Exhibit 10.2
BAYTOWN NITRIC ACID
PROJECT AND SUPPLY AGREEMENT
By and Among
EL DORADO NITROGEN COMPANY,
EL DORADO CHEMICAL COMPANY
and
BAYER CORPORATION
****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.
BAYTOWN NITRIC ACID
PROJECT AND SUPPLY AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1: DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Additional Capital Investment. . . . . . . . . . . . . . . . . 3
1.2 Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Ammonia. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Ammonia Specifications . . . . . . . . . . . . . . . . . . . . 4
1.5 Back-up and Start-up Supply Plan . . . . . . . . . . . . . . . 4
1.6 Baseline Fixed Costs . . . . . . . . . . . . . . . . . . . . . 4
1.7 Baseline Period. . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Battery Limits . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Bayer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Bayer Agreement. . . . . . . . . . . . . . . . . . . . . . . . 5
1.11 Bayer Baytown Plant. . . . . . . . . . . . . . . . . . . . . . 5
1.12 Bayer Default Termination Fee. . . . . . . . . . . . . . . . . 5
1.12(A) Bayer Support Agreement. . . . . . . . . . . . . . . . . . . . 5
1.13 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.14 Capital Costs Monthly Charge . . . . . . . . . . . . . . . . . 6
1.14(A) Capital Costs Monthly Credit . . . . . . . . . . . . . . . . . 6
1.15 Change of Control Event. . . . . . . . . . . . . . . . . . . . 6
1.16 Commencement Date. . . . . . . . . . . . . . . . . . . . . . . 9
1.17 Compliance Program . . . . . . . . . . . . . . . . . . . . . . 9
1.18 Delivered Unit Cost. . . . . . . . . . . . . . . . . . . . . . 9
1.19 Delivery Systems . . . . . . . . . . . . . . . . . . . . . . . 10
1.20 Demonstrated Capacity. . . . . . . . . . . . . . . . . . . . . 10
1.21 Depreciation Cycle . . . . . . . . . . . . . . . . . . . . . . 10
1.22 EDNC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.23 EDNC Baytown Plant . . . . . . . . . . . . . . . . . . . . . . 10
1.24 EDNC Baytown Plant Net Book Value. . . . . . . . . . . . . . . 10
1.25 EDNC Default Termination Fee . . . . . . . . . . . . . . . . . 11
1.26 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 11
1.27 Egress Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.28 Environmental, Health and Safety Laws. . . . . . . . . . . . . 11
1.29 Event of Default . . . . . . . . . . . . . . . . . . . . . . . 12
1.30 Excluded Fixed Costs . . . . . . . . . . . . . . . . . . . . . 12
1.31 Expiration Termination Fee . . . . . . . . . . . . . . . . . . 12
1.32 First Operating Period . . . . . . . . . . . . . . . . . . . . 13
1.33 Fixed Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.34 Fixed Costs Monthly Charge . . . . . . . . . . . . . . . . . . 14
1.35 Fixed Price Purchase Option. . . . . . . . . . . . . . . . . . 15
1.36 Fixed Price Purchase Option Amount . . . . . . . . . . . . . . 15
1.37 Force Majeure Event. . . . . . . . . . . . . . . . . . . . . . 15
1.38 Fully Operational. . . . . . . . . . . . . . . . . . . . . . . 15
1.39 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.40 Ground Lease . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.41 Guarantor. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.42 Initial Capital Investment . . . . . . . . . . . . . . . . . . 16
1.43 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.44 Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.45 Leased Premises. . . . . . . . . . . . . . . . . . . . . . . . 17
1.46 Leasehold Improvements . . . . . . . . . . . . . . . . . . . . 18
1.47 Leveraged Lease. . . . . . . . . . . . . . . . . . . . . . . . 18
1.47A Monthly Net Capital Amount . . . . . . . . . . . . . . . . . . 18
1.48 Moving Average Actual Cost . . . . . . . . . . . . . . . . . . 18
1.49 Net Distributed Cost . . . . . . . . . . . . . . . . . . . . . 18
1.50 Net Sales Price. . . . . . . . . . . . . . . . . . . . . . . . 18
1.51 Nitric Acid Specifications . . . . . . . . . . . . . . . . . . 19
1.52 Operating Period . . . . . . . . . . . . . . . . . . . . . . . 19
1.53 Operative Agreements . . . . . . . . . . . . . . . . . . . . . 19
1.55 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.56 Production Shortfall . . . . . . . . . . . . . . . . . . . . . 20
1.57 Profit Component . . . . . . . . . . . . . . . . . . . . . . . 20
1.58 Project Agreements . . . . . . . . . . . . . . . . . . . . . . 21
1.59 Rebate Reconciliation Statement. . . . . . . . . . . . . . . . 21
1.60 Renewal Term . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.61 Right of First Refusal . . . . . . . . . . . . . . . . . . . . 21
1.62 Safety Improvement Program . . . . . . . . . . . . . . . . . . 21
1.63 Services Agreement . . . . . . . . . . . . . . . . . . . . . . 21
1.64 Spill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.65 Start-up Expenses. . . . . . . . . . . . . . . . . . . . . . . 21
1.66 Start-up Nitric Acid . . . . . . . . . . . . . . . . . . . . . 23
1.67 Stipulated Loss Value. . . . . . . . . . . . . . . . . . . . . 23
1.68 Substitute Blended Nitric Acid . . . . . . . . . . . . . . . . 23
1.69 Surplus Nitric Acid. . . . . . . . . . . . . . . . . . . . . . 23
1.70 Technology Agreement . . . . . . . . . . . . . . . . . . . . . 23
1.71 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1.72 Termination Date . . . . . . . . . . . . . . . . . . . . . . . 24
1.73 Total Capital Invested . . . . . . . . . . . . . . . . . . . . 24
1.74 Total Estimate . . . . . . . . . . . . . . . . . . . . . . . . 24
1.75 Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1.76 Variable Costs Adjustments . . . . . . . . . . . . . . . . . . 24
1.77 Variable Costs Component . . . . . . . . . . . . . . . . . . . 24
1.78 Waste. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2: NITRIC ACID. . . . . . . . . . . . . . . . . . . . . . . . . 24
2.1 Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2(A) Nitric Acid Specifications . . . . . . . . . . . . . . . . . . 25
2.2(B) Start-up Nitric Acid and Substitute Blended Nitric
Acid: Specifications. . . . . . . . . . . . . . . . . . . . . 26
2.3 Place of Delivery. . . . . . . . . . . . . . . . . . . . . . . 27
2.4 Most Favored Customer. . . . . . . . . . . . . . . . . . . . . 27
2.5 Sales Optimization . . . . . . . . . . . . . . . . . . . . . . 28
2.6 Swaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3: PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
**** APPROXIMATELY TWENTY-ONE (21) PAGES HAVE BEEN OMITTED FROM
THIS SECTION PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
SUCH PAGES HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO SUCH REQUEST.
3.10 Additional Capital Investments . . . . . . . . . . . . . . . . 48
(A) Additional Capital Investments. . . . . . . . . . . . . . 48
(B) Changes to Profit Component . . . . . . . . . . . . . . . 49
(C) Requirements for Additional Capital Investment. . . . . . 49
(D) Direct Additional Capital Investment by Bayer . . . . . . 50
3.11 Miscellaneous (Invoices, Forecasts and Planned
Outages) Provisions. . . . . . . . . . . . . . . . . . . . . . 50
(A) Forecasts by Bayer. . . . . . . . . . . . . . . . . . . . 50
(B) Forecasts by EDNC . . . . . . . . . . . . . . . . . . . . 50
(C) Effect of Forecasts . . . . . . . . . . . . . . . . . . . 51
(D) Monthly Purchase Orders/Monthly Sales Forecasts . . . . . 51
(E) Planned Outages . . . . . . . . . . . . . . . . . . . . . 52
(F) Contract Maintenance Expenditures . . . . . . . . . . . . 52
3.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 4: BAYER REBATE AND EGRESS FEE. . . . . . . . . . . . . . . . . 53
4.1 Rebate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.2 Egress Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 5: TITLE AND RISK OF LOSS . . . . . . . . . . . . . . . . . . . 54
5.1 Ammonia. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.2 Nitric Acid Produced by EDNC at the EDNC Baytown
Plant for Bayer. . . . . . . . . . . . . . . . . . . . . . . . 54
5.3 Nitric Acid From El Dorado and Third Party
Suppliers Under the Start-up Supply Plan . . . . . . . . . . . 54
5.4 Nitric Acid From El Dorado and Third Party
Suppliers Under the Back-up Supply Plan. . . . . . . . . . . . 54
5.5 Surplus Nitric Acid. . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6: NITRIC ACID WARRANTY AND TECHNOLOGY. . . . . . . . . . . . . 55
6.1 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.2 Technology Approval. . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7: LEASE OF REAL PROPERTY FOR AND CONSTRUCTION OF EDNC
BAYTOWN PLANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.1 Ground Lease . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.3 Ownership, Operation and Maintenance . . . . . . . . . . . . . 58
SECTION 8: REPRESENTATIONS, WARRANTIES AND COVENANTS. . . . . . . . . . 58
8.1 Representations, Warranties and Covenants of EDNC. . . . . . . 58
(A) Corporate Standing. . . . . . . . . . . . . . . . . . . . 58
(B) Binding Effect of Project Agreements. . . . . . . . . . . 58
(C) Consents. . . . . . . . . . . . . . . . . . . . . . . . . 59
(D) Conflicts . . . . . . . . . . . . . . . . . . . . . . . . 59
(E) Health and Safety Covenants . . . . . . . . . . . . . . . 59
(F) Notices Under the Operative Agreements. . . . . . . . . . 60
(G) Compliance with Laws & Permits. . . . . . . . . . . . . . 60
(H) EDNC Baytown Plant Capacity . . . . . . . . . . . . . . . 61
(I) Hazards Analyses. . . . . . . . . . . . . . . . . . . . . 61
(J) Common Carriers . . . . . . . . . . . . . . . . . . . . . 62
(K) Termination for Uneconomic or Surplus Condition . . . . . 62
(L) Operative Agreements. . . . . . . . . . . . . . . . . . . 62
(M) Assignment and Sublease of EDNC Baytown Plant . . . . . . 62
(N) Bankruptcy Remote . . . . . . . . . . . . . . . . . . . . 62
(O) Quality Standards . . . . . . . . . . . . . . . . . . . . 63
8.2 Representations, Warranties and Covenants of
El Dorado. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(A) Corporate Standing. . . . . . . . . . . . . . . . . . . . 64
(B) Binding Effect of Project Agreements. . . . . . . . . . . 64
(C) Consents. . . . . . . . . . . . . . . . . . . . . . . . . 64
(D) Conflicts . . . . . . . . . . . . . . . . . . . . . . . . 65
(E) Back-up and Start-up Supply . . . . . . . . . . . . . . . 65
(F) Health and Safety . . . . . . . . . . . . . . . . . . . . 65
8.3 Representations, Warranties and Covenants of Bayer . . . . . . 65
(A) Corporate Standing. . . . . . . . . . . . . . . . . . . . 65
(B) Binding Effect of Project Agreements. . . . . . . . . . . 66
(C) Consents. . . . . . . . . . . . . . . . . . . . . . . . . 66
(D) Conflicts . . . . . . . . . . . . . . . . . . . . . . . . 66
(E) Quality Standards . . . . . . . . . . . . . . . . . . . . 67
SECTION 9: AMMONIA. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.1 Supply by Bayer. . . . . . . . . . . . . . . . . . . . . . . . 67
9.2 Supply by EDNC . . . . . . . . . . . . . . . . . . . . . . . . 68
9.3 Measurement of Ammonia Supplied. . . . . . . . . . . . . . . . 68
(A) Metering. . . . . . . . . . . . . . . . . . . . . . . . . 68
(B) Calibration . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10: UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11: WASTE . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 12: INTERRUPTION OF AMMONIA, UTILITIES OR NITRIC ACID . . . . . 70
12.1 Interruption of EDNC Feedstock . . . . . . . . . . . . . . . . 70
12.2 Interruption of Nitric Acid. . . . . . . . . . . . . . . . . . 71
SECTION 13: PIPELINE AND DELIVERY SYSTEM CONSTRUCTION AND
MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
13.1 Delivery Systems . . . . . . . . . . . . . . . . . . . . . . . 71
13.2 Plant Systems. . . . . . . . . . . . . . . . . . . . . . . . . 71
13.3 Connection Points. . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 14: PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 15: INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . 72
15.1 EDNC's Insurance . . . . . . . . . . . . . . . . . . . . . . . 72
(A) Builders Risk (Course of Construction) Insurance. . . . . 72
(B) Insurance Against Loss or Damage. . . . . . . . . . . . . 73
(C) Insurance Against Public Liability. . . . . . . . . . . . 73
(D) Workers' Compensation and Other Insurance . . . . . . . . 74
15.2 Bayer's Insurance. . . . . . . . . . . . . . . . . . . . . . . 74
(A) Builders Risk (Course of Construction) Insurance. . . . . 74
(B) Insurance Against Loss or Damage. . . . . . . . . . . . . 75
(C) Insurance Against Public Liability. . . . . . . . . . . . 75
(D) Workers' Compensation and Other Insurance . . . . . . . . 76
15.3 Waiver of Subrogation Rights . . . . . . . . . . . . . . . . . 76
15.4 Miscellaneous Insurance Provisions . . . . . . . . . . . . . . 77
15.5 Form of Policies . . . . . . . . . . . . . . . . . . . . . . . 77
15.6 Self-Insurance . . . . . . . . . . . . . . . . . . . . . . . . 78
15.7 Blanket Coverage . . . . . . . . . . . . . . . . . . . . . . . 78
15.8 Failure of EDNC to Insure. . . . . . . . . . . . . . . . . . . 78
SECTION 16: DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . 79
16.1 EDNC Events of Default . . . . . . . . . . . . . . . . . . . . 79
16.2 EDNC Cure Periods. . . . . . . . . . . . . . . . . . . . . . . 80
16.3 Bayer Events of Default. . . . . . . . . . . . . . . . . . . . 82
16.4 Bayer Cure Periods . . . . . . . . . . . . . . . . . . . . . . 83
16.5 Bayer Remedies for EDNC Events of Default. . . . . . . . . . . 83
16.6 EDNC Remedies for Bayer Events of Default. . . . . . . . . . . 86
SECTION 17: TERMINATION/FIXED PRICE PURCHASE OPTION . . . . . . . . . . 88
17.1 Bayer's Optional Termination Rights. . . . . . . . . . . . . . 88
17.2 EDNC's Optional Termination Rights . . . . . . . . . . . . . . 89
17.3 Automatic Termination. . . . . . . . . . . . . . . . . . . . . 89
17.4 Effects of Termination . . . . . . . . . . . . . . . . . . . . 90
17.5 Fixed Price Purchase Option. . . . . . . . . . . . . . . . . . 93
SECTION 18: INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 95
18.1 EDNC Indemnification . . . . . . . . . . . . . . . . . . . . . 95
18.2 Bayer Indemnification. . . . . . . . . . . . . . . . . . . . . 97
18.3 Notice of Proceedings. . . . . . . . . . . . . . . . . . . . . 98
18.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 19: INJUNCTIVE RELIEF . . . . . . . . . . . . . . . . . . . . . 99
SECTION 20: TERM AND RENEWALS . . . . . . . . . . . . . . . . . . . . .100
20.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . .100
20.2 Renewals . . . . . . . . . . . . . . . . . . . . . . . . . . .100
SECTION 21: RIGHT OF FIRST REFUSAL. . . . . . . . . . . . . . . . . . .100
21.1(A) Change of Control Event. . . . . . . . . . . . . . . . . . . .100
21.1(B) Third Party Offer. . . . . . . . . . . . . . . . . . . . . . .101
21.2 Injunctive Relief and Specific Performance . . . . . . . . . .101
SECTION 22: DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . .102
22.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . .102
22.2 Mediation. . . . . . . . . . . . . . . . . . . . . . . . . . .102
22.3 Commencement of Legal Actions. . . . . . . . . . . . . . . . .103
22.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . .103
22.5 Submission to Jurisdiction . . . . . . . . . . . . . . . . . .103
22.6 Consent to Service of Process. . . . . . . . . . . . . . . . .104
SECTION 23: ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . .104
SECTION 24: MODIFICATION. . . . . . . . . . . . . . . . . . . . . . . .104
SECTION 25: PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . .105
SECTION 26: DEMURRAGE . . . . . . . . . . . . . . . . . . . . . . . . .105
SECTION 27: COOPERATION . . . . . . . . . . . . . . . . . . . . . . . .105
SECTION 28: NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . .106
SECTION 29: BINDING AGREEMENT . . . . . . . . . . . . . . . . . . . . .106
SECTION 30: WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . .107
SECTION 31: CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . .107
SECTION 32: COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 33: ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 34: AUDIT RIGHTS. . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 35: GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . .109
SECTION 36: FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . .110
SECTION 37: CONTROLLING AGREEMENT . . . . . . . . . . . . . . . . . . .110
BAYTOWN NITRIC ACID PROJECT AND SUPPLY 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.
THIS BAYTOWN NITRIC ACID PROJECT AND SUPPLY AGREEMENT
(this "Agreement") is made and entered into this ____ day of
June, 1997 (the "Effective Date"), by and among EL DORADO
NITROGEN COMPANY, an Oklahoma corporation ("EDNC"), EL DORADO
CHEMICAL COMPANY, an Oklahoma corporation ("El Dorado") and BAYER
CORPORATION, an Indiana corporation ("Bayer").
W I T N E S S E T H:
WHEREAS, Bayer owns and operates a chemical
manufacturing facility located in Baytown, Chambers County, Texas
(the "Bayer Baytown Plant");
WHEREAS, Bayer engages in a manufacturing process at
the Bayer Baytown Plant that requires nitric acid meeting certain
agreed-upon specifications described in Section 2 hereof ("Nitric
Acid");
WHEREAS, Bayer desires to obtain Nitric Acid for use in
connection with the Bayer Baytown Plant;
WHEREAS, EDNC agrees, in accordance with the terms and
conditions of this Agreement, the Services Agreement (as such
term is hereinafter defined) and the Ground Lease (as such term
is hereinafter defined), to construct, lease and operate a
manufacturing facility capable of producing Nitric Acid (the
"EDNC Baytown Plant") on real property located at the Bayer
Baytown Plant;
WHEREAS, Bayer agrees to supply to EDNC ammonia that is
required for the production of Nitric Acid and that is requested
by EDNC in connection with the operation of the EDNC Baytown
Plant ****;
WHEREAS, Bayer agrees, in accordance with the terms and
conditions of this Agreement and the Services Agreement, to
supply to EDNC certain utilities and services that are required
for the production of Nitric Acid at the EDNC Baytown Plant and
to share certain facilities and services with EDNC;
WHEREAS, EDNC agrees to supply Nitric Acid to Bayer,
subject to and in accordance with the terms and conditions of
this Agreement;
WHEREAS, beginning on the Commencement Date, as
hereinafter defined, Bayer desires to purchase from EDNC all of
Bayer's requirements for Nitric Acid for use at the Bayer Baytown
Plant; and
WHEREAS, beginning on the Commencement Date, EDNC will
use reasonable efforts to market and distribute to third parties
Nitric Acid manufactured at the EDNC Baytown Plant that is not
required by Bayer.
NOW, THEREFORE, in consideration of the premises, and
other good and valuable consideration, the receipt and
sufficiency of all of which is hereby acknowledged, and intending
to be legally bound, the parties hereby agree as follows:
SECTION 1: DEFINITIONS
Unless otherwise defined herein, the following terms
have the respective meanings assigned to them for purposes of
this Agreement:
1.1 Additional Capital Investment - Shall mean all
capital investments (other than Initial Capital Investments) made
by or on behalf of EDNC or the Owner Trustee (as hereafter
defined) at the EDNC Baytown Plant, all as determined in
accordance with GAAP, including without limitation capitalized
maintenance expenditures but excluding expenditures incurred in
connection with:
(A) unless approved by Bayer, additional
improvements for the purpose of enabling the storage or transport
of Nitric Acid to third parties from the EDNC Baytown Plant
(e.g., capital expended for the construction of a rail spur,
barge loading facilities or additional truck loading facilities
not contemplated by EDNC's Initial Capital Investment proposal);
(B) remediation, abatement, containment, clean-
up, disposal or response costs associated with Spills (as such
term is defined in the Services Agreement) at, on or under the
Leased Premises to the extent such costs are the responsibility
of EDNC pursuant to this Agreement; and
(C) any other item for which EDNC has expended
any funds pursuant to its indemnification obligations to Bayer
under this Agreement.
1.2 Affiliate - Shall mean any person, partnership,
corporation, or other entity that controls, is controlled by or
is under common control with a specified person, partnership,
corporation or other entity. For purposes of this definition,
"control" shall mean the power, whether direct or indirect, and
whether by exercise of voting power or contract or otherwise, to
direct the management policies and decisions of another entity.
1.3 Ammonia - All ammonia necessary for the
manufacture of Nitric Acid by EDNC at the EDNC Baytown Plant at
the operating rates necessary to meet Bayer's requirements of
Nitric Acid and EDNC's sales requirements of Surplus Nitric Acid,
which ammonia shall be supplied to EDNC by Bayer for its use and
as required by EDNC at the EDNC Baytown Plant pursuant to the
terms of this Agreement.
1.4 Ammonia Specifications - Shall mean the
specifications for Ammonia set forth on Schedule 9 to this
Agreement.
1.5 Back-up and Start-up Supply Plan - That certain
Back-up and Start-up Supply Plan set forth in the attached
Exhibit D.
1.6 Baseline Fixed Costs - Shall mean the aggregate
of all Fixed Costs paid by EDNC during the Baseline Period, which
amount shall include any real estate or property tax abatement in
EDNC's favor.
1.7 Baseline Period - Shall mean the second Operating
Period.
1.8 Battery Limits - The boundary lines of the Leased
Premises.
1.9 Bayer - Shall have the meaning set forth in the
preamble.
1.10 Bayer Agreement - Shall mean the agreement to be
entered into among Bayer, Security Pacific Leasing Corporation
(or such other party designated as "Owner Participant"
thereunder), Bayerische Landesbank, New York Branch, El Dorado,
EDNC, Wilmington Trust Company (or such other party designated as
"Indenture Trustee" thereunder), Boatmen's Trust Company of Texas
(or such other party designated as "Lessor" and "Owner Trustee"
thereunder), substantially in the form of the attached Exhibit F.
1.11 Bayer Baytown Plant - Shall have the meaning set
forth in the recitals.
1.12 Bayer Default Termination Fee - Shall mean ****
1.12(A) Bayer Support Agreement - Shall mean the
agreement to be entered into among Bayer, Security Pacific
Leasing Corporation (or such other party designated as "Owner
Participant" thereunder), Bayerische Landesbank, New York Branch,
EDNC, El Dorado, Wilmington Trust Company (or such other party
designated as "Indenture Trustee" thereunder), Boatmen's Trust
Company of Texas (or such other party designated as "Lessor" and
"Owner Trustee" thereunder) and Bank of America National Trust
and Savings Association, substantially in the form of the
attached Exhibit G.
1.13 Business Day - Any day other than a (i) Saturday,
(ii) Sunday or (iii) holiday on which national banks in New York
City, New York are not open for business.
1.14 Capital Costs Monthly Charge - Shall mean:
****
1.14(A) Capital Costs Monthly Credit - Shall mean ****
1.15 Change of Control Event - Shall mean any of the
following events:
(A) EDNC, El Dorado or LSB Industries, Inc. (a
Delaware corporation and the parent company of El Dorado,
hereinafter "LSB") is merged or consolidated into or with another
corporation or other legal person not affiliated with EDNC,
El Dorado or LSB and, as a result, (i) EDNC, El Dorado or LSB,
whichever is applicable, is not the surviving entity and
(ii) shareholders of the acquiring party have directly or
indirectly acquired more than a majority of the combined voting
power of the then-outstanding voting securities of such
corporation or person immediately after such transaction;
(B) EDNC, El Dorado or LSB sells or otherwise
transfers all or substantially all of its assets (other than
pursuant to a sale-leaseback transaction) to any other
corporation or other legal person not affiliated with EDNC,
El Dorado or LSB, or LSB sells or otherwise transfers a majority
of all of the voting equity securities of EDNC or El Dorado to
any other corporation or other legal person not affiliated with
LSB and, as a result of such sale or transfer, less than a
majority of the combined voting power of the then-outstanding
voting securities of such corporation or person immediately after
such sale or transfer is held in the aggregate by the holders of
Voting Stock (as defined below) of EDNC, El Dorado or LSB,
whichever is applicable, immediately prior to such sale or
transfer;
(C) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report), each
as promulgated pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), disclosing that any person (as
the term "person" is used in Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act) has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act) of
securities representing ten percent (10%) or more of the combined
voting power of the then-outstanding securities entitled to vote
generally in the election of directors of EDNC, El Dorado or LSB
(the "Voting Stock"), and such person has publicly disclosed or
otherwise manifested an intention to cause the occurrence of an
event described in subparagraphs (A), (B), (D) or (E) of this
Section 1.15 in respect of EDNC, El Dorado or LSB, and such
person is ultimately successful in affecting the occurrence of an
event described in subparagraphs (A), (B), (D) or (E) of this
Section 1.15;
(D) EDNC, El Dorado or LSB files a report or
proxy statement with the Securities and Exchange Commission,
pursuant to the Exchange Act, disclosing in response to Form 8-K
or Schedule 14A (or any successor schedule, form or report or
item therein) that a change of control of EDNC, El Dorado or LSB
has occurred or will occur in the future pursuant to any then-
existing contract or transaction (provided, however, that the
pledge of the capital stock of LSB, EDNC or El Dorado to a third
party lender in connection with a bona fide financing transaction
will not, absent a default under such financing transaction, be
considered in determining whether a Change of Control Event has
occurred under this Section 1.15(D)); or
(E) If during any period of two (2) consecutive
years, individuals who at the beginning of any such period
constitute the directors of EDNC, El Dorado or LSB cease for any
reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the relevant
company's stockholders, of each director of the relevant company
first elected during such period was approved by a vote of at
least a majority of the directors of the relevant company then
still in office.
1.16 Commencement Date - The date on which the EDNC
Baytown Plant is Fully Operational.
1.17 Compliance Program - Shall have the meaning set
forth in Section 8.1(G) hereof.
1.18 Delivered Unit Cost - Shall mean:
****
1.19 Delivery Systems - All pipelines, powerlines and
other fixtures and improvements to the Bayer Baytown Plant
(including, without limitation, pipe racks and other related
fixtures) that comprise the systems that are necessary to
transport to or from the Battery Limits: (i) Ammonia to be sold
to the EDNC Baytown Plant; (ii) Utilities to be supplied to the
EDNC Baytown Plant, including water treatment sewers and
pipelines; (iii) Nitric Acid produced at the EDNC Baytown Plant;
and (iv) Excess Steam (as defined in the Services Agreement) and
condensate produced at the EDNC Baytown Plant.
1.20 Demonstrated Capacity - Shall mean the highest
level of production of nitric acid at the EDNC Baytown Plant
during any Operating Period, adjusted for normal outages for
catalyst changes and turnarounds.
1.21 Depreciation Cycle - Shall mean depreciation on a
straight-line basis over a ten (10) year useful life from the
deemed date of any investment or financing, with no assumed
salvage value.
1.22 EDNC - Shall have the meaning set forth in the
preamble.
1.23 EDNC Baytown Plant - Shall have the meaning set
forth in the recitals.
1.24 EDNC Baytown Plant Net Book Value - The pro forma
book value of the EDNC Baytown Plant as of the date of
cancellation, expiration or termination of the Term, determined
as follows: the sum of the Initial Capital Investment plus any
Additional Capital Investment, minus the aggregate amount of all
Capital Costs Monthly Charges paid to the relevant date,
utilizing the Depreciation Cycle.
1.25 EDNC Default Termination Fee - Shall mean ****
1.26 Effective Date - Shall have the meaning set forth
in the preamble.
1.27 Egress Fee - The throughput charge of thirty-two
cents ($.32) per ton of Surplus Nitric Acid (one hundred percent
assay basis) shipped from the Leased Premises pursuant to Section
4.2 hereof.
1.28 Environmental, Health and Safety Laws - All
applicable federal, state and local laws relating to pollution or
protection of human health or the environment including, without
limitation, all laws, statutes, ordinances, rules, regulations,
orders, codes and notices relating to releases or threatened
releases of pollutants, contaminants, toxic or hazardous
substances or wastes into the environment, including, without
limitation, the following statutes, as amended from time to time:
(a) Resource Conservation and Recovery Act ("RCRA");
(ii) Comprehensive Environmental Response, Compensation and
Liability Act of 1980; (iii) Superfund Amendments and
Reauthorization Act of 1986; (iv) Clean Air Act, 42 U.S.C. Section 7401
et seq.; (v) The Clean Water Act, 33 U.S.C. Section 1251 et seq.;
(vi) Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and
(vii) Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.
1.29 Event of Default - Shall have the meaning set
forth in Section 16 hereof.
1.30 Excluded Fixed Costs - Shall mean any tax other
than those based upon revenue or income, insurance premiums,
Bayer's net distributed unit costs or allocation rates for
services and utilities, contract maintenance or EDNC hourly or
salaried wage rates and/or benefits.
1.31 Expiration Termination Fee - Shall mean ****
1.32 First Operating Period - Shall mean the period
from the Commencement Date through December 31 of the year in
which the Commencement Date occurs; provided, however, that in
the event such period is less than four (4) months in duration,
the First Operating Period shall be the period from the
Commencement Date through December 31 of the succeeding calendar
year.
1.33 Fixed Costs - Shall collectively mean ****
1.34 Fixed Costs Monthly Charge - Shall mean ****
1.35 Fixed Price Purchase Option - Shall have the
meaning set forth in the Leveraged Lease (as hereinafter
defined).
1.36 Fixed Price Purchase Option Amount - Shall be ****
1.37 Force Majeure Event - Any circumstances
materially interfering with the performance of this Agreement or
any of the other Project Agreements that is reasonably beyond the
control of the party hereto that is affected by such
circumstances, such as but not limited to fire; storm; flood; act
of God; war; explosion; sabotage; strike or other labor trouble;
shortage of labor, utilities, fuel or energy; embargo; car
shortage; accident; any new occurrence of a material
environmental hazard or catastrophe; expropriation of plant,
product, raw materials, utilities, fuel or energy in whole or in
part by federal or state authority; inability to secure machinery
or other equipment for the manufacture of the product; acts of
the federal, state or local government or any agency thereof,
including, without limitation, any material change in
Environmental, Health and Safety Laws.
1.38 Fully Operational - When the EDNC Baytown Plant
has first operated for (i) up to two hundred forty (240) hours
(such duration to be fixed at EDNC's option, but in no event
shall such duration be less than seventy-two (72) consecutive
hours) at full capacity producing Nitric Acid meeting the Nitric
Acid Specifications at a rate not less than 1265 short tons (1150
metric tons) per day during each day of operation and (ii) at
least seventy-two (72) hours at the turndown rate producing
Nitric Acid meeting the Nitric Acid Specifications.
1.39 GAAP - Shall mean generally accepted United
States accounting principles consistently applied.
1.40 Ground Lease - That certain Ground Lease, dated
as of the Effective Date and in the form of the attached
Exhibit A.
1.41 Guarantor - Shall mean El Dorado Chemical
Company.
1.42 Initial Capital Investment - Shall mean ****
1.43 Initial Term - Shall mean the initial term of
this Agreement commencing on the Effective Date and ending on the
tenth (10th) year following the Commencement Date; provided,
however, that if the Commencement Date has not occurred prior to
December 31, 2008, then the termination shall occur on
December 31, 2008, unless (a) sooner terminated as provided
hereunder, (b) extended in accordance with Section 20 of this
Agreement or (c) extended for a period equal to the duration of a
Force Majeure Event as agreed by the parties.
1.44 Laws - Shall have the meaning set forth in
Section 8.1(G) hereof.
1.45 Leased Premises - Shall have the meaning
specified in the Ground Lease.
1.46 Leasehold Improvements - Shall have the meaning
specified in the Ground Lease.
1.47 Leveraged Lease - Shall mean the Lease Agreement
to be entered into between EDNC and the Owner Trustee (as
hereafter defined).
1.47A Monthly Net Capital Amount - Shall mean ****
1.48 Moving Average Actual Cost - Shall mean ****
1.49 Net Distributed Cost - Shall mean ****
1.50 Net Sales Price - Shall mean ****
1.51 Nitric Acid Specifications - Shall mean the
specifications for Nitric Acid set forth in Section 2.2 hereof.
1.52 Operating Period - Shall mean the First Operating
Period and any subsequent calendar year beginning on the first
(1st) day of January immediately after the conclusion of the
First Operating Period and ending on the last day of each
December until the end of the Term; provided, however, that the
final Operating Period shall terminate on the date of termination
or expiration of this Agreement.
1.53 Operative Agreements - Shall mean the following
financing documents:
(A) Participation Agreement;
(B) Leveraged Lease (as defined in Section 1.47
hereof);
(C) Tax Indemnity Agreement;
(D) Trust Indenture and Security Agreement;
(E) Ground Lease Sublease;
(F) Construction Loan and Security Agreement;
(G) Bayer Agreement (as defined in Section 1.10
hereof);
(H) Lessor's Consent to Ground Lease Sublease
and Non-Disturbance Agreement;
(I) Bayer Support Agreement (as defined in
Section 1.12(A) hereof); and
(J) Security Agreement and Collateral Assignment
of Facility Documents,
by and among the parties thereto, and including any other
documents pertaining to such financing of the EDNC Baytown Plant,
which documents Bayer shall have the right to approve in its sole
discretion pursuant to Section 8.1(L) hereof.
1.54 Owner Trustee - Shall mean the equipment lessor
under the Leveraged Lease.
1.55 Permits - All necessary federal, state and local
governmental permits, approvals, licenses, authorizations and
consents required in connection with the design, construction and
operation of the EDNC Baytown Plant, including, without
limitation, all construction and environmental permits.
1.56 Production Shortfall - Shall mean ****
1.57 Profit Component - Shall mean ****
1.58 Project Agreements - Shall collectively mean this
Agreement, the Ground Lease, the Services Agreement, the
Technology Agreement and the Supplemental Agreement.
1.59 Rebate Reconciliation Statement - Shall have the
meaning ****
1.60 Renewal Term - Any renewal term of this Agreement
subsequent to the Initial Term, each of which shall be five (5)
years in duration unless sooner terminated as provided hereunder.
1.61 Right of First Refusal - Shall have the meaning
set forth in Section 21 hereof.
1.62 Safety Improvement Program - Shall have the
meaning set forth in Section 8.1(E)(2)(b) hereof.
1.63 Services Agreement - That certain Services
Agreement, dated as of the Effective Date and in the form of the
attached Exhibit B.
1.64 Spill - Shall have the meaning set forth in the
Services Agreement.
1.65 Start-up Expenses - Shall mean ****
1.66 Start-up Nitric Acid - Shall have the meaning set
forth in Section 2.2 hereof.
1.67 Stipulated Loss Value - Shall have the meaning
set forth in the Bayer Agreement.
1.68 Substitute Blended Nitric Acid - Shall have the
meaning set forth in Section 2.2 hereof.
1.69 Surplus Nitric Acid - Shall mean any Nitric Acid
produced by EDNC at the EDNC Baytown Plant that is sold to any
party other than Bayer and its Affiliates.
1.70 Technology Agreement - That certain Technology
Agreement, by and between Bayer, EDNC, ICF Kaiser Engineers, Inc.
and La Grande Paroisse S.A., in the form of the attached
Exhibit E.
1.71 Term - The Initial Term and all Renewal Terms of
this Agreement, as determined in accordance with Section 20
hereof.
1.72 Termination Date - The date of termination of the
Project Agreements pursuant to Section 17 or Section 21 hereof.
1.73 Total Capital Invested - Shall mean, at any given
time: (a) the Initial Capital Investment plus (b) the aggregate
amount of any Additional Capital Investments in the EDNC Baytown
Plant.
1.74 Total Estimate - Shall have the meaning specified
in Section 3.11(C) hereof.
1.75 Utilities - Shall have the meaning specified in
the Services Agreement.
1.76 Variable Costs Adjustments - ****
1.77 Variable Costs Component - Shall mean ****
1.78 Waste - Shall have the meaning specified in the
Services Agreement.
SECTION 2: NITRIC ACID
2.1 Supply - From the Commencement Date until the
Termination Date, Bayer and EDNC agree that Bayer shall acquire,
and EDNC shall supply, Bayer's monthly requirements of Nitric
Acid meeting the requirements set forth in Section 2.2(A) hereof,
to the extent of Bayer's needs for facilities located at the
Bayer Baytown Plant, from the EDNC Baytown Plant, up to the
maximum monthly production of the EDNC Baytown Plant. Bayer may
obtain any Nitric Acid requirements at the Bayer Baytown Plant in
excess of the available production of the EDNC Baytown Plant from
El Dorado or from any other source whatsoever. During any start-
up period and in the event of any planned or unplanned outage,
Bayer, EDNC and El Dorado agree that the Back-up and Start-up
Supply Plan, attached hereto as Exhibit D, shall become
operative. EDNC will use reasonable efforts to have the EDNC
Baytown Plant on-line by September 1, 1998. Bayer will use
reasonable efforts to have the Delivery Systems, excluding
ammonia and steam, on-line by February 1, 1998.
2.2(A) Nitric Acid Specifications - EDNC covenants
that it will construct the EDNC Baytown Plant to provide Nitric
Acid of:
(i) an assay of at least sixty-five percent
(65%);
(ii) an iron content of not more than one and
three-tenths parts per million (1.3 ppm) on a thirty (30) day
rolling average, and in no event to exceed ten parts per million
(10 ppm);
(iii) total oxides of nitrogen, as N2O3, of not
more than one hundred parts per million (100 ppm);
(iv) color of less than one hundred (100) APHA
units;
(v) a chloride content of not more than ten
parts per million (10 ppm); and
(vi) a sulfate content of not more than ten
parts per million (10 ppm);
During the first hour and a half following start-up of
the EDNC Baytown Plant, EDNC may provide Nitric Acid meeting the
minimum criteria set forth in Section 2.2(B) hereof ("Start-up
Nitric Acid"). During any planned or unplanned outage, EDNC
shall be permitted to provide nitric acid meeting the minimum
criteria set forth in Section 2.2(B) hereof ("Substitute Blended
Nitric Acid") pursuant to the Back-up and Start-up Supply Plan
set forth in Exhibit D hereto.
2.2(B) Start-up Nitric Acid and Substitute Blended
Nitric Acid: Specifications - EDNC covenants that Start-up
Nitric Acid and Substitute Blended Nitric Acid shall meet the
following minimum specifications:
(i) an assay of at least sixty-four percent
(64%);
(ii) an iron content of not more than ten parts
per million (10 ppm);
(iii) total oxides of Nitrogen, as N2O3, content
of not more than one hundred fifty parts per million (150 ppm);
(iv) a color of not more than one hundred fifty
(150) APHA units;
(v) a chloride content of not more than ten
parts per million (10 ppm); and
(vi) a sulfate content of not more than one
hundred fifty parts per million (150 ppm).
Notwithstanding the above, Bayer may, in its sole
discretion, waive the specifications set forth in Sections 2.2(A)
and 2.2(B) hereof. EDNC's lab test results or lab test results
performed by Bayer on behalf of EDNC shall constitute conclusive
findings that the nitric acid provided hereunder meets or fails
to meet the specifications set forth in this Section 2.2.
2.3 Place of Delivery - Unless otherwise provided
herein, Bayer shall accept physical delivery of Nitric Acid that
is purchased hereunder at EDNC's product output flange at the
Battery Limits.
2.4 Most Favored Customer -
****
2.5 Sales Optimization - EDNC hereby covenants that it
will exercise diligent efforts to maximize sales to third parties
of Nitric Acid produced at the EDNC Baytown Plant to the extent
such Nitric Acid is not purchased by Bayer.
2.6 Swaps - All in-kind transfers ("swap"
arrangements) entered into by EDNC shall provide for the return
of inventory to, or replacement of inventory by, the EDNC Baytown
Plant.
SECTION 3: PRICE
**** APPROXIMATELY TWENTY-ONE (21) PAGES HAVE BEEN OMITTED FROM
THIS SECTION PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
SUCH PAGES HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO SUCH REQUEST.
3.11 Miscellaneous (Invoices, Forecasts and Planned
Outages) Provisions -
(A) Forecasts by Bayer - Prior to the
Commencement Date and not less than ninety (90) days before the
end of each Operating Period, Bayer shall provide to EDNC an
eighteen (18) month written forecast as to the anticipated
quantity of Nitric Acid to be purchased by Bayer during each
month of the following Operating Period and as to the schedule on
which Nitric Acid is to be purchased. Such forecasts shall
include anticipated daily average and minimum and maximum daily
use rates of Nitric Acid by Bayer.
(B) Forecasts by EDNC - Prior to the Commencement
Date and not less than ninety (90) days before the end of each
Operating Period, EDNC shall provide to Bayer (a) an eighteen
(18) month written sales forecast as to the quantity of Nitric
Acid produced at the EDNC Baytown Plant to be sold to third
parties by EDNC during the subsequent eighteen (18) month period
and the schedule on which Nitric Acid is to be sold and (b) an
estimate of Additional Capital Investment(s) to be undertaken by
EDNC during the subsequent calendar year.
(C) Effect of Forecasts - The parties shall add
five percent (5%) to the daily, monthly and total estimates
provided by Bayer under Section 3.11(A), the sum of each of which
shall be hereinafter referred to as the "Total Estimates." EDNC
may enter into long-term commitments to sell to third parties at
any time nitric acid produced at the EDNC Baytown Plant on a
daily, monthly or annual basis in excess of the Total Estimates,
and Bayer shall have no claim to nitric acid produced at the EDNC
Baytown Plant in excess of the Total Estimate. Except as
provided in the foregoing sentence, all forecasts and estimates
provided under this Section 3.11 shall be for information and
planning purposes only and shall not be construed as firm orders
or firm commitments on either party's part.
(D) Monthly Purchase Orders/Monthly Sales
Forecasts - Not less than five (5) days prior to the end of each
month, Bayer shall place monthly purchase orders for Nitric Acid
to be acquired in the next succeeding month. Such purchase
orders shall be subject to reasonable revision, modification or
cancellation, and to unplanned outages at the Bayer Baytown Plant
or the EDNC Baytown Plant. Not less than five (5) days prior to
the end of each month, EDNC shall provide Bayer with a monthly
sales forecast for nitric acid to be sold to third parties in a
given month. Such EDNC forecasts shall be subject to reasonable
revisions, modification or cancellation and to unplanned outages
at the Bayer Baytown Plant, the EDNC Baytown Plant or plants of
third party customers (including El Dorado's Arkansas plant).
(E) Planned Outages - EDNC shall provide to Bayer
at least sixty (60) days' notice of any planned outage of the
EDNC Baytown Plant, and shall schedule any such outage only with
the prior written consent of Bayer (which shall not be
unreasonably withheld). Bayer shall provide to EDNC at least
sixty (60) days' notice of any planned outage of any relevant
production unit located at Baytown and shall schedule any such
outage only with the prior written consent of EDNC (which shall
not be unreasonably withheld). The parties will work together to
coordinate outages to prevent any adverse impact that may be
caused by a planned outage of the EDNC Baytown Plant or any other
relevant production unit in Baytown.
(F) Contract Maintenance Expenditures - EDNC will
consult with Bayer on all major contract maintenance activities
to manage contract maintenance costs as referenced in
Schedule 1.33 hereof.
3.12 Taxes - All new taxes, excises and other
governmental charges, including, without limitation, all charges
for waste, sewer, solid waste disposal and similar services, and
all increases in existing taxes, excises and charges, except
taxes on or measured by revenues or income or similar taxes
imposed after the Effective Date of this Agreement, or after the
date any price is determined or modified, on or as a result of
the production, sale or transportation of the goods sold
hereunder that EDNC may be required to pay, may be added to the
Baseline Fixed Costs (but shall not adjust the Fixed Costs
Monthly Charge).
SECTION 4: BAYER REBATE AND EGRESS FEE
4.1 Rebate -
(A)****
(B) Within forty-five (45) days after the end of
each Operating Period, EDNC shall determine the actual rebate for
such Operating Period in accordance with Section 4.1(A) above and
shall deliver to Bayer a statement containing the amount of such
actual rebate, together with the calculation of the amount of the
reconciliation payment due from EDNC to Bayer for such Operating
Period (a "Rebate Reconciliation Statement").
(C) For purposes of this Section 4, at the end of
each Operating Period EDNC shall provide Bayer a sales report
reflecting the total quantity and sales of Surplus Nitric Acid
sold from the Leased Premises during that Operating Period.
4.2 Egress Fees - ****
SECTION 5: TITLE AND RISK OF LOSS
5.1 Ammonia - EDNC shall have title to and risk of
loss of Ammonia when such Ammonia enters the input flange to the
EDNC Baytown Plant.
5.2 Nitric Acid Produced by EDNC at the EDNC Baytown
Plant for Bayer - When Bayer receives the Nitric Acid at the
Nitric Acid output flange, title to and risk of loss of the
Nitric Acid shall pass to Bayer.
5.3 Nitric Acid From El Dorado and Third Party
Suppliers Under the Start-up Supply Plan - When Nitric Acid is
shipped from El Dorado or a third party to Bayer at the Bayer
Baytown Plant pursuant to the Start-up Supply Plan, title to and
risk of loss of the Nitric Acid shall pass to Bayer at the
battery limits of the El Dorado plant or the third party plant,
F.O.B. such producing plant.
5.4 Nitric Acid From El Dorado and Third Party
Suppliers Under the Back-up Supply Plan - When Nitric Acid is
shipped from El Dorado or a third party to Bayer at the Bayer
Baytown Plant pursuant to the Back-up Supply Plan, title to and
risk of loss of the Nitric Acid shall pass to Bayer at the
battery limits of the El Dorado plant or the third party plant,
F.O.B. such producing plant.
5.5 Surplus Nitric Acid - When Surplus Nitric Acid is
shipped from the EDNC Baytown Plant to a third party customer,
EDNC's standard terms and conditions of sale shall be F.O.B. EDNC
Baytown Plant and shall provide that title to and risk of loss of
the Nitric Acid pass to the third party customer at the Battery
Limits of the EDNC Baytown Plant.
SECTION 6: NITRIC ACID WARRANTY AND TECHNOLOGY
6.1 Title - EDNC warrants that the Nitric Acid
delivered by it shall conform to the Nitric Acid Specifications
and shall be free of all liens and encumbrances. Upon delivery
to Bayer, Bayer shall obtain good and marketable title to the
Nitric Acid. EDNC shall be released from this warranty if and to
the extent that the failure to meet the Nitric Acid
Specifications was attributable to Bayer's failure to meet the
specifications for, or quantities of, Ammonia or Utilities set
forth in the Services Agreement. The parties hereby agree to
take reasonable efforts to mitigate the application of this
Section by promptly notifying the other party of any detected
deficiency in the Ammonia and Utilities provided.
6.2 Technology Approval - EDNC shall select the
technology and engineering services necessary for the design,
construction and operation of the EDNC Baytown Plant with the
approval of Bayer, which approval shall not be unreasonably
withheld. The technology agreement shall be in form and
substance satisfactory to Bayer and shall provide that Bayer
shall have the right to continue to use the technology necessary
to operate the EDNC Baytown Plant from and after the Termination
Date.
SECTION 7: LEASE OF REAL PROPERTY FOR AND CONSTRUCTION OF EDNC
BAYTOWN PLANT
7.1 Ground Lease - Contemporaneously herewith, Bayer
and EDNC have entered into the Ground Lease pursuant to which
Bayer agrees to lease and EDNC agrees to rent the Leased Premises
for the Term. The Ground Lease shall be recorded by Bayer in the
land records of the office of the County Clerk of Chambers
County, Texas. EDNC shall hold and possess the Leased Premises
for the Term in accordance with the terms and conditions of the
Ground Lease (subject to the terms of any Operative Agreements
entered into by EDNC and approved by Bayer in accordance with
Section 8.1(L) hereof).
7.2 Construction -
(A) Subject to the issuance of all required
Permits, EDNC shall diligently proceed with the design and
construction of the EDNC Baytown Plant on the Leased Premises.
The EDNC Baytown Plant shall be designed and constructed (i) to
meet the criteria set forth on the attached Exhibit C and (ii) in
accordance with detailed plans and specifications that will be
made available to Bayer upon Bayer's reasonable request.
(B) Bayer shall consult with EDNC regarding the
construction schedule of the EDNC Baytown Plant, and Bayer shall
not direct activities of EDNC's contractors performing
construction services with respect to the EDNC Baytown Plant
except in emergency circumstances or situations requiring
immediate attention (e.g., obstruction of roadways, safety or
environmental issues).
(C) In order to avoid delays in the construction
of the EDNC Baytown Plant, Bayer shall use reasonable efforts to
respond to a request for a time-critical change order within two
(2) working days, but in no event shall Bayer's response time
exceed three (3) working days.
(D) In designing and constructing the EDNC
Baytown Plant, the parties have assumed that the combination of
Bayer's Nitric Acid demand and third party Nitric Acid demand
("Combined Demand") will equal or exceed the technology
provider's guaranteed turndown rate, which is currently estimated
to be ****. If the Combined Demand does not equal or exceed such
guaranteed turndown rate, the parties will exercise reasonable
efforts to mitigate the negative consequences of such weak
Combined Demand. If the Combined Demand in any Operating Period
is insufficient to achieve the guaranteed turndown rate, Bayer
and EDNC agree to negotiate in good faith appropriate temporary
adjustments to the Fixed Costs component, the Variable Costs
component, the Nitric Acid Specifications and any other aspects
of the Project Agreements that are negatively affected.
7.3 Ownership, Operation and Maintenance - EDNC shall
construct, operate and maintain all Leasehold Improvements on the
Leased Premises in connection with the EDNC Baytown Plant,
subject to the terms and conditions of the Ground Lease. Owner
Trustee will own the Leasehold Improvements and will lease the
same to EDNC pursuant to the Operative Agreements.
SECTION 8: REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 Representations, Warranties and Covenants of
EDNC - EDNC hereby represents and warrants to Bayer as follows:
(A) Corporate Standing - EDNC is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Oklahoma, and is duly qualified to transact
business and is in good standing in each jurisdiction in which
the conduct of its business requires such qualification. EDNC
has the full corporate power and authority to enter into and
perform this Agreement and all Project Agreements and to
consummate the transactions therein. The execution, delivery and
performance of the Project Agreements are authorized by all
necessary corporate action of EDNC.
(B) Binding Effect of Project Agreements - The
Project Agreements constitute legal, valid and binding
obligations of EDNC, enforceable against EDNC in accordance with
their terms. The execution, delivery and performance of the
Project Agreements do not violate or conflict with any provision
of the Articles of Incorporation or Bylaws of EDNC.
(C) Consents - Except for the Permits, no
consent, approval or authorization from, notice to, or filing or
registration with, any governmental authority or agency, or from,
to or with any other person or entity under any contract, license
or agreement to which EDNC is a party, is necessary or required
to be obtained or made by EDNC in connection with the execution,
delivery or performance of the Project Agreements by EDNC or the
consummation by EDNC of the transactions contemplated by the
Project Agreements.
(D) Conflicts - There is no:
(1) litigation or governmental proceeding
pending or, so far as is known to any officer of EDNC,
threatened;
(2) asserted claim or basis for any claim of
default, breach of liability under or violation of any law, rule
or regulation applicable to EDNC; nor
(3) any agreement or order to which EDNC is
a party or by which EDNC is bound, which in any such case, would
prohibit or materially delay the ability of EDNC to execute,
deliver and perform the Project Agreements in accordance with
their terms.
(E) Health and Safety Covenants -
(1) EDNC hereby agrees (a) to have "practice
in place" for all Chemical Manufacturers' Association Responsible
Care Codes within one (1) year of the Commencement Date and
(b) to enter the review/implementation phase of the Responsible
Care Codes within three (3) years of the Commencement Date.
(2)(a) EDNC hereby agrees to exercise
reasonable efforts to design and operate the EDNC Baytown Plant
with the objective of achieving an Occupational Health and Safety
Administration total Recordable Occupational Injury or Illness
rate (as defined in 29 C.F.R. Section 1904.12 (1996); hereinafter
"Recordable Incidence Rate") goal consistent with Bayer's
Recordable Incidence Rate goal for the Bayer Baytown Plant.
(b) In the event that injuries at the EDNC
Baytown Plant indicate to Bayer in its reasonable discretion that
there exists (i) a pattern of improper safety practice by EDNC at
the EDNC Baytown Plant, (ii) a failure of EDNC to maintain a safe
working environment at the EDNC Baytown Plant or (iii) a failure
to follow EDNC's safety plan (as previously approved by Bayer) at
the EDNC Baytown Plant, then (x) EDNC shall meet with
representatives of Bayer to develop a safety improvement program
("Safety Improvement Program") for the EDNC Baytown Plant to
bring its operations into compliance or to cure the shortcomings
Bayer has identified to EDNC and (y) EDNC shall take all
reasonable steps to implement such Safety Improvement Program.
(F) Notices Under the Operative Agreements - EDNC
hereby agrees to notify promptly, and agrees to require Owner
Trustee to notify promptly, Bayer of any EDNC default under the
Operative Agreements.
(G) Compliance with Laws & Permits - (1) EDNC
will construct and operate the EDNC Baytown Plant in full
compliance with all applicable federal, state and local laws,
statutes, ordinances, rules, regulations, orders, codes,
judgments, decrees and other governmental requirements applicable
to EDNC and/or the EDNC Baytown Plant (including, without
limitation, Environmental, Health and Safety Laws) (collectively,
"Laws") and in compliance with the terms of all applicable
operating, environmental, occupancy and other permits and similar
requirements. EDNC will promptly notify Bayer of the occurrence
of any violation of any such Law and/or the occurrence of any
Spill (as defined in the Services Agreement) at the EDNC Baytown
Plant.
(2) In the event that any occurrences at the
EDNC Baytown Plant indicate to Bayer in its reasonable discretion
that there exists a pattern of conduct resulting in frequent or
material violations of Laws, EDNC shall meet with representatives
of Bayer promptly and upon request of Bayer to develop a remedial
program ("Compliance Program") for the EDNC Baytown Plant to
bring its operations into compliance with Laws or to cure the
shortcomings identified to EDNC by Bayer, and EDNC shall take all
reasonable steps to implement such Compliance Program.
(H) EDNC Baytown Plant Capacity - EDNC shall
design and construct the EDNC Baytown Plant to have a production
capacity of 443,000 short tons of Nitric Acid per year.
(I) Hazards Analyses - EDNC shall perform a
process safety hazards analysis of the proposed Nitric Acid
manufacturing process. In addition, EDNC shall perform a safety
hazards analysis of the transportation and handling of Nitric
Acid (including Nitric Acid provided under the Back-up and Start-
up Supply Plan). Representatives of Bayer shall participate in
such safety hazards analyses.
(J) Common Carriers - EDNC shall select common
carriers for the transportation of Nitric Acid from a list of
common carriers that has been pre-approved by Bayer.
(K) Termination for Uneconomic or Surplus
Condition - EDNC will not terminate the Leveraged Lease for
uneconomic or surplus condition pursuant to the Leveraged Lease
without first obtaining the prior written consent of Bayer, which
consent Bayer may grant or withhold in its sole discretion.
(L) Operative Agreements - EDNC hereby agrees to
obtain Bayer's prior written consent (which consent Bayer may
grant or withhold in its sole discretion) before executing any of
the Operative Agreements. EDNC further agrees not to amend any
of the Operative Agreements in a manner that could materially
adversely effect Bayer without the prior written consent of
Bayer, which consent may not be unreasonably withheld.
(M) Assignment and Sublease of EDNC Baytown Plant
- - EDNC agrees not to assign or sublease (or to allow the Owner
Trustee to assign or sublease) the EDNC Baytown Plant or any
portion thereof to a third party without first obtaining the
express written consent of Bayer, which consent Bayer may grant
or withhold in its sole discretion.
(N) Bankruptcy Remote - EDNC will execute a
Supplemental Agreement substantially in the form of the attached
Exhibit H. EDNC covenants that the corporate purpose of EDNC, as
set forth in its articles/certificate of incorporation, is (a) to
engage in all activities reasonably related to (i) the production
of Nitric Acid at the EDNC Baytown Plant, (ii) the provision of
Nitric Acid to Bayer pursuant to the Project Agreements and (iii)
the sale of nitric acid produced at the EDNC Baytown Plant to
third parties and (b) to engage in all activities reasonably
related to obtaining financing for the construction, maintenance
and operation of the EDNC Baytown Plant.
(O) Quality Standards - EDNC will cooperate with
Bayer to achieve such quality standards and certifications (for
example, ISO 9000 standards) as either party may reasonably
request.
(P) Fixed Price Purchase Option - EDNC shall
promptly notify Bayer not less than sixty (60) days prior to the
date upon which EDNC may exercise the Fixed Price Purchase Option
(as such date is determined under the Operative Agreements) of
EDNC's intention to exercise or to decline to exercise such Fixed
Price Purchase Option. EDNC agrees not to exercise the Fixed
Price Purchase Option without first obtaining the written consent
of Bayer, which consent Bayer may grant or withhold in its sole
and absolute discretion. Bayer may, in the event that EDNC
notifies Bayer of its intention not to exercise the Fixed Price
Purchase Option, direct EDNC to exercise the Fixed Price Purchase
Option. In such event, EDNC shall act in accordance with Bayer's
instructions. If Bayer either (i) consents to the exercise of
the Fixed Price Purchase Option by EDNC or (ii) requires the
exercise thereof by EDNC, then Bayer shall pay the Fixed Price
Purchase Option Amount. The rights of Bayer and EDNC in such
circumstances shall be governed by the provisions of Section 17.5
hereof.
8.2 Representations, Warranties and Covenants of
El Dorado - El Dorado hereby represents and warrants to Bayer as
follows:
(A) Corporate Standing - El Dorado is a
corporation duly organized, validly existing and in good standing
under the laws of the state of Oklahoma, and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business requires such qualification.
El Dorado has the full corporate power and authority to enter
into and perform this Agreement and all Project Agreements and to
consummate the transactions therein. The execution, delivery and
performance of the Project Agreements are authorized by all
necessary corporate action of El Dorado.
(B) Binding Effect of Project Agreements - The
Project Agreements constitute legal, valid and binding
obligations of El Dorado, enforceable against El Dorado in
accordance with their terms. The execution, delivery and
performance of the Project Agreements do not violate or conflict
with any provision of the Articles of Incorporation or Bylaws of
El Dorado.
(C) Consents - Except for the Permits, no
consent, approval or authorization from, notice to, or filing or
registration with any governmental authority or agency, or from,
to or with any other person or entity under any contract, license
or agreement to which El Dorado is a party is necessary or
required to be obtained or made by El Dorado in connection with
the execution, delivery or performance of the Project Agreements
by El Dorado or the consummation by El Dorado of the transactions
contemplated by the Project Agreements.
(D) Conflicts - There is no:
(1) litigation or governmental proceeding
pending or, so far as is known to any officer of El Dorado,
threatened;
(2) asserted claim or basis for any claim of
default, breach of liability under or violation of any law, rule
or regulation applicable to El Dorado; nor
(3) any agreement or order to which
El Dorado is a party or by which El Dorado is bound, which, in
any such case, would prohibit or materially delay the ability of
El Dorado to execute, deliver and perform the Project Agreements
in accordance with their terms.
(E) Back-up and Start-up Supply - El Dorado will
supply back-up and Start-up Nitric Acid to Bayer in accordance
with the Back-up and Start-up Supply Plan set forth in Exhibit D
hereof.
(F) Health and Safety - El Dorado represents and
warrants that El Dorado is a member of the Chemical
Manufacturers' Association.
8.3 Representations, Warranties and Covenants of
Bayer - Bayer hereby represents and warrants to EDNC as follows:
(A) Corporate Standing - Bayer is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Indiana. Bayer is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business requires such qualification.
Bayer has the full corporate power and authority to enter into
and perform this Agreement and all Project Agreements to which
Bayer is a party and to consummate the transactions therein. The
execution, delivery and performance of the Project Agreements are
authorized by all necessary corporate action of Bayer.
(B) Binding Effect of Project Agreements - The
Project Agreements constitute legal, valid and binding
obligations of Bayer, enforceable against Bayer in accordance
with their terms. The execution, delivery and performance of the
Project Agreements do not violate or conflict with any provision
of the Articles of Incorporation or Bylaws of Bayer.
(C) Consents - Except for the Permits, no
consent, approval or authorization from, or notice to, or filing
or registration with any governmental authority or agency, or
from, to or with any other person or entity under any contract,
license or agreement to which Bayer is a party is necessary or
required to be obtained or made by Bayer in connection with the
execution, delivery or performance of the Project Agreements by
Bayer or the consummation by Bayer of the transactions
contemplated by the Project Agreements.
(D) Conflicts - There is no:
(1) litigation or governmental proceeding
pending or, so far as is known to any officer of Bayer,
threatened;
(2) asserted claim or basis for any claim of
default, breach of liability under or violation of any law, rule
or regulation applicable to Bayer; nor
(3) any agreement or order to which Bayer is
a party or by which Bayer is bound; which, in any such case,
would prohibit or materially delay the ability of Bayer to
execute, deliver and perform the Project Agreements in accordance
with their terms.
(E) Quality Standards - Bayer will cooperate with
EDNC to achieve such quality standards and certifications (for
example, ISO 9000 standards) as either party may reasonably
request.
SECTION 9: AMMONIA
9.1 Supply by Bayer - Bayer shall supply to EDNC at
the Battery Limits of the EDNC Baytown Plant the Ammonia for
EDNC's use in manufacturing Nitric Acid; provided, however, that
Bayer shall not be obligated to supply EDNC with more than One
Hundred Fifteen percent (115%) of the monthly nameplate
requirements of the EDNC Baytown Plant. **** Bayer warrants
that the Ammonia supplied hereunder shall meet the applicable
Ammonia Specifications set forth on the attached Schedule 9.
Bayer covenants that such Ammonia shall be free of all liens and
encumbrances. The Ammonia shall be delivered by or on behalf of
Bayer to EDNC at the Battery Limits of the EDNC Baytown Plant via
the Delivery System or other agreed-upon mechanism. Bayer shall
invoice EDNC monthly for Ammonia provided by Bayer.
9.2 Supply by EDNC - Subject to the terms of any
ammonia procurement contracts between Bayer and its ammonia
supplier(s) and subject to the satisfactory resolution of any
logistical issues between Bayer and EDNC regarding the
segregation and maintenance of ammonia inventory, the parties
hereby agree that upon EDNC's request the parties will negotiate
in good faith the possibility of the sourcing of ammonia for
third party sales by EDNC on its own behalf (provided, however,
that this clause shall not be interpreted to require Bayer to pay
any premium, increased cost or penalty for Ammonia under its
procurement contracts as a result of such direct sourcing by
EDNC).
9.3 Measurement of Ammonia Supplied
(A) Metering - EDNC shall install, operate and
maintain, at its expense, metering equipment to measure EDNC's
consumption of the Ammonia supplied by pipeline. EDNC's readings
will be the basis upon which any charges will be assessed against
EDNC for the consumption of Ammonia.
(B) Calibration - EDNC shall calibrate all meters
in accordance with manufacturer's recommendations. If dual in-
line meters are installed, EDNC shall also calibrate the meters
relative to each other. EDNC shall designate one meter as the
primary meter from which all readings shall be taken. The second
meter's readings shall be used during failure, testing or
recalibration of the first meter and to periodically verify the
reading of the first meter. EDNC shall give Bayer three (3) days
notice of, and the right to observe, the calibration of any
meters installed by EDNC. EDNC shall recalibrate each meter as
recommended by the manufacturer. If during any such periodic
recalibration the meter is found to be inaccurate by more than
one-half of one percent (0.50%) of indicated value, or the second
of the dual meters differs by more than one half of one percent
with the first meter, then EDNC shall repair or recalibrate such
meter to the lesser of: (i) manufacturer's tolerances; or
(ii) plus or minus one-half of one percent (0.50%) of indicated
value. If a meter is inaccurate by more than one-half of one
percent (0.50%) of indicated value, the party that has benefitted
from the inaccuracy shall refund to the other party one hundred
percent (100%) of the discrepancy, back to the date of the last
calibration or, if identifiable, back to the date of the failure
that triggered the inaccuracy. If feasible, EDNC shall affix its
seal to each meter after each calibration. EDNC agrees to
exercise reasonable efforts to conduct all meter readings,
inspections, recalibrations and repairs in a manner that will not
unreasonably interfere with Bayer's operations at the Bayer
Baytown Plant. EDNC shall also permit Bayer, at Bayer's expense,
to inspect the meters at any time, provided such inspection does
not unreasonably interfere with EDNC's operations at the EDNC
Baytown Plant.
SECTION 10: UTILITIES
In accordance with and subject to the terms, conditions
and limitations of the Services Agreement, Bayer shall supply to
EDNC at the Battery Limits of the EDNC Baytown Plant the
Utilities.
SECTION 11: WASTE
In accordance with and subject to the terms, conditions
and limitations of the Services Agreement, Bayer shall accept at
the Battery Limits of the EDNC Baytown Plant and shall be
responsible for the proper treatment and disposal, in accordance
with all applicable Environmental, Health and Safety Laws, of
certain Waste produced in connection with the operation of the
EDNC Baytown Plant.
SECTION 12: INTERRUPTION OF AMMONIA, UTILITIES OR NITRIC ACID
12.1 Interruption of EDNC Feedstock - If Bayer is
unable to or fails to deliver Ammonia or Utilities to the EDNC
Baytown Plant as required by the Project Agreements, then EDNC
may procure such Ammonia or Utilities elsewhere through any
commercially reasonable source. Notwithstanding the foregoing,
EDNC may supply such Ammonia and Utilities through the
infrastructure of the Bayer Baytown Plant only with the prior
approval of Bayer, which may not be unreasonably withheld. Any
procurement by EDNC of Ammonia or Utilities from parties other
than Bayer shall be at EDNC's risk, and shall have no effect on
the warranty made to Bayer by EDNC pursuant to Section 6 hereof.
If Bayer is unable to or fails to deliver Ammonia or Utilities as
required by the Project Agreements, EDNC's remedy for such
failure is set forth in Section 16 hereof.
12.2 Interruption of Nitric Acid - If EDNC is unable to
or fails to provide Bayer's monthly Nitric Acid requirements for
the Bayer Baytown Plant and EDNC is unable to provide back-up
supply to Bayer, then Bayer may procure such Nitric Acid
elsewhere through any commercially reasonable source. EDNC shall
permit Bayer to use EDNC's four (4) spot truck loading and
un-loading rack if Bayer requires use of the same for the receipt
of nitric acid from third party suppliers.
SECTION 13: PIPELINE AND DELIVERY SYSTEM CONSTRUCTION AND
MAINTENANCE
13.1 Delivery Systems - Bayer shall design, engineer
and construct the Delivery Systems. However, Bayer shall be
under no obligation to design, engineer or construct any
improvement within the Battery Limits of the Leasehold Premises,
including without limitation any improvement that relates to the
transportation of Ammonia, Utilities, Waste or other material to
or from the EDNC Baytown Plant to tie-in points with the Delivery
Systems at the Battery Limits.
13.2 Plant Systems - EDNC shall design, engineer and
construct the improvements necessary to transport Ammonia,
Utilities, Waste or other material provided or handled by the
Delivery Systems to or from tie-in points at the Battery Limits
to the EDNC Baytown Plant.
13.3 Connection Points - Bayer and EDNC shall agree
upon the connections at the Battery Limits between the Delivery
Systems and EDNC's connections thereto. Bayer shall be
responsible for operating and maintaining and shall own the
Delivery Systems outside of the Battery Limits of the EDNC
Baytown Plant. EDNC shall be responsible for operating and
maintaining and shall own or lease from the Owner Trustee (on
terms that have been approved by Bayer) all of the improvements
inside the Battery Limits of the EDNC Baytown Plant.
SECTION 14: PERMITS
EDNC shall be responsible for the preparation, filing
and cost of obtaining all Permits related to the construction,
lease/ownership and operation of the EDNC Baytown Plant. Bayer
shall have ten (10) Business Days from its receipt of draft
permit applications to review and approve, or to disapprove, all
Permit applications prepared by EDNC. Bayer shall provide EDNC
reasonable assistance necessary to obtain the Permits. The
parties' respective obligations hereunder are conditioned upon
the issuance of all required Permits.
SECTION 15: INSURANCE
15.1 EDNC's Insurance - EDNC shall maintain, or cause
to be maintained, the following insurance:
(A) Builders Risk (Course of Construction)
Insurance - EDNC shall maintain from the commencement of and
until the completion of the construction of the EDNC Baytown
Plant, builders risk insurance on an all-risk basis, including
perils of earthquake, windstorm and flood, on the work and all
property to be incorporated into the EDNC Baytown Plant. Such
coverage shall be in an amount not less than the full replacement
value of the completed EDNC Baytown Plant.
(B) Insurance Against Loss or Damage - After
completion of the construction and installation of the EDNC
Baytown Plant, EDNC shall maintain or cause to be maintained in
effect at all times during the Term of this Agreement and the
other Project Agreements property insurance for the EDNC Baytown
Plant. EDNC shall keep all of the equipment, machinery,
apparatus and buildings comprising the EDNC Baytown Plant insured
for full replacement value on an all-risk basis, including,
without limitation, perils of earthquake, windstorm and flood,
against loss or damage from fire or other casualty, with
vandalism, malicious mischief, replacement costs and cost of
demolition endorsements and with comprehensive boiler and
machinery coverage.
(C) Insurance Against Public Liability - EDNC
shall procure and maintain in effect at all times from the
Effective Date until the expiration or termination of this
Agreement automobile liability, comprehensive general and excess
liability insurance policies applying to bodily injury (including
death) and third party property damage arising from the
activities of EDNC under the Project Agreements. Such coverage
shall have a minimum combined single limit of liability of at
least Five Million Dollars ($5,000,000) and a general aggregate
limit of Five Million Dollars ($5,000,000). All such policies
shall be written to apply to all bodily injury, property damage,
personal injury and other losses occurring during the policy
term. Such coverage shall also contain endorsements:
(A) deleting any employee exclusion on personal injury coverage;
(B) including employees as additional insureds; (C) deleting any
liquor liability exclusion; (D) providing for coverage of
employer's automobile non-ownership liability; (E) providing for
fire legal liability coverage; (F) providing for explosion,
collapse and underground liability coverage; and (G) providing
for contractual liability.
(D) Workers' Compensation and Other Insurance -
EDNC shall also carry workers' compensation insurance and such
other forms of insurance that EDNC is required by law to provide,
covering loss resulting from injury, sickness, disability or
death of the employees of EDNC arising out of and in the course
of their employment to the extent required by law, together with
employer's liability coverage with a limit of One Million Dollars
($1,000,000).
15.2 Bayer's Insurance - Bayer shall maintain, or cause
to be maintained, the following insurance:
(A) Builders Risk (Course of Construction)
Insurance - Bayer shall maintain from the commencement of and
until the completion of the construction of the Delivery Systems
for which it is responsible, builders risk insurance on an all-
risk basis, including perils of earthquake, windstorm and flood,
on the work and all property to be incorporated into the Delivery
Systems located at the Bayer Baytown Plant. Such coverage shall
be in an amount not less than the full replacement value of the
completed Delivery Systems.
(B) Insurance Against Loss or Damage - Bayer
shall maintain or cause to be maintained in effect at all times
during the Term property insurance for the Bayer Baytown Plant
and keep it, and all of the equipment, machinery, apparatus and
buildings comprising the Bayer Baytown Plant insured for full
replacement value on an all-risk basis, including, without
limitation, perils of earthquake, windstorm and flood, against
loss or damage from fire or other casualty, with vandalism,
malicious mischief, replacement costs and cost of demolition
endorsements and with comprehensive boiler and machinery
coverage.
(C) Insurance Against Public Liability - Bayer
shall procure and maintain in effect at all times from the
Effective Date until the expiration or termination of this
Agreement, automobile liability, comprehensive general and excess
liability insurance policies applying to bodily injury (including
death) and third party property damage arising from the
activities of Bayer under the Project Agreements. Such coverage
shall have a minimum combined single limit of liability of at
least Five Million Dollars ($5,000,000) and a general aggregate
limit of Five Million Dollars ($5,000,000). All such policies
shall be written to apply to all bodily injury, property damage,
personal injury and other covered losses occurring during the
policy term. Such coverage shall also contain endorsements:
(A) deleting any employee exclusion on personal injury coverage;
(B) including employees as additional insureds; (C) deleting any
liquor liability exclusion; (D) providing for coverage of
employer's automobile non-ownership liability; (E) providing for
fire legal liability coverage; (F) providing for explosion,
collapse and underground liability coverage; and (G) providing
for contractual liability.
(D) Workers' Compensation and Other Insurance -
Bayer shall also carry workers' compensation insurance and such
other forms of insurance that Bayer is required by law to provide
covering loss resulting from injury, sickness, disability or
death of the employees of Bayer arising out of and in the course
of their employment to the extent required by law, together with
employer's liability coverage with a limit of One Million Dollars
($1,000,000).
15.3 Waiver of Subrogation Rights - Anything in this
Agreement to the contrary notwithstanding, EDNC and Bayer each
waive all rights of recovery, claim, action or cause of action
against the other, its agents, officers, directors, shareholders
or employees for any loss or damage that may occur to the EDNC
Baytown Plant or the Bayer Baytown Plant, or any personal
property of either party hereto, by reason of any cause or origin
that is insured against under insurance coverages hereunder,
excluding the sole negligence of the other party hereto, its
agents, officers or employees. The insurance policies required
hereunder shall be endorsed if necessary to waive the insured's
rights of subrogation against EDNC or Bayer as applicable.
15.4 Miscellaneous Insurance Provisions - Each party
shall provide the other party with thirty (30) days notice of
cancellation or material change in terms of any of the coverage
described in this Section 15 required to be maintained by the
party. If at any time during the Term the amount or type of
insurance coverage that each party is required to carry under
this Section 15 is, in the reasonable judgment of the other
party, materially deficient under Sections 15.1, 15.2 or 15.3
hereof, the party not in default of this Section 15 may, at its
option: (A) notify the defaulting party that it has thirty (30)
days in which to cure such deficiency or the defaulting party
shall be in default hereunder, or (B) pay any premiums or take
any other steps necessary to cure the deficiency, in which case
the defaulting party shall be liable to the non-defaulting party
for all premiums and other costs associated with such cure.
15.5 Form of Policies - All insurance policies required
to be carried under this Agreement shall be obtained from
insurance companies of good national or international reputation.
Any deductible amounts exceeding Five Hundred Thousand Dollars
($500,000) under any insurance policies required hereunder shall
be subject to the other party's prior written approval. In any
event, deductible amounts shall not exceed ten percent (10%) of
the limit of liability in dollars for each required insurance.
However, the above conditions of approval and limitations of
amounts of deductible shall not apply when the conditions of
self-insurance set forth in Section 15.6 below are satisfied.
Each party shall deliver to the other party, within ten (10) days
following the Effective Date, and annually thereafter,
certificates evidencing continued maintenance of the insurance
required under this Section 15.
15.6 Self-Insurance - Any insurance required to be
maintained by either party under this Agreement (other than
workers' compensation insurance) may be maintained under a plan
of self-insurance. However, either party shall be entitled to
use such self-insurance only (A) during periods when such party's
net worth exceeds Two Hundred Fifty Million Dollars
($250,000,000), and (B) if such party maintains adequate reserves
or liquid assets for payment of claims of liability against the
other party, including the replacement value of the EDNC Baytown
Plant in the case of EDNC and the Bayer Baytown Plant in the case
of Bayer.
15.7 Blanket Coverage - Any policy required to be
maintained by either party under this Agreement may be maintained
under a "blanket policy" that insures other parties or locations.
However, the amount of insurance and the type of coverage
required to be provided hereunder may not be thereby diminished,
changed or adversely affected.
15.8 Failure of EDNC to Insure - If EDNC fails to
procure or maintain the insurance that EDNC is required to
maintain pursuant to Section 15.1 hereof, Bayer may procure, on
behalf of EDNC, the minimum amount of insurance coverage required
under Section 15.1 hereof, and EDNC shall promptly reimburse
Bayer for the same.
SECTION 16: DEFAULT AND REMEDIES
16.1 EDNC Events of Default - An "EDNC Event of
Default" shall occur upon the occurrence of any one or more of
the following events, unless the event is caused by Bayer or any
of its agents or contractors:
(A) If EDNC is unable to provide, for any reason
substantially related to EDNC's negligence or any material breach
of EDNC's obligations hereunder, a minimum of the lesser of
(i) Bayer's monthly Nitric Acid requirements for the Bayer
Baytown Plant or (ii) **** per month of Nitric Acid, in each case
under any combination of this Agreement and the Back-up and
Start-up Supply Plan, provided, however, that EDNC shall have no
obligation to purchase substitute ammonia or utilities;
(B) If EDNC fails to meet, for thirty (30) days
during any one hundred eighty (180) day period or forty-five (45)
days during any three hundred sixty-five (365) day period, its
obligations to provide to Bayer Nitric Acid meeting the Nitric
Acid Specifications in Section 2.2 hereof, provided such failure
to provide Nitric Acid meeting the Nitric Acid Specifications has
a material adverse effect on the DNT/SAC or MNB/Aniline plants;
(C) If EDNC fails to pay to Bayer any amount due
Bayer pursuant to Sections 3.7 ("Fixed Costs Reimbursements"),
3.8 ("Capital Costs Reimbursements by EDNC"), 3.9 ("Profit
Component Reimbursements by EDNC"), 4 ("Rebate and Egress Fee")
or 15.8 ("Failure of EDNC to Insure") hereof, or any amount due
pursuant to the Services Agreement, the Ground Lease or the
Technology Agreement when and as due, and such payments are not
being contested in good faith by appropriate proceedings;
(D) If EDNC breaches any of its covenants set
forth in Section 8.1(E) hereof ("Health and Safety Covenants");
(E) If EDNC defaults in its obligations under the
Operative Agreements and such default is not cured or waived
within any applicable cure period set forth therein;
(F) If EDNC breaches its covenants set forth in
Section 8.1(G) ("Compliance with Laws & Permits") hereof; or
(G) If EDNC materially defaults in the due
performance or observance of any other term, covenant or
agreement on its part to be performed or observed pursuant to any
of the provisions of this Agreement or any of the other Project
Agreements.
16.2 EDNC Cure Periods - In the event any EDNC Event of
Default occurs, EDNC shall have the following cure periods
following notice by Bayer to EDNC:
(A) Sixty (60) days in the case of a default
under Section 16.1(A) hereof;
(B) Zero (0) days, in the case of a default under
Section 16.1(B) hereof;
(C) Five (5) Business Days, in the case of a
default under Section 16.1(C) hereof;
(D) Ten (10) days, in the case of a default under
Section 16.1(D) hereof (provided, however, that in the event of a
default under Section 16.1(D) that is caused by a breach by EDNC
of its covenant under Section 8.1(E)(2), EDNC shall have a
reasonable period of time, which in no event shall exceed one
hundred eighty (180) days, to implement the Safety Improvement
Program described in Section 8.1(E)(2)(b) hereof);
(E) Zero (0) days in the case of a default under
Section 16.1(E) hereof;
(F) In the case of a default under Section
16.1(F) hereof, a reasonable period of time which in no event
shall exceed one hundred eighty (180) days, to implement the
Compliance Program described in Section 8.1(G)(2) hereof and to
obtain results which indicate to Bayer in its reasonable
discretion that EDNC has substantially addressed and corrected
the issues identified pursuant to Section 8.1(G)(2) hereof; and
(G) Forty-five (45) days, in all other cases,
unless such EDNC Event of Default cannot reasonably be cured in
forty-five (45) days and EDNC has, during such forty-five (45)
day period, undertaken reasonably effective curative measures, in
which case the cure period for such EDNC Event of Default shall
be the number of days reasonably required to effectuate such
cure.
If any EDNC Event of Default is remedied within the
aforementioned cure periods, such EDNC Event of Default shall not
constitute a continuing EDNC Event of Default and this Agreement
shall continue in full force and effect as if said EDNC Event of
Default had not occurred. The waiver of any EDNC Event of
Default under this Agreement shall not constitute a waiver of any
subsequent EDNC Event of Default.
16.3 Bayer Events of Default - A "Bayer Event of
Default" shall occur upon the occurrence of any one or more of
the following events, unless the event is caused by EDNC or any
of its agents or contractors:
(A) If Bayer is unable to provide, for any reason
substantially related to Bayer's negligence or any material
breach of Bayer's obligations hereunder, a minimum of the lesser
of the Ammonia necessary to produce (i) Bayer's monthly Nitric
Acid requirements for the Bayer Baytown Plant or (ii) **** per
month of Nitric Acid (less any amounts supplied to Bayer under
the Back-up and Start-up Supply Plan);
(B) If Bayer fails to meet, for thirty (30) days
during any one hundred eighty (180) day period or forty-five (45)
days during any three hundred sixty-five (365) day period, its
obligations to supply to EDNC certain Ammonia, Utilities or
Services (as defined in the Services Agreement) to be supplied by
Bayer and such failure to provide Ammonia, Utilities or Services
has a material adverse effect on the EDNC Baytown Plant;
(C) If Bayer fails to pay to EDNC any amount due
EDNC pursuant to Section 3 hereof when and as due; or
(D) If Bayer materially defaults in the due
performance or observance of any other term, covenant or
agreement on its part to be performed or observed pursuant to any
of the provisions of this Agreement or any of the other Project
Agreements.
16.4 Bayer Cure Periods - In the event of any Bayer
Event of Default occurs, Bayer shall have the following cure
periods following notice by EDNC to Bayer:
(A) Sixty (60) days, in the case of a default
under Section 16.3(A); or
(B) Zero (0) days, in the case of a default under
Section 16.3(B) hereof;
(C) Five (5) Business Days, in the case of a
default under Section 16.3(C) hereof; and
(D) Forty-five (45) days, in all other cases,
unless such Bayer Event of Default cannot reasonably be cured in
forty-five (45) days and, during such forty-five (45) day period,
Bayer has undertaken reasonably effective curative measures, in
which case the cure period for such Bayer Event of Default shall
be the number of days reasonably required to effectuate such
cure.
If any Bayer Event of Default is remedied within the
aforementioned cure periods, such Bayer Event of Default shall
not constitute a continuing Bayer Event of Default and this
Agreement shall continue in full force and effect as if said
Bayer Event of Default had not occurred. The waiver of any Bayer
Event of Default under this Agreement shall not constitute a
waiver of any subsequent Bayer Event of Default.
16.5 Bayer Remedies for EDNC Events of Default - The
parties agree that upon the occurrence of an EDNC Event of
Default (and subject to the continuation of such Event of Default
beyond any applicable cure periods), Bayer shall have the
following rights and remedies (in addition to the indemnification
rights provided for in Section 18.1 hereof):
(A) If an EDNC Event of Default occurs pursuant
to Section 16.1(A) hereof, Bayer shall have the termination
rights specified in Section 17.1 hereof and EDNC shall pay to
Bayer the difference between the reasonable cost of any purchase
of substitute nitric acid (including cost of transportation,
storage, handling and any other direct costs associated with
procuring substitute nitric acid) and the Variable Costs
Component in respect of all Nitric Acid ordered by Bayer and not
delivered by EDNC during the existence of and continuation of the
EDNC Event of Default;
(B) If an EDNC Event of Default occurs pursuant
to Section 16.1(B) hereof, Bayer shall have the termination
rights specified in Section 17.1 hereof and EDNC shall pay to
Bayer its actual damages incurred in connection with the
provision of nitric acid failing to meet the Nitric Acid
Specifications during the existence and continuation of the EDNC
Event of Default;
(C) If an EDNC Event of Default occurs pursuant
to Section 16.1(C) hereof, Bayer shall have the termination
rights specified in Section 17.1 hereof; provided, however, that
if EDNC contests the amounts due Bayer, EDNC and Bayer shall
first resolve such payment dispute in accordance with Section 22
hereof;
(D) If an EDNC Event of Default occurs pursuant
to Section 16.1(D) hereof, Bayer shall have the termination
rights specified in Section 17.1 hereof and EDNC shall pay to
Bayer its damages incurred; and
(E) In all other EDNC Events of Default, Bayer
shall have the termination rights specified in Section 17.1
hereof and EDNC shall pay to Bayer its damages incurred and Bayer
shall have any and all other rights and remedies available,
whether at law or at equity.
In addition to any and all other remedies available to
Bayer as specified above, Bayer shall have the right to offset
its damages incurred pursuant to any Event of Default against any
payments due EDNC under the Project Agreements or otherwise,
subject to the following limitations:
(1) Bayer may offset damages incurred pursuant to an
EDNC Event of Default under Section 16.1(A) or Section 16.1(B)
hereof against any payments due EDNC except that amount equal to
EDNC's periodic payments under the Leveraged Lease.
(2) Bayer may offset damages incurred pursuant to an
EDNC Event of Default under Section 16.1(C) hereof against any
payments due EDNC except that amount equal to EDNC's periodic
lease payments under the Leveraged Lease, provided Bayer and EDNC
have first employed the dispute resolution procedures set forth
in Section 22 hereof; and
(3) Bayer may offset any damages incurred pursuant to
an EDNC Event of Default under Section 16.1(D), Section 16.1(F)
or Section 16.1(G) hereof against any payments due EDNC except
(i) that amount equal to EDNC's periodic lease payments under the
Leveraged Lease, (ii) the Fixed Costs Monthly Charge and (iii)
the Variable Costs Component.
Upon the occurrence of an EDNC Event of Default, Bayer
may, at its election, deliver Leveraged Lease payments directly
to the Owner Trustee.
16.6 EDNC Remedies for Bayer Events of Default - The
parties agree that upon the occurrence of a Bayer Event of
Default (and subject to the continuation of such Event of Default
beyond any applicable cure periods), EDNC shall have the
following rights and remedies (in addition to the indemnification
rights provided for in Section 18.2 hereof):
(A) If a Bayer Event of Default occurs due to
Bayer's failure to provide sufficient quantities of Ammonia
pursuant to Section 16.3(A) hereof or Bayer's failure to provide
sufficient quantities of Utilities or Services pursuant to
Section 16.3(B) hereof, EDNC shall have the termination rights
specified in Section 17.2 hereof and Bayer shall pay to EDNC the
difference between the cost of any reasonable purchase of
ammonia, utilities or services, as the case may be (including
cost of transportation, storage, handling and any other direct
costs associated with procuring substitute ammonia, utilities or
services) and the price of Ammonia, Utilities or Services, as the
case may be, under the Project Agreements in respect of all
Ammonia, Utilities and/or Services ordered by EDNC from Bayer
during the existence and continuation of the Bayer Event of
Default;
(B) If a Bayer Event of Default occurs due to
Bayer's failure to provide Ammonia, Utilities or Services that
meet specifications pursuant to Section 16.3(B) hereof, EDNC
shall have the termination rights specified in Section 17.2
hereof and Bayer shall pay to EDNC its actual damages incurred in
connection with the provision of Ammonia, Services or Utilities
failing to meet the specifications for Ammonia, Services and
Utilities during the existence and the continuation of the Bayer
Event of Default;
(C) If a Bayer Event of Default occurs pursuant
to Section 16.3(C) hereof, EDNC shall have the termination rights
specified in Section 17.2 hereof; provided, however, that if
Bayer contests the amounts due EDNC, Bayer and EDNC shall first
resolve such payment dispute in accordance with Section 22
hereof. Following such resolution in EDNC's favor, EDNC shall
have the termination rights specified in Section 17.2 hereof and
Bayer shall pay to EDNC its damages incurred; and
(D) In all other Bayer Events of Default, EDNC
shall have the termination rights specified in Section 17.2
hereof and Bayer shall pay to EDNC its damages, and EDNC shall
have any and all other rights and remedies available, whether at
law or at equity.
In addition to any and all other remedies available to
EDNC as specified above, EDNC shall have the right to offset its
damages incurred pursuant to an Event of Default against any
payments due Bayer under the Project Agreements or otherwise.
SECTION 17: TERMINATION/FIXED PRICE PURCHASE OPTION
17.1 Bayer's Optional Termination Rights - Bayer shall
have an option to terminate this Agreement by written notice to
EDNC upon an occurrence of any one of the following events:
(A) Failure by EDNC to complete construction and
commence the operations of the EDNC Baytown Plant prior to ****
(provided such failure is not substantially related to a material
breach by Bayer of its obligations under the Project Agreements);
provided, however, that if such failure is by reason of a Force
Majeure Event, then Bayer shall not have the option to terminate
this Agreement if EDNC provides, within sixty (60) days of the
occurrence of such Force Majeure Event, a reasonable plan to
remedy such Force Majeure Event and such plan is reasonably
acceptable to Bayer;
(B) An EDNC Event of Default that is not cured
within any applicable cure period (provided, however, that Bayer
shall have complied with any continuing obligations under the
Bayer Agreement);
(C) Failure by EDNC to obtain construction
financing, evidenced by definitive signed agreements approved by
Bayer (the approval of which Bayer may withhold in its sole
discretion), by July 15, 1997; or
(D) Failure by EDNC to obtain permanent
financing, evidenced by definitive signed agreements approved by
Bayer (the approval of which Bayer may withhold in its sole
discretion), by ****
17.2 EDNC's Optional Termination Rights - EDNC shall
have an option to terminate this Agreement by written notice to
Bayer upon an occurrence of any one of the following events:
(A) Failure by Bayer to complete construction of
the Delivery Systems prior to **** (provided such failure is not
substantially related to a material breach by EDNC of its
obligations under the Project Agreements); provided, however,
that if such failure is by reason of a Force Majeure Event, then
EDNC shall not have the option to terminate this Agreement if
Bayer provides, within sixty (60) days of the occurrence of such
Force Majeure Event, a reasonable plan to remedy such Force
Majeure Event and such plan is reasonably acceptable to EDNC; or
(B) A Bayer Event of Default that is not cured
within any applicable cure period.
17.3 Automatic Termination - This Agreement shall be
automatically terminated:
(A) at the expiration of the Term, if the Term of
this Agreement is not extended beyond either the Initial Term or
any current Renewal Term;
(B) in the event that either Bayer, on the one
hand, or EDNC or El Dorado on the other hand (collectively, "EDNC
Parties") (i) makes an assignment for the benefit of creditors,
becomes insolvent or admits in writing its inability to pay its
debts as they become due, files a voluntary petition in
bankruptcy or a petition seeking reorganization, liquidation,
dissolution or similar relief under any law or regulation; (ii)
either Bayer or one of the EDNC Parties applies for, consents to
or acquiesces in the appointment of a trustee, receiver or
liquidator for itself or any of its property; or (iii) an
involuntary bankruptcy or involuntary insolvency proceeding is
commenced by either Bayer or either of the EDNC Parties and such
involuntary bankruptcy or involuntary insolvency proceeding is
not dismissed within ninety (90) days of its commencement.
17.4 Effects of Termination
(A) In the event that (i) the Term of this
Agreement is not extended beyond either the Initial Term or any
current Renewal Term, (ii) is terminated as a result of an EDNC
Event of Default, (iii) is terminated as a result of a Bayer
Event of Default or (iv) is automatically terminated pursuant to
Section 17.3 hereof, Bayer shall pay to EDNC the appropriate
termination fee (as hereinafter provided); the Project Agreements
shall terminate (except as otherwise provided in Section 17.4(B)
hereof); and all right and interest of EDNC to and under the
Ground Lease and the Leasehold Improvements shall automatically
terminate without further action by Bayer, EDNC or any other
party. In the case of a termination due to (a) the expiration of
the Initial Term or any Renewal Term, any automatic termination
under Section 17.3 hereof, Bayer shall pay to EDNC the Expiration
Termination Fee; (b) an EDNC Event of Default, Bayer shall pay to
EDNC the EDNC Default Termination Fee; and (c) a Bayer Event of
Default, Bayer shall pay to EDNC the Bayer Termination Fee. The
Bayer Agreement shall govern Bayer's rights and obligations in
respect of the Owner Trustee in the case of such a termination.
Any election by Bayer pursuant to the Bayer Agreement shall not
release EDNC or El Dorado from liability for any deficiencies
EDNC owes pursuant to any of the Project Agreements. EDNC's
interest in and title to the Leasehold Improvements shall be
transferred to Bayer upon payment to EDNC (or to the Owner
Trustee on behalf of EDNC) of the Expiration Termination Fee, the
EDNC Default Termination Fee or the Bayer Termination Fee,
whichever is applicable. If the Bayer Default Termination Fee,
the EDNC Default Termination Fee or the Expiration Termination
Fee is a negative number, then EDNC shall pay to Bayer the
deficiency.
(B) The termination contemplated by this
Section 17 shall be conditioned upon and subject to the receipt
of any necessary regulatory approvals, including without
limitation the expiration of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (if
applicable), and any necessary approvals under the Exon-Florio
Act, as amended (if applicable). The termination shall be
effective (A) within thirty (30) days following the expiration of
the Term of this Agreement, (B) within ninety (90) days following
the date of termination in the event the Project Agreements are
terminated pursuant to Section 17.1, 17.2 or 17.3 hereof or
(C) within ninety (90) days following the exercise of the Right
of First Refusal described in Section 21 hereof; provided,
however, that in no event shall the transaction be consummated
until the expiration of the waiting period, if any, imposed by
the Hart-Scott-Rodino Antitrust Improvements Act, as amended (if
applicable), and the receipt by the parties of all other
necessary regulatory approvals. At the termination, EDNC shall
take all action necessary (in the sole discretion of Bayer and
its counsel) to transfer its interest in the Leasehold
Improvements and other assets comprising the EDNC Baytown Plant
and to surrender the Leased Premises free and clear of any and
all liens, encumbrances and liabilities (direct, contingent and
otherwise) other than the Permitted Exceptions (as such term is
defined in the Ground Lease), the Leveraged Lease liabilities
assumed by Bayer (if any) and such other liens, encumbrances and
liabilities imposed by or through Bayer. The rights set forth in
Section 16, the obligations set forth in this Section 17, and the
indemnification obligations contained in Section 18 and elsewhere
in the Project Agreements shall survive any termination or
expiration of the Project Agreements, and the payment of the
Expiration Termination Fee, the Bayer Default Termination Fee or
the EDNC Default Termination Fee shall be subject to offset by
Bayer for damages otherwise recoverable by Bayer hereunder.
(C) In the event that the termination of the
Project Agreements and the payment of the Expiration Termination
Fee, the Bayer Default Termination Fee or the EDNC Default
Termination Fee (as applicable) shall be prohibited or materially
delayed by the operation of the Hart-Scott-Rodino Antitrust
Improvements Act, as amended, the Exon-Florio Act, as amended, or
any other applicable federal, state or local law, EDNC and Bayer
agree to negotiate in good faith appropriate agreements that will
permit EDNC to continue to operate the EDNC Baytown Plant for the
continued production of Nitric Acid for Bayer. Such agreements
shall include a continuation of term of the Ground Lease and
mutually acceptable terms pertaining to the provision of the
Ammonia, Utilities and Services necessary for the continuing
operation by EDNC of the EDNC Baytown Plant.
(D) Upon termination of this Agreement pursuant
to this Section 17 or exercise of the Right of First Refusal
pursuant to Section 21 hereof, the nondefaulting party or parties
shall be entitled to recover from the defaulting party or
parties, in addition to all other sums due and payable by the
defaulting party or parties hereunder, all expenses incurred in
enforcing this Agreement, including without limitation, all
reasonable attorneys' fees and out-of-pocket litigation expenses.
Termination of this Agreement for any cause whatsoever shall not
interfere with, affect or prevent the collection by the
nondefaulting party or parties of any and all sums of money
accrued hereunder or otherwise due to the nondefaulting party or
parties prior to the date such termination becomes effective.
Termination of this Agreement for any reason shall not relieve
the defaulting party or parties of any of its or their
unfulfilled obligations under this Agreement, including, without
limitation, its or their indemnification obligations hereunder.
17.5 Fixed Price Purchase Option
(A) Not less than twelve (12) months nor more
than eighteen (18) months prior to the scheduled end of the Lease
Term (as such term is defined in the Operative Agreements), Bayer
may, in its sole and absolute discretion: (i) direct EDNC to
exercise the Fixed Price Purchase Option (provided, however, that
if Bayer elects such option, Bayer shall pay Boatmen's Trust
Company of Texas (or any successor Lessor appointed pursuant to
the Operative Agreements) the Fixed Price Purchase Option Amount,
thereby terminating the Leveraged Lease); (ii) direct EDNC to
exercise the Fixed Price Purchase Option, thereby terminating the
Leveraged Lease, and terminate the Project Agreements (provided,
however, that if Bayer elects such option, Bayer shall pay
Boatmen's Trust Company of Texas (or any successor Lessor
appointed pursuant to the Operative Agreements) the Fixed Price
Purchase Option Amount, thereby terminating the Leveraged Lease,
and shall pay EDNC the Expiration Termination Fee, thereby
terminating the Project Agreements); or (iii) refuse its consent
to the exercise by EDNC of the Fixed Price Purchase Option, in
which case the Fixed Price Purchase Option shall not be payable,
and Bayer may permit the Project Agreements to expire pursuant to
Section 17.3 (provided, however, that if Bayer elects such
option, Bayer shall pay to EDNC the EDNC Expiration Termination
Fee and shall enter into new Project Agreements with Boatmen's
Trust Company of Texas (or any successor Lessor appointed
pursuant to the Operative Agreements) or its designee pursuant to
Section 8 of the Lessor's Consent to Ground Sublease and Non-
Disturbance Agreement.) In the event that Bayer directs EDNC to
exercise the Fixed Price Purchase Option, then EDNC shall have
the option, and is hereby granted the option, to (i) exercise the
Fixed Price Purchase Option in its own name (or any assignee
approved by Bayer), or (ii) assign the Fixed Price Purchase
Option to Bayer (or its designee) prior to any exercise of the
Fixed Price Purchase Option and Bayer hereby consents to such
assignment. If the Fixed Price Purchase Option is assigned to
Bayer hereunder, the parties hereto agree that title to the EDNC
Baytown Plant will automatically revert to Bayer.
SECTION 18: INDEMNIFICATION
18.1 EDNC Indemnification
(A) EDNC shall indemnify and save Bayer and its
Affiliates harmless from and against any and all claims, actions,
obligations, suits, damages (whether direct, actual, special,
consequential or otherwise, but excluding lost profits), fines,
penalties, losses, costs, liabilities and expenses, including,
without limitation, reasonable attorneys' fees, out-of-pocket
litigation expenses and other costs incurred in connection with
(i) any negligence or misconduct on the part of EDNC or its
officers, employees, agents, invitees or contractors, (ii) any
bodily injury, loss of life, personal injury or death to persons
or damage to property occurring in or on the EDNC Baytown Plant
or the Construction Laydown Area (as such term is defined in the
Ground Lease) not attributable, in whole or in part, to the
negligence or intentional misconduct of the party seeking to be
indemnified, (iii) any breach by EDNC of any Environmental,
Health and Safety Law, any Spill or the remediation, abatement,
containment, clean-up, disposal or response costs associated with
environmental conditions at the Bayer Baytown Plant or the EDNC
Baytown Plant caused by EDNC, (iv) any failure by EDNC to observe
or comply with any applicable laws or government rules or
regulations, (v) any tax or other indemnity payments due Owner
Trustee, Owner Participant or any other party under the Operative
Agreements incurred as a result of any act, omission or
misrepresentation occurring on or prior to the date of the
exercise of any option by Bayer under the Bayer Agreement, or
(vi) a breach of any other EDNC covenant or agreement hereunder
or under any of the Project Agreements, provided, however, that
until the occurrence of an EDNC Event of Default: (a) Bayer's
remedy for EDNC's failure to supply Nitric Acid is expressly
limited to the difference between all costs associated with the
procurement of substitute Nitric Acid and the Variable Costs
Component and (b) Bayer's remedy for off-specification nitric
acid is expressly limited to actual damages.
(B) If EDNC's indemnification obligations under
Section 18.1(A) hereof arise or result from EDNC's sole
negligence, EDNC shall (subject to any limitations set forth in
Section 18.1(A) hereof) remain entirely responsible for the
results and consequences of its sole negligence, and if EDNC's
indemnification obligations under Section 18.1(A) hereof arise or
result from joint or concurrent negligence of more than one
party, EDNC shall be responsible (subject to any limitations set
forth in Section 18.1(A) hereof) for only that portion of the
claim, loss, damage, cost or expense caused by the negligence of
EDNC, EDNC's agents or employees, subcontractors retained by EDNC
or agents or employees of such subcontractors. In all other
cases, all remedies under Section 16 hereof and at law and equity
are available to Bayer.
18.2 Bayer Indemnification
(A) Bayer shall indemnify and save EDNC and its
Affiliates harmless from and against any and all claims, actions,
obligations, suits, damages (whether direct, actual, special,
consequential or otherwise, but excluding lost profits), fines,
penalties, losses, costs, liabilities and expenses, including,
without limitation, reasonable attorneys' fees, out-of-pocket
litigation expenses and other costs incurred in connection with
(i) any negligence or misconduct on the part of Bayer or its
officers, employees, agents, invitees or contractors, (ii) any
bodily injury, loss of life, personal injury or death to persons
or damage to property occurring in or on the Bayer Baytown Plant
(other than the EDNC Baytown Plant or the Construction Laydown
Area (as such term is defined in the Ground Lease)) not
attributable, in whole or in part, to the negligence or
intentional misconduct of the party seeking to be indemnified,
(iii) any breach by Bayer of any Environmental, Health and Safety
Law or any Spill or the remediation, abatement, containment,
clean-up, disposal or response costs associated with
environmental conditions at the Bayer Baytown Plant or the EDNC
Baytown Plant caused by Bayer, (iv) any failure by Bayer to
observe or comply with any applicable laws or government rules or
regulations or (v) a breach of any other Bayer covenant or
agreement hereunder or any of the Project Agreements, provided,
however, that until the occurrence of a Bayer Event of Default,
EDNC's remedy for Bayer's failure to provide Ammonia, Utilities
or Services is expressly limited to the difference between all
costs associated with the purchase of substitute ammonia,
utilities or services, as the case may be, and the price of
Ammonia, Utilities or Services, as the case may be, under the
Project Agreements.
(B) If Bayer's indemnification obligations under
Section 18.2(A) hereof arise or result from Bayer's sole
negligence, Bayer shall (subject to any limitations set forth in
Section 18.2(A) hereof) remain entirely responsible for the
results and consequences of its sole negligence, and if Bayer's
indemnification obligations under Section 18.2(A) hereof arise or
result from joint or concurrent negligence of more than one
party, Bayer shall be responsible (subject to any limitations set
forth in Section 18.2(A) hereof) for that portion of the claim,
loss, damage, cost or expense caused by the negligence of Bayer,
Bayer's agents or employees, subcontractors retained by Bayer or
agents or employees of such subcontractors. In all other cases,
all remedies under Section 16 hereof and at law and equity are
available to EDNC.
18.3 Notice of Proceedings - The indemnitee shall give
the indemnitor notice of any suit, proceeding or action (whether
pending or threatened) commenced by any party which could give
rise to damages under this Section 18. Such notice shall be
given within thirty (30) days of indemnitee's discovery or
receipt of such matter (but the failure to notify within such
time period shall not rescind the indemnitor's duty to indemnify
but shall only reduce the amount of the indemnification amount to
the extent that the indemnifying party is damaged by such delay).
The indemnitor shall then have the option, at its own cost and
expense, to participate in or assume control of such proceedings
by retaining counsel reasonably acceptable to the indemnitee. If
the indemnitor does not make its election within thirty (30) days
of its receipt of the indemnitee's notice, the indemnitee may
proceed with the defense of the matter and indemnitor shall be
bound by the result.
18.4 Insurance - Notwithstanding anything contained in
this Section 18 to the contrary, it is the intention of the
parties to avail themselves, to the maximum extent possible, of
the proceeds of the insurance policies required to be maintained
pursuant to this Agreement and to the extent the damages or
expenses referenced by this Section 18 are paid by such insurance
policies (including deductibles), this indemnity shall be
inapplicable.
SECTION 19: INJUNCTIVE RELIEF
The parties acknowledge that irreparable damage may
occur in the event that any of the material provisions of this
Agreement are not performed in accordance with their specific
terms or are otherwise breached and such performance does not
occur or such breach is not cured within the period set forth
above. Each of the parties therefore agrees that the other
parties shall be entitled to an injunction or injunctions to
prevent nonperformance or breach of material provisions of this
Agreement and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which they
are entitled at law or in equity.
SECTION 20: TERM AND RENEWALS
20.1 Initial Term - The Initial Term of this
Agreement shall commence on the Effective Date.
20.2 Renewals - The Term of this Agreement shall be
automatically renewed for six (6) successive Renewal Terms of
five (5) years each unless either Bayer or EDNC has given the
other party written notice of its intention not to renew the Term
of this Agreement not less than twelve (12) nor more than
eighteen (18) months before the expiration of the Initial Term or
the current Renewal Term, as the case may be. If Bayer gives
such notice, then not more than ninety (90) days nor less than
sixty (60) days before the end of the Term Bayer shall pay to
EDNC the Expiration Termination Fee and shall terminate the
Project Agreements pursuant to Section 17 hereof.
SECTION 21: RIGHT OF FIRST REFUSAL
21.1(A) Change of Control Event - Upon the occurrence
of a Change of Control Event, EDNC shall notify Bayer of Bayer's
option and right to pay the EDNC Default Termination Fee and to
terminate the Project Agreements pursuant to Section 17 hereof.
Bayer shall have a reasonable amount of time, not to exceed sixty
(60) days, from its receipt of notice of a Change of Control
Event to exercise an option to pay to EDNC the EDNC Default
Termination Fee and to terminate the Ground Lease and the other
Project Agreements in accordance with Section 17 hereof.
21.1(B) Third Party Offer - If EDNC desires to sell
and receives a bona fide third-party offer to purchase any voting
equity securities of EDNC or any portion of the assets of the
EDNC Baytown Plant (other than purchases of product in the
ordinary course of business) that EDNC would like to accept, EDNC
shall notify Bayer of Bayer's option and right to pay either the
Expiration Termination Fee or the amount of the third party
offer, whichever is lower, and to terminate the Project
Agreements pursuant to Section 17 hereof (the "Right of First
Refusal"). Bayer shall have a reasonable amount of time, not to
exceed sixty (60) days, from its receipt of the notice of a bona-
fide third party offer to exercise an option to pay to EDNC the
Expiration Termination Fee or the amount of the third party offer
and to terminate the Ground Lease and the other Project
Agreements in accordance with Section 17 hereof.
21.2 Injunctive Relief and Specific Performance - The
parties acknowledge that irreparable damage may occur in the
event that any of the material provisions of this Section 21 are
not performed in accordance with their specific terms or are
otherwise breached and such performance does not occur or such
breach is not cured within the period set forth above. Each of
the parties therefore agrees that the other party will be
entitled to an injunction or injunctions to prevent
nonperformance or breach of material provisions of this
Section 21 and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which they
are entitled at law or in equity.
SECTION 22: DISPUTE RESOLUTION
22.1 General - Unless otherwise provided herein or in
the Project Agreements, any dispute arising hereunder or under
the Project Agreements shall be resolved in the manner specified
in this Section 22.
22.2 Mediation - The parties agree to exercise
reasonable efforts to resolve any dispute promptly and within a
reasonable period of time. If any such dispute cannot be
resolved within fifteen (15) Business Days, either party shall
have the right to notify the other party that it wishes to
convene a personal meeting between the senior management of
Bayer's Polymers Division and the senior management of EDNC.
Such meeting shall take place within fifteen (15) Business Days
of the delivery of such notice. The representatives of the
parties shall then meet and attempt in good faith to resolve the
subject dispute. If such attempt is unsuccessful, either party
may proceed to litigate the matter at issue. Any such
negotiation or series of negotiations shall be maintained as
confidential by the parties and the parties covenant that they
shall not disclose (other than to their respective Affiliates)
either the existence of such proceedings or the content thereof
to any other party without the express written consent of the
opposite party. Any participation in or initiation of such
discussions shall not be deemed to be an admission of liability
and no statement made or provided in or related to such
negotiations shall be construed as a statement against interest
or otherwise disclosed or used in any proceeding involving the
parties.
22.3 Commencement of Legal Actions - In the absence of
irreparable harm or material damages, the parties agree that no
party shall be entitled to commence any legal action to resolve
any dispute hereunder prior to the completion of the procedures
specified in Section 22.2 hereof. If a party declines or fails
to participate in the meeting contemplated by Section 22.2
hereof, the other party shall be entitled to request any court of
competent jurisdiction to grant a stay of litigation while the
parties attempt to settle the litigation through this negotiation
method. The party declining to participate agrees not to oppose
such a stay.
22.4 Governing Law - The construction and
interpretation of this Agreement shall be governed by the
internal laws of the State of Texas, without regard to conflicts-
of-laws provisions.
22.5 Submission to Jurisdiction - The parties hereto
hereby irrevocably submit to the jurisdiction of the United
States District Court for the Southern District of Texas over any
dispute arising out of or relating to this Agreement or any of
the transactions contemplated hereby. Each party hereby
irrevocably agrees that all claims in respect of such dispute or
proceeding shall be heard and determined in such court. The
parties hereby irrevocably waive, to the fullest extent permitted
by applicable law, any objection that they may now or hereafter
have to the venue of any such dispute brought in such court, any
defense of inconvenient forum and any right to trial by jury of
any dispute under the Project Agreements.
22.6 Consent to Service of Process - Each of the
parties hereto hereby consents to process being served by either
party to this Agreement in any suit, action or proceeding by
mailing of a copy thereof in accordance with the provisions of
Section 28 hereof.
SECTION 23: ENTIRE AGREEMENT
This Agreement, the Project Agreements and the Bayer
Agreement, together with all the schedules attached hereto and
thereto, contain the entire understanding of the parties and
supersede any prior understanding and agreements among them
respecting the subject matter hereof and thereof. There are no
agreements, arrangements or understandings, oral or written,
between and among the parties hereto relating to the subject
matter of this Agreement and the other Project Agreements that
are not set forth or expressly referred to herein or therein.
SECTION 24: MODIFICATION
This Agreement shall not be modified or amended, except
by written instrument executed by the duly authorized officers of
the parties hereto.
SECTION 25: PAYMENTS
All amounts payable hereunder shall be paid in lawful
money of the United States on a net fifteen (15) day basis, with
interest to accrue thereafter at a rate equal to the prime rate
charged by Citibank, N.A. The acceptance by either party of bank
drafts, checks or other media of payment will be subject to
immediate collection of the full face amount thereof and the
payment shall not be deemed to have been paid until actually
received in cash by the respective party, except that no interest
shall be charged after receipt of any bank drafts, checks or
other media of payment that is collected in cash in the ordinary
course of business and without unusual delay.
SECTION 26: DEMURRAGE
Bayer or EDNC shall unload and release all
transportation equipment promptly to minimize demurrage or other
out-of-pocket expense resulting from delivery. The amount of any
demurrage or out-of-pocket expense resulting to either party from
the other party's delay in unloading or releasing transportation
equipment will be paid by the responsible party.
SECTION 27: COOPERATION
The parties hereto shall cooperate and take all such
reasonable and necessary actions required to achieve the stated
purposes of the Project Agreements during the Term hereof.
SECTION 28: NOTICES
Any notice, communication or statement required or
permitted to be given hereunder shall be in writing and deemed to
be sufficiently given when delivered in person, or on the second
Business Day following the date of transmission by U.S. certified
or registered mail, return receipt requested, or on the Business
Day following the date of transmission by overnight courier to
the address of the respective party below:
Bayer Corporation
100 Bayer Road
Pittsburgh, Pennsylvania 15205-9741
Attn: Controller, Polymers Division
Attn: Assistant General Counsel,
Polymers Division
El Dorado Nitrogen Company
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma 73107
Attn: President
El Dorado Chemical Company
655 Craig Road, Suite 322
St. Louis, Missouri 63141
Attn: Vice President, Industrial Chemicals
and: LSB Industries, Inc.
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma 73107
Attn: General Counsel
Either party may, by notice given as aforesaid, change its
address or its party that receives notices for all subsequent
notices.
SECTION 29: BINDING AGREEMENT
This Agreement shall be binding upon and shall inure to
the benefit of the respective successors and assigns of the
parties hereto, as the case may be, and may not be terminated,
modified, changed or amended, except by a written instrument
signed by the party to be charged.
SECTION 30: WAIVER
No waiver by Bayer or EDNC of any default or breach of
any covenant, condition or stipulation herein shall be treated as
a waiver of any subsequent default, or breach of the same or any
other covenant, condition or stipulation hereof.
SECTION 31: CONSTRUCTION
The singular form of any word used herein shall include
the plural, and vice versa. The use herein of a word of any
gender shall include each of the masculine, feminine and neuter
genders. The headings or titles of the several sections and
paragraphs of this Agreement are for convenience only. They
shall not affect the meaning, construction or effect of the
provisions hereof and do not constitute a part of this Agreement.
Nothing contained in or done pursuant to this Agreement
or any of the other Project Agreements shall be deemed or
construed by the parties hereto, or by any third party, to create
the relationship of principal and agent, partnership, joint
venture or any association whatsoever between Bayer and EDNC. It
is expressly understood and agreed that no provisions contained
in this Agreement, nor any act or acts of the parties hereto,
shall be deemed to create any agency, partnership or joint
venture relationship between Bayer and EDNC.
SECTION 32: COUNTERPARTS
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which taken together constitute one instrument.
SECTION 33: ASSIGNMENT
EDNC may not assign its respective rights and
obligations under the Project Agreements to any other party
without first obtaining the express written consent of Bayer,
which consent may be granted or withheld by Bayer in its sole
discretion; provided, however, that EDNC shall be permitted to
sublease the Leased Premises and to encumber the Ground Lease
Sublease (as defined in the Ground Lease) in accordance with
Section 15.3 of the Ground Lease, and to collaterally assign its
rights under the Project Agreements to the Construction Loan
Agent, the Owner Trustee and/or the Indenture Trustee under the
Operative Agreements.
SECTION 34: AUDIT RIGHTS
Each calculation, adjustment, payment or estimate made
pursuant to the Project Agreements shall be supported by
appropriate work papers and background data and shall be made in
conformity with GAAP. Each party shall have the right, at its
own expense, to employ a firm of independent certified public
accountants to conduct an audit of any adjustment or calculation
made pursuant to the Project Agreements. Such auditors shall
execute agreements of confidentiality reasonably acceptable to
both parties, approval of the form of which shall not be
unreasonably withheld.
SECTION 35: GUARANTY
The Guarantor hereby unconditionally guarantees the
full and faithful performance by EDNC of all of the terms,
provisions, representations, warranties and obligations of EDNC
pursuant to the Project Agreements, including without limitation
the indemnification and remedial provisions of the Project
Agreements. The Guarantor further agrees that Bayer may, without
notice to or further assent of the Guarantor, and without in any
way releasing or impairing the obligations of the Guarantor
hereunder (i) waive compliance with, or any default under, the
Project Agreements; (ii) modify or amend any provisions of the
Project Agreements with the written consent of EDNC only;
(iii) grant extensions or renewals of any of the obligations of
EDNC; and (iv) in all respects deal with EDNC as if this guaranty
were not in effect. The obligations of the Guarantor under this
guaranty shall remain in force notwithstanding any event that
would, in the absence of this clause, result in the release or
discharge by operation of law of the Guarantor from the
performance of its obligations hereunder. The liability of the
Guarantor under this guaranty to Bayer shall be a guaranty of
performance and of payment, not merely a guaranty of collection,
and the liability of the Guarantor under this guaranty shall not
be contingent upon the exercise by Bayer of any right it may have
in respect of the Guarantor. This guaranty obligation is not
intended to and shall not release or extinguish any obligations
of EDNC to Bayer. The provisions of this Section 35 are not
intended to create and shall not create or impose any obligations
on the Guarantor in favor of any third party, the provisions of
this Section 35 being only for the benefit of Bayer.
SECTION 36: FORCE MAJEURE
Upon the occurrence of a Force Majeure Event, the
obligations of the parties shall be suspended pending removal,
termination or cure of the Force Majeure Event. This Section 36
shall apply to all provisions, terms and conditions of this
Agreement, notwithstanding anything seemingly to the contrary
herein.
SECTION 37: CONTROLLING AGREEMENT
To the extent any of the Project Agreements contain
conflicting provisions, the terms of this Agreement shall
control.
IN WITNESS WHEREOF, the undersigned have executed this
Baytown Nitric Acid Project and Supply Agreement effective as of
the date first above written.
BAYER CORPORATION
By:________________________
Name:______________________
Title:_____________________
EL DORADO NITROGEN COMPANY
By: ______________________
Name:_____________________
Title:____________________
El Dorado Chemical Company executes this Baytown Nitric
Acid Project and Supply Agreement solely for purposes of the
representations, warranties and covenants set forth in
Section 8.2 hereof, the provisions of Section 17.4 hereof, the
guaranty set forth in Section 35 hereof and the Back-up and
Start-up Supply Plan attached hereto as Exhibit D.
EL DORADO CHEMICAL COMPANY
By:_____________________
Name:___________________
Title:__________________
EXHIBIT A
GROUND LEASE
Filed as a separate exhibit.
EXHIBIT B
SERVICES AGREEMENT
Filed as a separate exhibit.
EXHIBIT C
DESIGN CRITERIA
1.1 Plant Capacity
One dual pressure nitric unit. The EDNC Baytown Plant will be
built in Baytown, Texas at the existing Bayer Baytown Plant. The
EDNC Baytown Plant will have the annual capacity to produce
443,000 short tons per year (403,000 metric tons per year or 1265
short tons/day), one hundred percent (100%) basis, with the
nitric acid at sixty-five percent (65%) by weight concentration.
Bayer Baytown Plant demand will be impacted by scheduled EDNC
Baytown Plant unit shutdowns. Either the toluene diisocynate
train or the methyl diphenyl diisocynate train can be down for up
to six weeks each for maintenance. The EDNC Baytown Plant will
operate with a minimum on-stream time of ninety-two percent
(92%).
1.2 Nitric Acid Specification at Battery Limits
1. Assay At least 65%
2. Iron content Not more than 1.3 ppm on a
thirty (30) day rolling
average, and in no
event to exceed 10 ppm
3. Total oxides of nitrogen as N2O3 Not more than 100 ppm
4. Color Less than 100 APHA units
5. Chloride content Not more than 10 ppm
6. Sulfate content Not more than 10 ppm
7. Temperature 45-50 degrees C, maximum
8. Pressure 75 P.S.I.G.
1.3 Absorber Feed Water
Bayer will supply demineralized Water for absorber feed water
only, not for boiler water makeup.
1.4 Environmental
NOx Abatement
The EDNC Baytown Plant is located in an ozone nonattainment zone.
EDNC is to provide any continuous on-line analyzers for final
tailgas stream monitoring as required the Texas Natural Resources
Conservation Commission.
All EDNC Baytown Plant start-up and shutdown NOx plumes are to be
colorless unless otherwise approved by Bayer. The parties agree
to work together to minimize, if feasible, the occurrence of
visible stack emissions caused by a compressor trip.
Effluent Disposal
EDNC shall collect waste water in a sump and shall neutralize the
waste water as required in Schedule 6 of the Services Agreement.
EDNC will pump the neutralized water to the existing Bayer
Baytown Plant overhead waste water line.
Storm Water - The Bayer Baytown Plant has limits on quality of
storm water runoff. EDNC shall include necessary paving and
curbs to contain spills and acid from maintenance activities and
routine discharges. EDNC shall collect spills and acid from
maintenance activities and routine discharges along with the
first inch of rainfall into the waste water sump. EDNC shall
neutralize the same as required by Schedule 6 of the Services
Agreement. EDNC will also send this water to the overhead waste
water line. Rain water that is not collected in this sump will
overflow to grade to the plant storm water system.
Sanitary sewer - Underground gravity tie-in point will be
provided for disposal.
Boiler Blowdown - EDNC shall dispose of boiler blowdown via
process trench to waste water sump for pumping overhead or to
EDNC cooling tower for part of the cooling tower makeup.
Ammonia Stripper Blowdown - EDNC shall dispose of ammonia
stripper blowdown (without oil) via process trench to waste water
sump for pumping overhead.
Cooling Tower Blowdown - EDNC shall pipe blowdown from the EDNC
Baytown Plant to a separate header that collects all cooling
tower blowdown.
1.5 Utilities
The Bayer Baytown Plant has normal steam distribution levels of
630 and 135 P.S.I.G.. The EDNC Baytown Plant shall export steam
at 700 P.S.I.G. minimum and import from the 630 P.S.I.G. Bayer
header for start-up (instantaneous rate of 110,000 lbs/hr).
Bayer will supply utilities to the Battery Limits of the EDNC
Baytown Plant as stated in Section 3 of the Services Agreement.
Utility Characteristics
EDNC shall design the EDNC Bayer Baytown Plant on the basis of
the following utility characteristics:
Pressure (P.S.I.G.) Temperature (degrees Celsius)
------------------- -----------------------------
Normal Design Normal Design
M.P. Steam 135 175 181 210
H.P. Steam 650 750 258 282
M.P. Condensate 135 175 181 210
H.P. Condensate 650 750 258 282
Boiler Feed Water 250 300 115 145
Plant Water 80 150 Ambient 60
Nitrogen (1) 110 150 Ambient 60
Plant Air 75 150 Ambient 60
Instrument Air (1)(2)75 150 Ambient 60
(1) Nitrogen can be used to back up instrument air in an
emergency.
(2) Dew Point -40 degrees F.
Electricity:
- -----------
over 200 Hp 2300v 3 phase 60 Hz
0.2 - 200 Hp 460v 3 phase 60 Hz
below 0.2 Hp 100v 1 phase 60 Hz
Electricity will be metered by HL&P to EDNC from the Bayer
electrical distribution system. Bayer will charge EDNC an
allocation for the use of Bayer's electrical system
infrastructure. EDNC may operate motors over 200 Hp at other
voltages with Bayer approval. Bayer electrical distribution will
be at 13,800 volts.
Natural Gas:
- -----------
Natural gas will be supplied to the Battery Limits at 50 P.S.I.G.
and ambient temperatures. The gross heating value is 1032
BTU/SCF (934 net).
1.6 Instrumentation and Electrical
Any interface with Bayer to share information needs to be
defined. Bayer needs to know the waste water flow, pH,
environmental flows, utilities flows and product flows.
EDNC shall install emergency communications systems in accordance
with Bayer specifications.
1.7 Location and Site Data
Plant Location: Baytown, Texas, on portion of Block 12C
Typical Climatological Data used by Bayer for design:
Height above sea level
23 feet
Minimum Winter temperature
17 F
Maximum summer temperature
102 F
Design air temperature for air
cooled exchangers
105 F
Direction of Prevailing Winds
S/SE
Design max. wind strength
125 mph for the absorber
column; others per 1995 Code
Design max. rainfall intensity
2.5 inches/hour
1.8 Product Storage
Bayer requires storage tanks to have secondary containment for
product storage. Tanks are to be sized to provide three days
storage at plant capacity. EDNC shall include product pumps and
necessary piping to users. EDNC shall also provide acid piping
to battery limits with a separate metering station for nitration
and MNB.
1.9 Civil Engineering Information
Refer to Fugro-McClelland (Southwest), Inc. report of August 29,
1996. The piling on all absorbers should be no lower than
thirty-two feet (32') below mean sea level assuming a grade of at
least 23' above mean sea level. IF EDNC requires any additional
soil investigation, EDNC shall arrange for the performance of
such investigations and shall bear the cost of the same. Bayer
requests one copy of any soil investigation done by EDNC.
EXHIBIT D
BACK-UP AND START-UP SUPPLY PLAN
****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.
SUPPLY FOR PLANNED OUTAGES:
ASSUMPTIONS: . Beginning storage at minimum level of 95%
capacity, 3605 tons (100% basis)
Storage capacity of 3 days production, 3795
tons (100% basis)
. Third party Nitric Acid at approximately 61%
assay; El Dorado Arkansas Nitric Acid at 65%
assay
. Storage must be re-built to 50% level from
excess production capacity or from outside
sources
. During outage, Bayer maintains usage rate at
100% of capacity
. Supply of nitric acid from outside sources
will be reduced accordingly to coincide with
Bayer usage rates below 1265 tons per day
Example 1:
APPROXIMATE DIVISION
BETWEEN SOURCES
Estimated Ending
Total El Dorado Third Party Use From Storage
Day No. Trucks Trucks/Tons Trucks/Tons Storage Level
- -------- --------- ----------- ----------- -------- -------
1 15 15 234 0 0 1031 2574
2 15 15 234 0 0 1031 1543
3 30 20 320** 10 156 789 754
* 4 20 20 312 0 0 0 1129
5 20 20 312 0 0 0 1504
6 20 20 312 0 0 0 1879
---- --- ---
120 1724 0 156
Tons Tons
* Back in full production at 105% of nameplate capacity. Rates
reduced to nameplate capacity after Day 6.
** One truck will supply Nitric Acid at 98% assay, and the
balance of the trucks will supply Nitric Acid of 65% assay.
Note 1: The supply plan for planned outage is subject to
availability of drivers and transportation equipment
suitable for Nitric Acid services, which EDNC currently
believes will be available. Nitric Acid that cannot be
delivered due to unavailability of transportation
equipment shall not be included as Production
Shortfall.
Note 2: EDNC will use reasonable efforts to supply Nitric Acid
hereunder at the lowest cost to Bayer, subject to the
availability of Nitric Acid at the El Dorado, Arkansas
plant at the time of the planned outage.
Note 3: EDNC shall invoice Bayer for all costs incurred in the
delivery of Nitric Acid hereunder. The price for
Nitric Acid shipped from the El Dorado, Arkansas plant
shall be the then-current price for Nitric Acid to
Bayer under the Project and Supply Agreement, plus the
applicable transportation charges. The price for
Nitric Acid shipped from third parties shall be the
price billed to EDNC or El Dorado, whichever is
applicable, plus the applicable transportation charges.
When possible, Nitric Acid shall be supplied on a swap
basis, whether from El Dorado or a third party.
Note 4: EDNC will return storage to the fifty percent (50%)
minimum level by running the Nitric Acid Plant at one
hundred five percent (105%) of nameplate capacity.
Nitric Acid would be supplied from El Dorado or third
party sources as needed to supplement the incremental
production above Bayer's usage rate; provided, however,
that EDNC must be able to return the storage to the
fifty percent (50%) level within a reasonable period
after the re-start of the EDNC Baytown Plant.
Note 5: EDNC will use reasonable efforts to supply ninety-eight
percent (98%) concentrated nitric acid to blend with
third party acid to bring the average assay to sixty-
four percent (64%). EDNC will invoice Bayer at
El Dorado's then-current average price for ninety-eight
percent (98%) concentrated nitric acid sales from
Arkansas plus transportation charges.
Note 6: Bayer reserves the right to supply the ninety-eight
percent (98%) concentrated nitric acid from its own
facilities rather than from El Dorado's Arkansas plant.
Note 7: The data in Example 1 above are illustrative only and
in no way bind EDNC or El Dorado to the schedule of
shipments shown.
SUPPLY FOR UNPLANNED OUTAGES:
ASSUMPTIONS: . Beginning storage at minimum level of 50%
capacity, 1898 tons (100% basis)
. Storage capacity of 3 days production, 3795
tons (100% basis)
. Third party Nitric Acid at approximately 61%
assay; El Dorado Nitric Acid at 65% assay
. Storage must be re-built to 50% level from
excess production capacity or from outside
sources
. El Dorado will not hold capacity idle to
cover unplanned outages
. During outage, Bayer cuts rate to 52.5% of
capacity, 665 tons per day
. Supply of acid from outside sources will be
reduced accordingly to coincide with Bayer
usage rates below 1265 tons per day
Example 2:
APPROXIMATE DIVISION
BETWEEN SOURCES
Estimated Ending
Total El Dorado Third Party Use From Storage
Day No. Trucks Trucks/Tons Trucks/Tons Storage Level
- ------- ---------- ----------- ----------- -------- -------
1 6 6 94 0 0 571 1327
2 6 6 94 0 0 571 756
3 25 15 242** 10 156 267 489
4 30 20 320** 10 156 189 300
5 30 20 320** 10 156 189 111
* 6 20 20 312 0 0 0 486
7 20 20 312 0 0 0 861
8 20 20 312 0 0 0 1236
9 20 20 312 0 0 0 1611
10 14 14 218 0 0 0 1892
-- --- ---
214 2894 468
Tons Tons
* Back in full production at 105% of nameplate capacity. Rates
reduced to nameplate capacity after Day 10.
** One truck will supply Nitric Acid at 98% assay.
Note 1: The parties will meet to determine ways to mitigate the
effects of any unplanned outage on Bayer or EDNC,
whether or not such unplanned outage is due to EDNC's
negligence. If an unplanned outage is due to the
negligence of EDNC, Bayer shall have the
indemnification rights set forth in Section 18.1
hereof.
Note 2: The supply plan for unplanned outage is subject to
availability of drivers and transportation equipment
suitable for Nitric Acid services, which EDNC currently
believes will be available. Nitric Acid that cannot be
delivered due to unavailability of transportation
equipment shall not be included as Production
Shortfall.
Note 3: EDNC shall invoice Bayer for all costs incurred in the
delivery of Nitric Acid hereunder. The price for
Nitric Acid shipped from El Dorado, Arkansas shall be
the then-current price for Nitric Acid to Bayer under
the Project and Supply Agreement, plus the applicable
transportation charges. The price for Nitric Acid
shipped from third parties shall be the price billed to
EDNC or El Dorado, whichever is applicable, plus the
applicable transportation charges. When possible,
Nitric Acid shall be supplied a swap basis, whether
from El Dorado or third parties.
Note 4: EDNC will return storage to the fifty percent (50%)
minimum level by running the Nitric Acid Plant at one
hundred five percent (105%) of the nameplate capacity.
Nitric Acid would be supplied from El Dorado or from
other sources as needed to supplement the incremental
production above Bayer's usage rate beyond day five,
provided, however, that EDNC must be able to return the
storage to the fifty percent (50%) level within a
reasonable period after the re-start of the Plant.
Note 5: EDNC will use reasonable efforts to supply ninety-eight
percent (98%) concentrated nitric acid to blend with
third party acid to bring the average assay to sixty-
four percent (64%). EDNC will invoice Bayer at
El Dorado's then-current average price for ninety-eight
percent (98%) concentrated nitric acid sales from
El Dorado, Arkansas plus transportation charges.
Note 6: Bayer reserves the right to supply the ninety-eight
percent (98%) concentrated nitric acid from its own
facilities rather than from El Dorado, Arkansas.
Note 7: The data in Example 2 herein are illustrative only and
in no way bind EDNC or El Dorado to the schedule of
shipments shown.
START-UP SUPPLY PLAN
CONDITIONS: (a) Supply plan for 65% Nitric Acid requirements
up to 260 tons per day (100% acid basis).
(b) Storage systems available beginning March 1,
1998. EDNC may elect to build inventory
prior to the start of the 4/1/98 - 8/31/98
requirement.
(c) Storage capacity of 3 days production, 3795
tons (100% basis).
(d) Third party Nitric Acid at approximately 61%
assay. El Dorado Nitric Acid at 65% assay.
One full truck of 98% concentrated Nitric
Acid per ten trucks of 61% Nitric Acid.
(e) Purchases will be steady and continuous to
allow trucks and drive teams to be dedicated
to the shipments.
NOTES:
Note 1: Subject to condition (e) above, the supply plan
ensures the availability of drivers and
transportation equipment suitable for Nitric Acid
service.
Note 2: EDNC will use reasonable efforts to supply Nitric
Acid hereunder at the lowest cost to Bayer.
Note 3: EDNC shall invoice Bayer for all costs incurred in
the delivery of Nitric Acid hereunder. The price
for Nitric Acid shipped from El Dorado's plant in
El Dorado, Arkansas shall be: ****
The price for Nitric Acid shipped from third
parties shall be the price billed to EDNC plus the
applicable transportation charges. To the extent
possible, Nitric Acid will be supplied to the
Bayer Baytown Plant on a swap basis from El Dorado
or third parties.
Note 4: When a load is not shipped, Bayer may be charged a
"non-user" charge, estimated to be **** per unit,
to cover out-of-pocket expenses for the
tractor/trailer/driver unit standing-by idle.
These charges would apply seven (7) days per week
for the sixteen (16) units in service.
Note 5: EDNC will supply 98% concentrated nitric acid to
blend with third party acid to bring the average
assay to 65%. EDNC will invoice Bayer for the
nitric acid against the existing swap agreement
between Bayer and EDNC, plus transportation
charges.
If the exchange balance exceeds 1,500 tons in
favor of EDNC, EDNC has the option to supply
additional tons of 98% concentrated nitric acid at
EDNC's then-current average price for sales from
Arkansas.
Note 6: Bayer reserves the right to supply the 98%
concentrated nitric acid from its own facilities
rather than from El Dorado's Arkansas plant.
Note 7: This start-up supply plan is intended to be a five
month supply plan.
Note 8: Within fifteen (15) days of the end of each
calendar month under this start-up supply plan,
EDNC will invoice Bayer for its actual handling
and unloading costs for Nitric Acid.
EXHIBIT E
Note: This draft agreement
must be reviewed by Bayer team, EDNC,
ICF Kaiser and La Grande Paroisse S.A.
TECHNOLOGY SUBLICENSE AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT made and effective this __ day of
__________, 1997 by and between ICF KAISER ENGINEERS, INC. whose
address is Gateway View Plaza, 1600 West Carson Street,
Pittsburgh, Pennsylvania 15219-1031 ("ICF KAISER"), LA GRANDE
PAROISSE S.A., Immeuble Iris 12, Place de L'Iris, 92062, Paris La
Defense 2) ("G-P"), EL DORADO NITROGEN COMPANY, P.O. Box 419082,
St. Louis, Missouri 63141-1782 ("EDNC") and BAYER CORPORATION,
100 Bayer Road, Pittsburgh, Pennsylvania 15205-9741 ("Bayer").
WHEREAS, EDNC has contracted with ICF Kaiser pursuant
to an agreement dated __________ __, 1997 (hereinafter referred
to as the "CONTRACT"), to design, procure and construct a nitric
acid plant having a capacity of 1265 short tons per day (100%
acid basis) of nitric acid to be installed at the Baytown, Texas
site (hereinafter referred to as the "UNIT"); and
WHEREAS, the UNIT shall be designed and constructed
utilizing a process developed by G-P for producing nitric acid by
oxidation of a mixture of air and anhydrous ammonia over a
platinum/rhodium catalyst and by oxidation and absorption under
pressure of the produced nitrous gas, together with a catalytic
reduction of the tall gas by ammonia (hereinafter referred to as
the "Process"); and
WHEREAS, ICF Kaiser will utilize certain patented or
unpatented inventions and improvements, modifications, trade
secrets and technical information relating to the Process
(hereinafter referred to as "TECHNICAL INFORMATION") and provided
to ICF Kaiser by G-P; and
WHEREAS, in connection with the CONTRACT, G-P has
granted to ICF Kaiser a license to practice and use said
TECHNICAL INFORMATION for engineering and constructing the UNIT
using the Process, and operation and maintaining said UNIT, and
selling the product thereby obtained;
NOW THEREFORE, in consideration of the mutual covenants
set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. A. ICF Kaiser and G-P hereby grant to EDNC, its assignees,
designees or affiliates, an irrevocable, royalty-free
sub-license under G-P's TECHNICAL INFORMATION to
practice and use said TECHNICAL INFORMATION for
operating and maintaining the UNIT using the Process,
and for selling the product thereby obtained, excluding
the use of said TECHNICAL INFORMATION for extension of
said UNIT or any similar unit in the United States of
America and abroad, or for the design or construction
of any new similar unit wherever located, except as is
normally accepted industry practice for the periodic
upgrade, modernization or debottlenecking for increased
or modified production of the UNIT. Said exception
shall be limited to increase of production capacity of
the UNIT to a maximum of 20% beyond the higher of the
guaranteed operating capacity or the actual operating
capacity as determined during the performance test as
defined in the CONTRACT. G-P's TECHNICAL INFORMATION
for further increase of production capacity of the UNIT
shall not be used without the prior written consent of
G-P, which consent shall not be unreasonably withheld.
B. Upon any acquisition of the UNIT by Bayer in accordance
with the terms of the Project and Supply Agreement by
and among EDNC, El Dorado Chemical Company and Bayer,
ICF Kaiser and G-P hereby grant to Bayer, its
assignees, designees or affiliates, an irrevocable,
royalty-free sub-license under G-P's TECHNICAL
INFORMATION to practice and use said TECHNICAL
INFORMATION for operating and maintaining the UNIT
using the Process and for selling the product thereby
obtained. The parties agree that internal transfers of
employees of EDNC, El Dorado Chemical Company and Bayer
from the UNIT to other units not licensed to use the
TECHNICAL INFORMATION shall not be deemed a violation
of this license, provided that such employees agree in
writing to be individually bound by the confidentiality
provisions contained herein.
2. A. In consideration of G-P's and ICF Kaiser's use and
disclosure of said TECHNICAL INFORMATION, EDNC agrees
to receive and maintain in confidence and not to use
(except as otherwise permitted by paragraph 1, above)
or disclose to any third party or parties the said
TECHNICAL INFORMATION, or any part thereof, disclosed
to EDNC by ICF Kaiser or G-P, without the prior written
consent of both ICF Kaiser and G-P, for a period of ten
(10) years from the date of this Agreement or from the
date the UNIT completely ceases operation, whichever
date occurs later. The term "third party" shall mean
any person, legal or natural, other than EDNC or Bayer,
parents, subsidiaries and affiliated companies of EDNC
or Bayer.
B. In consideration of G-P's and ICF Kaiser's use and
disclosure of said TECHNICAL INFORMATION, Bayer agrees
to receive and maintain in confidence and not to use
(except as otherwise permitted by paragraph 1, above)
or disclose to any third party or parties the said
TECHNICAL INFORMATION, or any part thereof, disclosed
to Bayer by ICF Kaiser or G-P, without the prior
written consent of both ICF Kaiser and G-P, for a
period of ten (10) years from the date of this
Agreement or from the date the UNIT completely ceases
operation, whichever date occurs later. The term
"third party" shall mean any person, legal or natural,
other than EDNC or Bayer, parents, subsidiaries and
affiliated companies of EDNC or Bayer.
3. A. EDNC will disclose said TECHNICAL INFORMATION only to
those of EDNC's or Bayer's employees, contractors or
agents who require it in connection with their duties
related to the aforesaid use, and will bind these
employees, contractors and agents to the
confidentiality obligations described in this
Agreement. Not included in the foregoing
confidentiality obligations and restricted use
obligations is:
i. Information that at the time of disclosure is in
the public domain, or which later becomes part of
the public domain by publication or otherwise
through no act of EDNC or Bayer;
ii. Information that can be demonstrated to be in
EDNC's or Bayer's possession prior to ICF
Kaiser's or G-P's disclosure;
iii. Information that is furnished to EDNC or Bayer by
a third party, as a matter of right without
restriction on disclosure, and which was not
received directly or indirectly from ICF Kaiser
or G-P; or
iv. Information that is by reasonable proof
independently developed by EDNC.
B. Bayer will disclose said TECHNICAL INFORMATION only to
those of Bayer's or EDNC's employees, contractors or
agents who require it in connection with their duties
related to the aforesaid use, and will bind these
employees, contractors and agents to the
confidentiality obligations described in this
Agreement. Not included in the foregoing
confidentiality obligations and restricted use
obligations is:
i. Information that at the time of disclosure is in
the public domain, or which later becomes part of
the public domain by publication or otherwise
through no act of Bayer or EDNC;
ii. Information that can be demonstrated to be in
Bayer's or EDNC's possession prior to ICF
Kaiser's or G-P's disclosure;
iii. Information that is furnished to Bayer or EDNC by
a third party, as a matter of right without
restriction on disclosure, and which was not
received directly or indirectly from ICF Kaiser
or G-P; or
iv. Information that is by reasonable proof
independently developed by Bayer.
4. For the purpose of this Agreement, any combination of
TECHNICAL INFORMATION shall not be deemed to be within the
foregoing exceptions because individual terms of TECHNICAL
INFORMATION are in the public domain or in EDNC's or Bayer's
possession unless the combination itself is in the public
domain or in EDNC's or Bayer's possession. This Agreement
shall be construed and governed under the same laws and
venue as the CONTRACT.
In WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on their behalf by their respective
representative, each such representative having been first duly
authorized so to act, as of the date first above written.
ICF KAISER ENGINEERS, INC.
By:________________________________
(signature)
Name:______________________________
(print name)
Title:_____________________________
Date:______________________________
LA GRANDE PAROISSE S.A.
By:________________________________
(signature)
Name:______________________________
(print name)
Title:_____________________________
Date:______________________________
EL DORADO NITROGEN COMPANY
By:________________________________
(signature)
Name:______________________________
(print name)
Title:_____________________________
Date: _____________________________
BAYER CORPORATION
By:________________________________
(signature)
Name:______________________________
(print name)
Title:_____________________________
Date:______________________________
EXHIBIT F
BAYER AGREEMENT
****THIS ENTIRE EXHIBIT HAS BEEN OMITTED FROM THIS PUBLIC FILING
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT BY THE
SECURITIES AND EXCHANGE COMMISSION AND HAS BEEN FILED SEPARATELY
WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR
PURPOSES OF SUCH REQUEST.
EXHIBIT G
BAYER SUPPORT AGREEMENT
****THIS ENTIRE EXHIBIT HAS BEEN OMITTED FROM THIS PUBLIC FILING
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT BY THE
SECURITIES AND EXCHANGE COMMISSION AND HAS BEEN FILED SEPARATELY
WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR
PURPOSES OF SUCH REQUEST.
EXHIBIT H
SUPPLEMENTAL AGREEMENT
Filed as a separate exhibit.
SCHEDULE 1.14A
CAPITAL COSTS MONTHLY CREDIT
See attached copy.
SCHEDULE 1.33
FIXED COST ESTIMATE: EDNC BAYTOWN NITRIC ACID PLANT
LA GRANDE PAROISSE PROCESS ANNUAL PRODUCTION = 443,000 TONS
65% ACID - COST ON 100% BASIS
****THE REMAINDER OF THIS SCHEDULE HAS BEEN OMITTED FROM THIS PUBLIC FILING
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE
COMMISSION AND HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES
AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
SCHEDULE 1.42(A)
INITIAL CAPITAL INVESTMENT
****THIS ENTIRE SCHEDULE HAS BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION
AND HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
SCHEDULE 1.42(B)
INITIAL CAPITAL INVESTMENT
****THIS ENTIRE SCHEDULE HAS BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION
AND HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
SCHEDULE 1.77
VARIABLE COST ESTIMATE: EDNC BAYTOWN NITRIC ACID PLANT
LA GRANDE PAROISSE PROCESS
65% ACID - COST ON 100% BASIS
ANNUAL PRODUCTION IN 100% TONS = 1265 TONS/DAY * 350 DAYS/YEAR = 443,000
****THE REMAINDER OF THIS SCHEDULE HAS BEEN OMITTED FROM THIS PUBLIC FILING
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT BY THE SECURITIES
AND EXCHANGE COMMISSION AND HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF
THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
SCHEDULE 9
AMMONIA
Purchased Anhydrous Ammonia Specification
Ammonia, Anhydrous - Commercial Grade
Properties:
Appearance Clear, colorless Liquid
Oil, PPM 5.0 ppm
Water, weight % 0.5% maximum
Iron (Fe), PPM 1 maximum
Nonvolatile 0.5% maximum
Delivery Pressure 200 P.S.I.G.
Delivery Temperature, expected Ambient