public in and for said
County and State, on this ____day of ____________, 2000,
personally came and appeared__________________________, who in
the presence of me, said authority, declared and acknowledged
that he is the identical person who executed the foregoing
instrument in writing; that his signature thereto is his own true
and genuine signature; and that he executed said instrument in
his capacity as of Koch Nitrogen Company, a Nebraska corporation,
of his own free will and accord and as the free act and deed of
said Koch Nitrogen Company for the purposes and considerations
therein set forth and expressed.
______________________________
Notary Public
My Commission Expires:_____________________
STATE OF __________ )
COUNTY OF _________ )
BEFORE ME, the undersigned, a Notary Public in and for said
County and State, on this ____day of ____________, 2000,
personally came and appeared__________________________, who in
the presence of me, said authority, declared and acknowledged
that he is the identical person who executed the foregoing
instrument in writing, that his signature thereto is his own true
and genuine signature; and that he executed said instrument in
his capacity as of El Dorado Chemical Company, an Oklahoma
corporation, of his own fire will and accord and as the free act
and deed of said El Dorado Chemical Company, for the purposes and
considerations therein set forth and expressed.
______________________________
Notary Public
My Commission Expires:_________________________
28
ADDENDUM A
EXAMPLE OF FIXED CHARGE ADJUSTMENT CALCULATION
The following exemplifies the Procedure as set forth in Article
VI, Section E for calculating the Fixed Charge Adjustment and the
resulting Fixed Charge for calendar year 1999:
***
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
28