EXHIBIT 10.5
PRODUCT EXCHANGE AGREEMENT
BETWEEN
NEWCO, LTD.
AND
TIOXIDE EUROPE, LTD.
INDEX
ARTICLE TITLE
1. DEFINITIONS
2. SUPPLY OF PRODUCTS
3. QUANTITIES AND FORECASTS.
4. ORDER AND DELIVERY
5. PRODUCT IMBALANCES
6. QUALITY, ADJUSTMENTS
7. TERM AND TERMINATION
8. WARRANTY
9. CLAIMS
10. REMEDY
11. PATENT WARRANTY
12. NO CONSEQUENTIAL DAMAGES
13. FORCE MAJEURE
14. ALLOCATION
15. GOVERNMENT ACTION
16. USER PROTECTION AND PRODUCT INFORMATION
17. LABELING AND LITERATURE, NAME ON PRODUCT
18. TAXES, INTEREST, VAT, IMPORT DUTIES
19. CONFIDENTIAL INFORMATION
20. DISPUTE RESOLUTION
21. ASSIGNMENT
22. NO AGENCY AND NO PARTNERSHIP
23. ENTIRE AGREEMENT/AMENDMENTS/SEVERABILITY
24. WAIVER
25. NOTICES
26. GOVERNING LAW
27. COVENANT NOT TO COMPETE
28. ASSURANCES
SCHEDULE "A" - TIOXIDE FINISHED PRODUCTS
SCHEDULE "B" - NEWCO FINISHED PRODUCTS
SCHEDULE "C" - TIOXIDE CALCINER DISCHARGE PRODUCTS
SCHEDULE "D" - NEWCO CALCINER DISCHARGE PRODUCTS
SCHEDULE "E" - CUSTOMER LIST (SULFATE PRODUCTS)
SCHEDULE "F" - CUSTOMER LIST (TC4)
PRODUCT EXCHANGE AGREEMENT
This Product Exchange Agreement ("Agreement") is entered into this
_________day of _________, 1998, by and between NEWCO, Ltd. ("Newco") a
corporation incorporated in England and Wales and Tioxide Europe, Ltd., ("TEL"),
a corporation of the United Kingdom for the purpose of exchanging Products, as
defined herein and specified in the attached Schedules, collectively referred to
herein as the "parties" or singularly as "party" and each party hereto variously
referred to as the "supplying party" or the "receiving party" as the case may
be.
Whereas, TEL, an Affiliate of DuPont, holds one-hundred percent of the
shares of stock of Newco; and,
Whereas, the primary asset of Newco is the titanium dioxide
manufacturing plant located at Grimsby, U.K. (the "Grimsby Plant"); and
Whereas, concurrent with the execution of this Agreement, Purchaser is
acquiring the Tioxide North American titanium dioxide business; and
Whereas, concurrent with the execution of this Agreement, TEL has agreed
to sell the whole of the issued share capital in Newco, to Purchaser to provide
Purchaser and its Affiliates with manufacturing capacity to support Purchaser's
North American business; and
Whereas, the Products currently sold in North America include specific
products not currently manufactured by Newco and the parties wish to ensure
continued availability of the Products while Newco and its Affiliates expand
their product range to ensure continuity and while the customers for such
Products carry out the necessary trials to approve Products newly manufactured;
and
Whereas, the Products currently sold by the Grimsby Plant are desired by
TEL (and its Affiliates) for sale in Europe for a limited period of time; and
Whereas, TEL (and its Affiliates) and Newco (and its Affiliates) therefore
wish, for a limited period of time, to exchange as between one another equal, or
close to equal quantities of the Products specified below for no additional
consideration other than the Products themselves, or as otherwise specified on
the terms and subject to the conditions contained herein; and
Whereas, the parties intend to minimize both the total quantity of
products exchanged and the duration of the exchange so as independently to
supply the needs of each company's own customers at or before the end of the
Contract Period; and
Whereas, the parties recognize that imbalances may result in one party
hereto not receiving the same quantity of Product that said party is supplying
to the receiving party; and
Whereas, the terms contained herein are, among other things, developed to
address said Product Imbalance as defined below in furtherance of the goals of
this Agreement;
NOW THEREFORE, the parties hereto agree to enter into this Product
Exchange Agreement on the terms set forth below:
1. Definitions:
In this Agreement, including the attached Schedules, the recitals,
words and expressions shall have the following meaning:
"Affiliates" shall have the same meaning as set forth in the Share
Purchase and Sale Agreement between TEL and Purchaser dated __________, 1998
relating to the sale and purchase of the whole of the issued share capital of
Newco.
"Business Day(s)" means a day (other than a Saturday or Sunday) on
which banks are generally open for normal business in each of London, Montreal
and New York.
"Calciner Discharge Products" means the Newco Calciner Discharge
Products or the Tioxide Calciner Discharge Products or generally both as the
case may be.
"Calciner Discharge Product Imbalance" means at any Product
Imbalance Date any difference in quantity between the Calciner Discharge Product
received by TEL and the Calciner Discharge Product received by Newco in the
period since the later of (1) the Completion Date or (2) the most recent
preceding Product Imbalance Date for which the Product Imbalance has been cured
or eliminated pursuant to Subclauses 5.1.4 through 5.1.6, as the case may be.
"Calciner Discharge Product Value" means an amount in U.S. dollars
determined by calculating the sum of the average per-metric-ton full cost of
manufacturing Calciner Discharge Products experienced by the Tioxide Group
during its 1997 accounting year plus a 2.5% manufacturing margin, such sum to be
escalated annually on December 31 each year by the increase/decrease in the
Retail Prices Index for such year as published by H.M. Government, and
multiplying such escalated sum by the relevant total number of tons of Calciner
Discharge Products.
"Completion Date" as used in this Agreement has the same meaning as
that set forth in the Share Purchase and Sale Agreement between TEL and
Purchaser.
"Contract Period" means the period beginning on the Completion Date
and ending two (2) years thereafter (subject to early termination under Clause 7
of this Agreement).
"Delivery Point" means the supplying party's plant.
"DuPont" means E. I. du Pont de Nemours and Company., a U.S.
(Delaware) Corporation.
"Finished Products" means the Newco Finished Products or the Tioxide
Finished Products or generally both as the case may be.
"Finished Product Imbalance" means at any Product Imbalance Date ,
any difference in quantity between the Finished Products received by TEL and the
Finished Products received by Newco in the period since the later of (1) the
Completion Date, or (2) the most recent preceding Product Imbalance Date for
which the Product Imbalance has been cured or eliminated pursuant to Subclauses
5.1.4 through 5.1.6, as the case may be.
"Finished Product Value" means an amount in U.S. dollars determined
by calculating the sum of the average per-metric-ton full cost of manufacturing
Finished Products experienced by the Tioxide Group during its 1997 accounting
year plus a 2.5% manufacturing margin, such sum to be escalated annually on
December 31 each year by the increase/decrease in the Retail Prices Index for
such year as published by H.M. Government, and multiplying such escalated sum by
the relevant total number of tons of Finished Products.
"Force Majeure" has the meaning set forth in Paragraph 13 of this
Agreement.
"Newco CD Product Imbalance" means a Calciner Discharge Product
Imbalance occurring because Newco receive a quantity of Calciner Discharge
Product from TEL that is greater than the quantity of Calciner Discharge Product
received by TEL from Newco.
"Newco Calciner Discharge Products" means the Products listed in
Schedule "D" meeting the Specifications, being all those grades of calciner
discharge produced at the Grimsby Plant (U.K.) during the three years prior to
the Completion Date for subsequent treatment to become Finished Products. These
Products will be produced by Newco solely at the Grimsby Plant (U.K.)
during the term of this Agreement.
"Newco FP Product Imbalance" means a Finished Product Imbalance
occurring because Newco received a quantity of Finished Product from TEL that is
greater than the quantity of Finished Product received TEL from Newco.
"Newco Finished Products" means the products listed in Schedule "B"
meeting the Specifications, being those Finished Products produced at the
Grimsby Plant (U.K.) during the three years prior to the Completion Date. These
Products will be produced by Newco solely at the Grimsby Plant (U.K.)
during the term of this Agreement.
"Newco Products" means the Newco Calciner Discharge Products and
the Newco Finished Products, collectively.
"Packaging Materials" means all materials used to package the
Products, including, but not limited to, all bags, containers and other
materials that are reasonably necessary to package the Products at the time
title passes in accordance with Clause 4.3.
"Product" means the Calciner Discharge Products or the Finished
Products, as the case may be. "Products" means the Calciner Discharge Products
and the Finished Products, collectively. As used in this Agreement, "Product" or
"Products" may refer to Product or Products produced by the "supplying party" or
received by the "receiving party", or generally both, as the context requires.
"Product Imbalance" means the Calciner Discharge Products
Imbalance or the Finished Products Imbalance.
"Product Imbalance Date" means any one of: (1) the date one year
following the Completion Date, (2) the date of the end of the Contract Period,
or (3) the date of termination of this Agreement pursuant to Subclause 7.2.
"Purchaser" means NL Industries, Inc., a U.S. (New Jersey)
corporation.
"Quality" means, for a given Product grade, a set of values
described within the Specifications.
"Specification(s)" means the standard specifications of the Products
on the day prior to the Completion Date or as amended by agreement in writing
between the parties hereto. For a given Product grade, such standard
Specifications may describe one or more Quality.
"Tioxide CD Product Imbalance" means a Calciner Discharge Product
Imbalance occurring because TEL received a quantity of Calciner Discharge
Product from Newco that is greater than the quantity of Calciner Discharge
Product received by Newco from TEL.
"Tioxide Calciner Discharge Products" means the products listed in
Schedule "C" meeting the Specifications, being all those grades of calciner
discharge produced by TEL or its Affiliates for transfer to North American
during the three years prior to the Completion Date for subsequent treatment to
become Finished Products. These Products will be produced by TEL or its
Affiliates during the term of this Agreement at the former (ICI) Tioxide
manufacturing plants.
"Tioxide FP Product Imbalance" means a Finished Product Imbalance
occurring because TEL received a quantity of Finished Product from Newco that is
greater than the quantity of Finished Product received by Newco from TEL.
"Tioxide Finished Products" means the products listed in Schedule
"A" meeting the Specifications, being those Finished Products sold by Tioxide or
an Affiliate in North America during the three years prior to the Completion
Date. These Products will be produced by TEL or its Affiliates solely at former
(ICI) Tioxide manufacturing plants during the term of this Agreement.
"Tioxide Products" means the Tioxide Calciner Discharge Products
and the Tioxide Finished Products, collectively.
"Value" means the Calciner Discharge Product Value and the
Finished Product Value.
2. Supply of Products.
2.1 During the Contract Period, TEL agrees to deliver to Newco or
Newco's Affiliates and Newco (or Newco's Affiliates, as the case may be) agrees
to accept from TEL the quantity of Tioxide Calciner Discharge Products and of
Tioxide Finished Products as determined in accordance with Clause 3.
2.2 In consideration of the Tioxide Calciner Discharge Products and
the Tioxide Finished Products supplied pursuant to Subclause 2.1, Newco agrees
to deliver to TEL and TEL agrees to accept a like quantity of Newco Calciner
Discharge Products and Newco Finished Products.
2.3 In consideration of any Calciner Discharge Product Imbalance
and/or Finished Product Imbalance that may occur pursuant to Subclauses 2.1 and
2.2, the parties agree to cure such Product Imbalance according to the
provisions of Clause 5.
2.4 For Product supplied according to Subclauses 2.1 and 2.2, the
grade, package type and Quality will be determined by the provisions of
Subclauses 3.2 through 3.6.
3. Quantities and Forecasts.
3.1 Based on current requirements, the parties agree that for
Tioxide Products delivered to Newco:
(a) the total quantity of Tioxide Calciner Discharge Products
listed in Schedule C shall not exceed 25,000 metric tonnes;
(b) the total quantity of Tioxide Finished Products listed in
Schedule A, Part 1 shall not exceed 55,000 metric tonnes;
(c) the total quantity of Tioxide Finished Products listed in
Schedule A, Part 2 shall not exceed 1,000 metric tonnes; and
(d) the total quantity of Tioxide Products shall not exceed
75,000 metric tonnes or such lesser amount specified in the
forecast provided by Newco pursuant to Subclause 3.2;
during any period of 12 consecutive months within the Contract Period. All Newco
forecasts will be for product to be made available by TEL at the Delivery Point
for receipt by Newco. If these quantities are not sufficient to meet Newco's
needs, the parties will negotiate in good faith to establish new limits.
3.2 Within fifteen (15) days after the Completion Date, Newco shall
provide to TEL a 12-month forecast by month for the total quantity of Tioxide
Product needed by specifying a quantity for each grade, Quality, and package
type.
3.3 Within ten (10) days after receipt of Newco's forecast pursuant
to Subclause 3.2, TEL will provide a 12-month forecast by month for the same
total quantity of Newco Product to be supplied to TEL, specifying a quantity for
each grade, Quality and package type.
3.4 The forecasts provided pursuant to Subclauses 3.2 and 3.3 will
be updated monthly on a 12-month rolling basis by each receiving party and
provided:
(a) first from Newco to TEL by the 5th day of the month
preceding the first month of each updated forecast, and
(b) then from TEL to Newco by the 10th day of the month
preceding the first month of each updated forecast.
3.5 On receipt of the reciprocal demand forecasts provided pursuant
to Subclause 3.4, each supplying party will promptly assess its ability to meet
the forecast. If any potential problem is foreseen, the parties will in good
faith promptly discuss the problem, mutually agree on a resolution, and finalize
the forecast by the 15th day of the month preceding the first month of each
updated forecast.
3.6 Each forecast provided according to Subclauses 3.2 - 3.4 shall
be non-binding and for planning purposes only and does not represent a
commitment by the supplying party to deliver and the receiving party to accept
delivery of any quantity of Product, except that for each such forecast:
3.6.1 Month 1 requirements shall be a fixed and binding
commitment by the receiving party to accept delivery of
Product quantities by grade, Quality and package type.
3.6.2 Months 2 and 3 shall be variable by plus or minus 5%
both for total quantity and for quantities by grade, Quality
and package type, but are otherwise binding on the supplying
party and the receiving party.
3.7 The parties will adjust forecasts for Months 4 through 12 in
each rolling forecast in a good faith attempt both to meet the requirements of
Subclause 3.1 and to ensure that the total quantity of Tioxide Products and of
Newco Products are equal at the end of each full year of the Contract Period.
3.8 Each forecast shall also report the total quantities of Calciner
Discharge Product and of Finished Product supplied and received during each full
year following the Completion Date, so as to enable the parties to calculate any
Product Imbalances.
3.9 All exchanges of information pursuant to this Clause 3 are
subject to Clause 19.3 "Confidential Information".
4. Order and Delivery.
4.1 The receiving party shall place all orders for Product from the
supplying party according to commercially reasonable procedures specified by the
supplying party at least forty-five (45) days before the date of requested
delivery, except that:
4.1.1 During the first month following the Completion Date,
the parties will cooperate to maintain continuity of supply
for orders placed prior to the Completion Date for delivery
during that first month; and
4.1.2 By mutual agreement, the parties may waive the 45-day
lead time to help minimize or avoid a Product Imbalance.
4.2 All orders from the receiving party shall be for full container
quantities with each container loaded to the maximum allowable weight compliant
with legal weight restrictions and physical property restrictions and in no
instance more than two (2) grade and package type combinations per container.
The receiving party shall be responsible for providing such containers. The
supplying party will make good faith efforts to avoid package damage associated
with loading products of dissimilar package size. The supplying party will have
no liability for package damage in the case of containers with more than one (1)
grade of product type where such package damage has been caused by the inclusion
of two (2) grade and package type combinations per container.
4.3 All Product will be supplied by the supplying party: "Ex Works".
All title and risk for the Product shall pass to the receiving party when the
product is accepted for loading and shipment at the Delivery Point. The
receiving party shall bear all costs of transportation, freight, duties, taxes
and related costs and is responsible for the logistics of transporting the
Product.
4.4 Product will be delivered by supplying party in Packaging
Materials provided by the receiving party at the cost of the receiving party.
4.4.1 Packaging Materials will be available to the supplying
party for its use at the relevant Delivery Point at least
sixty (60) days in advance of any delivery date in sufficient
quantity to allow supplying party to meets its commitments
hereunder.
4.4.2 All Packaging Materials will display the receiving
party's name, trademark(s), if any, and other relevant
information for use by the supplying party in fulfilling the
receiving party's requests for Product.
4.4.3 Any failure to supply Product due to lack of
availability of proper Packaging Materials will be deemed a
failure of receiving party to perform its obligations
according to the provisions of this Agreement and will not be
a failure of the supplying party to perform its obligations
according to the provisions of this Agreement, unless the
supplying party is solely negligent for lack of availability
of proper Packaging Materials.
4.4.4 During the first one hundred eighty (180) days following
the Completion Date or until sufficient Packaging Materials
are provided by the receiving party, whichever shall first
occur, the supplying party shall utilize its own Packaging
Materials, with associated costs to be reimbursed by the
receiving party. Receiving party shall be responsible for
re-labeling in accordance with Subclause 4.4.2.
4.5 All Product made available by the supplying party, in
satisfaction of an order from receiving party, will be promptly transported by
receiving party from the Delivery Point.
4.6 Product will be made available throughout the delivery month in
accordance with the supplying party's monthly production schedule.
4.7 The parties will use reasonable efforts to cooperate with one
another in providing any necessary documentation to support these transactions
and any subsequent shipments or exports contemplated hereunder.
4.8 The parties acknowledge that:
(a) This Agreement is of short duration and designed solely to
facilitate the intent of the parties described in the
Recitations,
(b) There are no significant or material differences among the
financial values of the Products listed in Schedules A and B,
(c) There are no significant or material differences among the
financial values of the Products listed in Schedules "C" and
"D", and
(d) Circumstances relating to documentation, customs, duties,
taxation, or other legal requirements may necessitate the
assignment of a financial value to a particular quantity of
Product.
The parties therefore agree that where required as in Subclause 4.8
(d), the Calciner Discharge Product value and the Finished Product value at the
time of delivery to the Delivery Point shall be deemed to be equal to the
Calciner Discharge Product Value and the Finished Product Value, respectively of
such Product, and shall not be applied differently to either Tioxide Products or
Newco Products.
5. Product Imbalances.
5.1 If a Product Imbalance should occur, the parties will promptly
cure such Product Imbalance under the following terms:
5.1.1 The "Newco Imbalance Value" for such Product Imbalance
shall be the sum of:
(1) The Calciner Discharge Product Value of the Newco
CD Product Imbalance, if any; and
(2) The Finished Product Value of the Newco FP
Imbalance, if any.
5.1.2 The "Tioxide Imbalance Value" for such Product Imbalance
shall be the sum of:
(1) The Calciner Discharge Product Value of the
Tioxide CD Product Imbalance, if any; and
(2) The Finished Product Value of the Tioxide FP
Imbalance, if any.
5.1.3 Newco, if the Newco Imbalance Value is larger than the
Tioxide Imbalance Value, or TEL, if the Tioxide Imbalance
Value is larger than the Newco Imbalance Value (the
"Reimbursing Party") shall be responsible to reimburse the
other party (the "Reimbursed Party") in an amount equal to the
net of the larger of the Newco Imbalance Value and the Tioxide
Imbalance Value less the smaller of the Newco Imbalance Value
and the Tioxide Imbalance Value (the "Net Imbalance Value").
5.1.4 The Reimbursing Party will reimburse the Reimbursed
Party by (a) supplying a quantity of Finished Product, (b)
supplying a quantity of Calciner Discharge Product, and/or (c)
making a cash payment, such that the sum of (1) the Value of
such Finished Product, (2) the Value of Such Calciner
Discharge Product, and (3) the amount of the cash payment
shall be equal to the Net Imbalance Value.
5.1.5 For any Product to be supplied pursuant to Subclause
5.1.4, (a) the Reimbursing Party shall specify the total
quantity and (b) the Reimbursed Party shall specify whether
the Product will be Calciner Discharge Product or Finished
Product. The cash payment will be adjusted accordingly.
5.1.6 The calculations, determinations, and decisions to be
made in Subclauses 5.1.1. through 5.1.5 will be completed
within thirty (30) days of the occurrence of the Product
Imbalance and any cash payment will be made by the Reimbursing
Party within fifteen (15) days thereafter.
5.1.7 For any Product to be supplied pursuant to Subclauses
5.1.4 and 5.1.5, the Reimbursed Party shall specify the
Product grade(s), Quality and package type, and the parties
will mutually agree upon delivery timing.
5.1.8 For any cash payment, VAT shall be charged to the
Reimbursed Party as appropriate.
5.2 Any quantities of Product supplied and cash payments made by the
Reimbursing Party pursuant to Subclause 5.1.4 through 5.1.6 will be excluded
from consideration in the determination of any later Product Imbalance.
5.3 The provisions of this Agreement relating to Product Imbalances
shall not apply where any Product Imbalance has been caused by a Force Majeure
event or circumstance, except to the extent that :
(a) at or near the end of the Contract Period the corrective
measures of Subclauses 13.2 or 13.3 are sufficient to remove
what would otherwise be a contribution of the Force Majeure
event to a Product Imbalance, or
(b) the party not declaring a Force Majeure elects under
Clause 13.3(b) to continue to receive Product during Force
Majeure.
5.4 The parties' obligation to cure Product Imbalances pursuant to
Clauses 5.1 and 5.2 shall survive termination of this Agreement.
6. Quality, Adjustments:
There will be no change in the specifications of the Product
produced by the supplying party without the express written consent of the
receiving party. The supplying party shall give sufficient prior notice to the
receiving party of any significant change(s) in raw materials, manufacturing
processes, or test methods for mutual assessment of the probable effect on the
receiving party's Product performance. Final Product attributes will remain
unchanged and will be consistent with the Specifications.
7. Term and Termination.
This Agreement shall become effective on the Completion Date and
terminate at the end of the Contract Period.
7.1 Clauses 5, 8, 9, 10, 11, 12, 15 and 19 shall survive
termination of this Agreement.
7.2 If both TEL and Newco reach agreement at the time of
submission of any rolling twelve-month forecasts that their
respective needs for Products for all future months after
Month 2 of the forecast will be zero, then in that case the
Contract Period will be deemed to end at the end of such Month
2 for the purposes of this Agreement.
8. Warranty:
Each supplying party warrants to each receiving party only that any
Product when supplied will meet the Specifications for the Product. EXCEPT FOR
THE FOREGOING AND AS EXPRESSLY PROVIDED HEREIN, SUPPLYING PARTY MAKES NO EXPRESS
OR IMPLIED WARRANTY (INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FROM ANY COURSE OF DEALING
OR TRADE USAGE) REGARDING THE PRODUCT. Receiving party assumes all risk and
liability for results obtained by the use of the supplying party Product,
whether used alone or in combination with other materials.
9. Claims:
9.1 With respect to either Tioxide Products or Newco Products, no
claim shall be greater in amount than the Value of the Product (plus freight,
duty and disposal costs) exchanged hereunder in respect of which damages are
claimed except in the case of willful breach of this Agreement. Failure to give
notice of a claim within one hundred eighty (180) days from date of delivery, or
the date fixed for delivery (in case of non-delivery), shall constitute a waiver
by the receiving party of all claims in respect of the Product so delivered or
not delivered, as the case may be except in the case of willful breach of this
Agreement. No Product shall be returned to the supplying party without supplying
party's permission, which shall not be unreasonably withheld or delayed, and
then only in the commercially reasonable manner prescribed by the supplying
party. No claim shall be allowed for Product that has been processed (e.g.
"finished") in any manner. Claims include, without limitation, claims of any
kind, whether or not (a) for loss, damage, expense or injury, (b) with respect
to the Product delivered or for non-delivery of the Product, or (c ) based on
supplying party's breach of warranty, contract, statute, regulation or
negligence, strict liability or any tort.
9.2 No Claim for failure to deliver on time or at all, will be valid
if the reason for said late delivery or non-delivery is the failure either in
whole or in part, by the receiving party to provide the supplying party with a
sufficient quantity of Packaging Materials for the Products ordered by the
receiving party.
10. Remedy:
Except in the case of willful breach of this Agreement, a party's
exclusive and sole remedy for any claim shall be the recovery of the Value of
the Product exchanged with the other party (plus freight, duty and disposal
costs) in the transaction giving rise to the claim. Such recovery may be in the
form of cash or in the form of Product at the discretion of the party against
whom the claim is made.
11. Patent Warranty:
The supplying party warrants that the use or sale of the Products
delivered hereunder will not infringe the claims of any validly issued patent
covering the Products themselves, but does not warrant against infringement due
to: (a) the use of the Products in combination with other Products (or third
party products of other manufacturers) or materials or in the operation of any
process, or (b) the compliance by supplying party with any specifications
provided to supplying party by the receiving party.
12. No Consequential Damages:
Neither party shall be liable for special, indirect, incidental,
punitive or consequential damages (including, without limitation, damages for
loss of business profits, business interruption or any other loss), whether or
not caused by, or resulting from, the negligence of such party even if such
party has been advised of the possibility of such damages.
13. Force Majeure:
13.1 Force Majeure is an event or circumstance beyond the reasonable
control of the party claiming the Force Majeure including but not limited to:
act of God, fire, flood, explosion, hurricane, breakdown of machinery or
equipment, governmental action or inaction or request of governmental authority,
accident, strike, lockout, labor trouble or shortage, inability to obtain raw
material, power, equipment or transportation, but the party claiming the Force
Majeure shall be diligent in attempting to remove such cause or causes and shall
promptly notify the other party of its extent and probable duration. No
liability shall result to either party from delay in performance or from
non-performance caused by a Force Majeure other than that described in this
Clause 13 and in Clause 14 and this Agreement shall remain otherwise unaffected.
13.2 If the party declaring a Force Majeure is the supplying party,
the receiving party shall be entitled to reduce its own quantity commitments (by
grade, Quality, and package of such receiving party's choice) as a supplying
party in an amount equal to the quantity by which the non-performing party fails
to perform. The non-performing party shall have no obligation to purchase
quantities of Product from other sources to enable it to perform under this
Agreement.
13.3 If the party declaring a Force Majeure is the receiving party,
the supplying party will be entitled:
(a) to reduce its own commitments as a receiving party in an
amount equal to the quantity by which the non-performing party
fails to perform, or
(b) to continue to receive Product from the non-performing
party.
13.4 In order to claim a Force Majeure hereunder, the party
attempting to excuse its delay in performance or non-performance must notify the
other party within 24 hours of obtaining knowledge of the Force Majeure and
confirm the Force Majeure event in writing within 5 Business Days thereafter. If
the other party does not agree that the event or circumstance is a Force
Majeure, that party may dispute the claim under the Dispute Resolution
provisions contained herein.
13.5 YEAR 2000 ISSUE. A delay in performance or non-performance
attributable to improper processing, management, manipulation, miscalculation or
misreading of data by computer-operated systems arising out of processing for
the year 2000 shall not constitute a Force Majeure.
14. Allocation:
14.1 If a Force Majeure event or circumstance occurs which results
in the failure of the supplying party to supply Product to the receiving party,
supplying party will distribute its available supply pro rata (based on
deliveries in the three calendar months prior to the Force majeure event or
circumstance) between the receiving party and the aggregate of all other
purchasers, including, third parties as well as divisions, joint ventures,
business units, affiliates and subsidiaries of supplying party, for the duration
of such Force Majeure event or circumstance without liability for any failure of
performance that may result therefrom. For the avoidance of confusion,
distribution among such other purchasers will be made on such basis as the
supplying party may deem fair and practical after first determining the portion
to be provided to receiving party.
14.2 If a non-Force Majeure event or circumstance occurs which
results in the failure of the supplying party to supply Product to the receiving
party according to the forecast commitments hereunder, the supplying party shall
meet all of its supply obligations under this Product Exchange Agreement prior
to, and in preference over, any other supply obligations to purchasers,
divisions, joint ventures, business units, affiliates and subsidiaries of
supplying party.
15. Government Action:
If any Government action should place or continue limitations on the
terms of this Agreement such that it would be illegal or against public or
Government policy for supplying party to receive full value (i.e. equivalent
exchanged product) for its Product, supplying party shall have the option: (a)
to continue to perform under this Agreement subject to such adjustments that
supplying party may deem necessary to comply with such Government action; (b) to
revise this Agreement, subject to receiving party's written approval, in order
to most nearly accomplish the original intent of this Agreement; or (c) to
terminate performance of the affected portions of this Agreement without
liability for damages.
16. User Protection and Product Information:
The receiving party warrants that it will use its own independent
skill and expertise in connection with the selection and use of the supplying
party's Product and that it possesses the skill and expertise to safely handle,
store, transport, use, and dispose of the Product. In connection therewith,
receiving party agrees to:
16.1 Familiarize itself with available safety and health information
and precautions, including, but not limited to, those contained in any pertinent
material safety data sheet;
16.2 Adopt and follow safe handling, storage, transportation, use,
and disposal practices with respect to the Product, including, but not limited
to, those required by applicable law and regulation; and
16.3 Instruct its employees, independent contractors, agents and
customers in the warning and safe use practices required in connection with the
unloading, handling, storage, transportation, use and disposal of the Product.
17. Labeling and Literature, Name on Product:
Each party hereto acknowledges that there may be risks and liability
resulting from the use of each party's Products. Each party hereto acknowledges
that it has received and is familiar with the supplying party's labeling,
literature and any pertinent Material Safety Data Sheets ("MSDS" sheets)
concerning such Products and their properties. The receiving party will forward
such information to receiving party's employees and any others (including
receiving party's customers), who may handle, process or sell such Product from
supplying party and advise such parties to familiarize themselves with such
information.
18. Taxes, VAT, Import Duties
18.1 The receiving party is responsible for payment of all taxes,
duties and VAT due and payable upon movement of Product under this Agreement.
18.2 Where VAT is payable by one party to another, this shall be
charged by means of a valid VAT invoice issued pursuant to the legislation
extant in the country where the VAT charge is levied.
18.3 For any goods which have been supplied to the receiving party
VAT-free on the basis that those goods are to be exported from the European
Union by the receiving party, the receiving party is required to provide within
one month of the date of supply of product a certificate of shipment proving the
goods were removed from the European Union. If such certificate is not provided
within that time period, then the supplying party shall charge and receiving
party shall pay VAT and associated penalties, if any. Such VAT and associated
penalties shall be invoiced by the supplying party and paid, within 15 days of
receipt of the invoice, by the receiving party.
19. Confidential Information:
19.1 For purposes of this Clause:
19.1.1 "Confidential Information" means all information received by the
receiving party from the disclosing party relating to the disclosing party, its
Affiliates and the businesses conducted by the disclosing party (whether
pursuant to this Agreement or otherwise) including not only written information
but information transferred orally, visually, electronically, or by any other
means. For the avoidance of doubt, the term Confidential Information shall not
include:
(i) information that is in the public domain at the date of
this Agreement;
(ii) information that subsequently comes into the public domain,
otherwise than as a result of a breach of this Agreement, but
only after it has come into the public domain;
(iii) information which the receiving party or its Representatives
obtain from a third party not under any confidentiality
obligation to the disclosing party respecting such
information;
(iv) information which the receiving party or its Representatives
at the time of disclosure already has in its possession and
which is not subject to any obligation of secrecy on their
part to the other party;
(v) information which is independently developed by employees of
the receiving party or its Representatives who had no access
to the information disclosed by the disclosing party.
19.1.2 "Representatives" means Affiliates, directors, officers, employees,
agents or representatives of either party or its Affiliates, and their
respective solicitors, accountants, consultants and financial advisors.
19.2 Each party hereto undertakes to maintain Confidential Information
received by it, its Affiliates or its Representatives relating to the other
party or the other party's Affiliates in confidence and not disclose that
Confidential Information to any person other than its Representatives except
with the prior written approval of the other party.
19.3 Each party undertakes only to disclose to Representatives such
Confidential Information relating to the other party or the other party's
Affiliates as is reasonably required for the purposes of performing the
obligations under this Agreement and only to Representatives whom it has
informed of the confidential nature of the Confidential Information and who
undertake to keep it confidential. Such information shall not be used for any
other purpose than the performance of the parties' obligations hereunder. Each
party shall be responsible for breach of such confidentiality undertaking by it
or its Representatives.
19.4 In the event that, after receipt of Confidential Information, either
party, or any person or Representative to whom it has transmitted Confidential
Information, becomes legally required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process or otherwise) to disclose any of the Confidential Information
received, the legally compelled party shall provide the other party with prompt
written notice of that requirement so that the other party may seek a protective
order or other appropriate remedy but shall not be obliged to delay disclosure
if to do so would be in breach of any conditions for such disclosure imposed by
the authority compelling disclosure and in any event should the other party not
be successful in seeking or obtaining a protective order or other appropriate
remedy, the other party shall waive compliance with the provisions of this
Agreement for such particular case to enable the legally compelled party or its
Representative to comply with any such legal requirement.
19.5 Disclosure of Confidential Information to permitted assigns shall not
be a violation of this Clause 19, provided that the disclosing party has
complied with the provisions of Clause 21.2.
20. Dispute Resolution:
20.1 In the event of a dispute between supplying party and receiving
party arising in connection with this Agreement, the parties will first attempt
to resolve the dispute informally. If such informal efforts fail to resolve the
dispute to the parties' satisfaction, senior representatives of each of the
parties shall be notified and shall, within 10 Business Days of a written
request from one party to the other, meet in a good faith effort to resolve such
dispute or difference without recourse to legal proceedings.
20.2 If the dispute or difference is not resolved as a result of
such meeting, supplying or receiving party may (at such meeting or within 10
Business Days from its conclusion) propose to the other in writing that
structured negotiations be entered into with the assistance of a mediator. Upon
receipt of such notice the parties to the dispute shall each propose and select
a suitable mediator.
20.3 All negotiations connected with the dispute shall be conducted
in strict confidence and without prejudice to the rights of the parties in any
future proceedings.
20.4 Within seven (7) Business Days of the appointment of the
mediator, both parties shall meet with him/her in order to agree on a program
for the exchange of any relevant information and the structure to be adopted for
negotiations.
20.5 If the parties to the dispute accept the mediator's
recommendations or otherwise reach agreement on the resolution of the dispute,
such agreement shall be reduced to writing and, once it is signed by their duly
authorized representatives, shall be and remain binding upon the parties. If an
agreement cannot be reached, either of the parties may invite the mediator to
provide a non-binding but informative opinion in writing, provided however that
neither party shall be entitled to rely on such opinion or introduce it into
evidence in any legal proceedings. If agreement still cannot be reached, then
any dispute or difference between the parties may be referred to the courts.
Unless a party is seeking injunctive relief, no dispute shall be referred to the
courts until 30 Business Days after the mediator has issued his/her
recommendation(s).
20.6 Each party shall bear its own costs of this Dispute Resolution
process.
21. Assignment:
21.1 Except as provided in Subclause 21.2 below, the rights,
benefits and obligations of the parties under this Agreement shall not be
assigned, transferred or otherwise disposed of in whole or in part without the
prior express written consent of the other party.
21.2 Consent to assignment of this Agreement shall not be required
(1) in circumstances where all the rights, benefits and obligations of either
party hereto are proposed to be assigned or transferred to an Affiliate of the
transferring party; or (2) in the event that either party hereto or such party's
Affiliates (if applicable) proposes to assign all its rights, benefits and
obligations to a third party purchaser of the transferring party's entire
interest in the manufacture of titanium dioxide; provided however, (upon such
event) the transferring party obtains the agreement of the proposed assignee or
transferee, prior to the transfer or assignment, to comply with the terms of
this agreement and except in the case of a sale pursuant to Subclause 21.2(2) to
obtain from the assignee or transferee a re-assignment in the event that the
assignee or transferee ceases to be an Affiliate.
22. No Agency and no Partnership:
22.1 Except as otherwise expressly provided for in this Agreement
and/or the Schedules, or unless otherwise agreed between the parties in writing,
no party shall:
22.1.1 make purchases or sales or incur any
liabilities whatsoever on behalf of the other
party hereto;
22.1.2 pledge the credit of the other party; or
22.1.3 hold itself out as acting as agent for the
other party.
22.2 The parties hereto have not and expressly do not intend to form
a partnership by virtue of this Agreement and do not intend to be partners.
23. Entire Agreement/Amendments/Severability:
23.1 This Agreement contains the whole agreement between the parties
and their Affiliates relating to the transactions contemplated by this Agreement
and supersedes and replaces all previous agreements between the parties and
their Affiliates relating to such transactions.
23.2 A provision in another agreement between the parties to this
Agreement or between the respective parent undertakings of the parties (and
whether made before or after the date of this Agreement) which refers to this
Agreement and which extends or supplements any provision of this Agreement will
be deemed for the purposes of Subclause 23.1 to form part of the whole agreement
between the parties as referred to in that Subclause.
23.3 Each of the parties to this agreement acknowledges on its own
behalf and on behalf of each of its Affiliates that , in agreeing to enter into
this Agreement, it has not relied on any representation, warranty, collateral
contract or other assurance (except those set out in this Agreement) and waives
all rights and remedies which, but for this Subclause, might otherwise be
available to it in respect of any such representation, warranty, collateral
contract or other assurance, provided that nothing in this Clause shall limit or
exclude any liability for fraud.
23.4 Except as otherwise specifically stated, no modification or
amendment hereto shall be of any force or effect unless (1) reduced to writing
and signed by both parties hereto, and (2) expressly referred to as being a
modification of this Agreement, including the attached Schedules.
23.5 If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Agreement is invalid or
unenforceable in whole or in part, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the list of customers in Schedule E, the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the pertinent
term or provision (or to approve such reductions, deletions or replacements as
agreed by the parties), and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be appealed.
24. Waiver:
24.1 The failure of either party to insist in any one or more
instances upon strict performance of any of the provisions of this Agreement or
to take advantage of any of its rights shall not be construed as a waiver of any
such provision or the relinquishment of any such right.
24.2 The provisions of the United Nations Convention on Contracts
for the International Sale of Goods 1980 shall not apply to this contract or any
transaction contemplated hereunder.
25. Notices:
25.1 Any notice or other document to be served under this Agreement
shall be in writing and may be delivered by hand or sent by post or facsimile
process where the remote facsimile machine has an answer-back facility to the
party to be served at its address or facsimile number appearing in this
Agreement and marked for the attention of the person whose name is referred to
in Subclause 25.2 below. Any notice or other document sent by post shall be sent
by registered post (if both posted and for delivery within the same
jurisdiction) or by registered airmail (if posted for delivery outside the
jurisdiction in which it is posted). Any notice or other document sent by
facsimile process shall also be sent to the other party by registered post or
registered airmail (as the case may be) in accordance with this Clause.
25.2 The person to whom notices or documents should be addressed for
the purposes of Subclause 25.1 is:
25.2.1 If to be served on TEL:
----------------------------
Name or Title, Business Unit
----------------------------
Address
25.2.2 If to be served on Newco:
----------------------------
Name or Title, Business Unit
----------------------------
Address
25.3 In proving service of a notice or document it shall be
sufficient to prove that delivery was made by hand or that the envelope
containing the notice or document was properly addressed and posted (either by
registered post or by registered airmail, as the case may be, in accordance with
the requirements of this Clause 25) or that the facsimile message was properly
addressed and dispatched as the case may be.
26. Governing Law:
This Agreement is governed by and shall be construed in
accordance with Delaware (U.S.) law.
27. Covenant Not to Compete
For a period of two and one-half years from and after the Completion
Date, none of TEL or its Affiliates will directly or indirectly market, sell or
offer for sale in North America (a) to any of the customers listed in Schedule E
any product (whether or not such product is listed in Schedules A, B, C or D)
that is manufactured by the sulfate process, and (b) to any of the customers
listed in Schedule F any TC4 Product. Schedule E shall include all current
customers and all former customers who have purchased in North America from
Tioxide (or its Affiliates), during the three-year period ending on the
Completion Date, titanium dioxide manufactured by the sulfate process. Schedule
F shall include all current customers and all former customers who have
purchased in North America from Tioxide (or its Affiliates), during the
three-year period ending on the Completion Date, TC4 Product.
28. Assurances
The parties hereto acknowledge that due to inadequate information
available to them on the Completion Date, there may be other Products (or in the
case of Schedules E and F, other customers) which, according to the provisions
of this Agreement, should have been included on the Schedules A, B, C, D, E and
F. To the extent that the parties hereto obtain additional information which
indicates that a Product or customer should have been included in the relevant
Schedule, the parties shall consult with a view to agreeing whether the Product
or customer should be included, such agreement not to be unreasonably withheld.
From and after the parties' agreement pursuant to this Clause 28, such Product
or customer shall be deemed to be a part of the relevant Schedule as if it had
been included as on the Completion Date.
IN WITNESS WHEREOF, the parties hereto have caused this Product Exchange
Agreement to be executed by their duly authorized representatives.
TIOXIDE EUROPE, LTD. NEWCO, Ltd.
By:_________________________________ By:___________________________
Title:_______________________________ Title:_________________________
Date:_______________ Date:_____________