FEEDSTOCK AGREEMENT
THIS FEEDSTOCK AGREEMENT (herein called the "Agreement") is entered
into effective as of July 1, 1997 (the "Effective Date"), among
Melamine Chemicals, Inc. (herein called "MCI"), a Delaware
corporation, having its principal place of business and office at
Donaldsonville, Louisiana, Triad Nitrogen, Inc. (herein called "TNI"),
a Delaware corporation, having its principal place of business and
office at Donaldsonville, Louisiana, and Mississippi Chemical
Corporation (herein called "Guarantor"), a Mississippi corporation,
having its principal place of business and office at Yazoo City,
Mississippi, as an intervenor.
WITNESSETH:
1. Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
a. "Affiliate" shall mean any person, partnership, corporation,
limited liability company, association or other entity or
organization that controls, is controlled by or is under
common control with a specified person, partnership,
corporation, limited liability company, association or other
entity or organization. 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 or organization.
b. "Anhydrous Ammonia" shall mean anhydrous ammonia meeting the
specifications set forth in Exhibit A hereto, which is made
a part hereof by reference.
c. "Anhydrous Ammonia Equivalent" shall mean a substance
contained in the melamine carbamate recycle which is similar
in composition to Anhydrous Ammonia but has not been
separated out of such melamine carbamate recycle at time of
delivery hereunder by MCI to TNI.
d. "Carbamate" shall have the meaning set forth in Section
3.c.(1) hereof.
e. "Contract Year" shall mean twelve (12) consecutive calendar
months commencing on July 1 and ending on the next
succeeding June 30; provided, however, a Contract Year shall
end on the day immediately preceding the TNI Urea Plant
Expansion Date (as hereafter defined), and succeeding
Contract Years during the term hereof shall begin on the TNI
Urea Plant Expansion Date and on each anniversary of the TNI
Urea Plant Expansion Date.
f. "Facility Charge" shall have the meaning set forth in
Section 5 hereof.
g. "Lease" shall mean that certain Site Lease Agreement between
TNI and MCI effective as of July 1, 1997, as amended,
modified, supplemented or restated from time to time.
h. "Material Breach" shall mean a breach by any party of an
obligation under this Agreement in consequence of which the
objectives of this Agreement are no longer being met.
Without limiting the generality of the foregoing, the
parties agree that any deliberate refusal to deliver or
purchase product in accordance with the terms and conditions
of this Agreement shall constitute a Material Breach.
i. "M-I Facility" shall mean the melamine plant constituting a
part of the MCI Plant which produces melamine through a
continuous chemical process that heats urea under low
pressure in the presence of a catalyst and which produces a
by-product liquid Carbamate meeting the specifications set
forth in Exhibit C hereto.
j. "MCCLP" shall mean Mississippi Chemical Company, L.P., an
Affiliate (under common control) of TNI.
k. "MCI Plant" shall mean, collectively, the melamine plants
and related facilities operated by MCI on the leased
premises located at Donaldsonville, Ascension Parish,
Louisiana more fully described in the Lease, together with
any later additions (including the MCI Plant Expansion, if
undertaken) or modifications thereto.
l. "MCI Plant Expansion" shall mean an expansion of the MCI
Plant to include a new melamine plant.
m. "MCI Plant Expansion Date" shall mean the date upon which
MCI notifies TNI that the MCI Plant Expansion (if any) is
complete and operational or, at TNI's option, a later date
that is no later than the second anniversary date of the MCI
Plant Expansion Notice.
n. "MCI Plant Expansion Notice" shall mean a written notice by
MCI to TNI of MCI's intention to undertake the MCI Plant
Expansion, which notice shall set forth (i) the estimated
date (which shall be no sooner than two (2) years and no
later than three (3) years after issuance of the MCI Plant
Expansion Notice) that the MCI Plant Expansion will be
complete and operational, (ii) MCI's reasonable, good-faith
estimate of the increase (number of Tons) in its
requirements of Urea Melt per twelve-month Contract Year
after the MCI Plant Expansion is complete and operational,
as compared to the maximum quantity of Urea Melt that TNI is
obligated to sell to MCI (pursuant to Section 3.a.(1)
hereof) during the Contact Year within which the MCI Plant
Expansion Notice is given, and (iii) the volume of and all
specifications applicable to the off-gases to be produced
from the MCI Plant, to the extent they would be relevant to
a determination by TNI as to whether to accept the return of
such off-gases.
o. "Month" shall mean a calendar month.
p. "Post-Expansion Urea Supply Obligation" shall have the
meaning set forth in Section 3.a.(2) hereof.
q. "Submission Date" shall have the meaning set forth in
Section 13.e.(2) hereof.
r. "TNI Anhydrous Ammonia Price," with respect to each Month
during the term hereof, shall be the weighted average price
per Ton, excluding all taxes reflected therein, that is
received on all sales of Anhydrous Ammonia produced by TNI
and sold FOB Donaldsonville, Louisiana, to persons or
entities other than MCI and the Affiliates of TNI. The
parties acknowledge that, as of the Effective Date, MCCLP is
the party to whom TNI sells and intends to sell
substantially all of the Anhydrous Ammonia produced by TNI
at Donaldsonville, Louisiana. MCCLP in turn markets such
Anhydrous Ammonia to third parties. Therefore, starting on
the Effective Date, the TNI Anhydrous Ammonia Price for each
Month shall be the weighted average price per Ton, excluding
all taxes reflected therein, that MCCLP receives on all of
its Anhydrous Ammonia sales, FOB Donaldsonville, Louisiana,
during the six (6) Months immediately preceding such Month,
excluding (i) sales to MCI and TNI Affiliates and
(ii) intracompany transfers. If TNI should cease to sell
substantially all of the Anhydrous Ammonia produced by TNI
at Donaldsonville, Louisiana to MCCLP, and instead sells
such Anhydrous Ammonia to another Affiliate for re-sale to
third parties, then such Affiliate shall be substituted for
MCCLP as of the date of such change for purposes of the
foregoing calculation. If TNI should cease to sell
substantially all of the Anhydrous Ammonia produced by TNI
at Donaldsonville, Louisiana to MCCLP or another Affiliate,
and instead begins selling such Anhydrous Ammonia directly
to unaffiliated third parties, then the TNI Anhydrous
Ammonia Price, with respect to each Month after TNI ceases
to sell substantially all of the Anhydrous Ammonia produced
by TNI at Donaldsonville, Louisiana to MCCLP or another
Affiliate, shall be the weighted average price per Ton,
excluding all taxes reflected therein, that TNI (or MCCLP or
the other relevant Affiliate, with respect to prior Months
during which MCCLP or another Affiliate purchased
substantially all of the Anhydrous Ammonia produced by TNI
for re-sale to unaffiliated third parties) receives on all
of its Anhydrous Ammonia sales, FOB Donaldsonville,
Louisiana during the six (6) Months immediately preceding
such Month, excluding (i) sales to MCI and to TNI's
Affiliates and (ii) intracompany transfers. If for any
reason the parties cannot determine the TNI Anhydrous
Ammonia Price by the method set forth above, or if at any
time after the second Contract Year, either party shall
reasonably determine that the then-applicable TNI Anhydrous
Ammonia Price differs by more than ten percent (10%) from
the average prevailing spot market price of Anhydrous
Ammonia produced and sold in the Gulf region of the United
States during the six (6) Months immediately preceding the
Month when such determination is made, then such party may,
by written notice to the other party, request an adjustment
in or substitute methodology for the calculation of the TNI
Anhydrous Ammonia Price. Authorized representatives of the
parties shall, within thirty (30) days after either party's
issuance of such written notice, meet in good faith to
negotiate a mutually satisfactory adjustment in, or
substitute methodology for, the calculation of the TNI
Anhydrous Ammonia Price. If, within forty-five (45) days
after the parties' first meeting to discuss such issue, the
parties are unable to agree upon an alternate method of
calculating the TNI Anhydrous Ammonia Price, then the
Parties shall submit such determination to the alternate
dispute resolution procedures set forth in Section 13.e
hereof (except that the negotiations described above shall
substitute for the negotiations and mediations described in
Sections 13.e.(1), (2) and (3)), which alternate dispute
resolution procedures will determine the method for
calculating the TNI Anhydrous Ammonia Price.
s. "TNI Urea Plant" shall mean the urea plant operated by TNI
located at Donaldsonville, Ascension Parish, Louisiana,
together with any later additions (including the TNI Urea
Plant Expansion, if undertaken) or modifications thereto.
t. "TNI Urea Plant Expansion" means the expansion of the TNI
Urea Plant that may be undertaken by TNI in connection with
its obligation (subject to any and all restrictions and
limitations herein set forth) to sell and deliver to MCI its
increased requirements of Urea Melt in response to a MCI
Plant Expansion.
u. "TNI Urea Plant Expansion Date" shall mean the earlier of:
(i) the first date that both (x) the MCI Plant Expansion
Date shall have occurred and (y) TNI shall have notified MCI
that the TNI Urea Plant Expansion is complete and
operational; or (ii) the first date that both (A) the
estimated date for completion of the MCI Plant Expansion (as
set forth in the MCI Plant Expansion Notice) shall have
elapsed (regardless of whether the MCI Plant Expansion is
complete on such date) and (B) ninety (90) days shall have
elapsed since the date of written notice by TNI to MCI that
the TNI Urea Plant Expansion is complete and operational.
If the earlier of (i) or (ii) above shall occur on a
February 29, then the TNI Urea Plant Expansion Date shall be
the next day (March 1).
v. "TNI Urea Price," with respect to each Month during the term
hereof, shall be the weighted average price per Ton,
excluding all taxes reflected therein, that is received on
all sales of bulk prilled, granular or melt urea produced by
TNI and sold FOB Donaldsonville, Louisiana, to persons or
entities other than MCI and the Affiliates of TNI. The
parties acknowledge that, as of the Effective Date, MCCLP,
an Affiliate (under common control) of TNI, is the party to
whom TNI sells and intends to sell substantially all of the
prilled, granular and/or melt urea produced by TNI at the
TNI Urea Plant. MCCLP in turn markets such bulk prilled,
granular and/or melt urea to third parties. Therefore,
starting on the Effective Date, the TNI Urea Price for each
Month shall be the weighted average price per Ton, excluding
all taxes reflected therein, that MCCLP receives on all of
its bulk prilled, granular and/or melt urea sales, FOB
Donaldsonville, Louisiana, during the six (6) Months
immediately preceding such Month, excluding (i) sales to MCI
and TNI Affiliates, and (ii) intracompany transfers. If TNI
should cease to sell substantially all of the prilled,
granular and/or melt urea produced by TNI at the TNI Urea
Plant to MCCLP, and instead sells such prilled, granular
and/or melt urea to another Affiliate for re-sale to third
parties, then such Affiliate shall be substituted for MCCLP
as of the date of such change for purposes of the foregoing
calculation. If TNI should cease to sell substantially all
of the prilled, granular and/or melt urea produced by TNI at
the TNI Urea Plant to MCCLP or another Affiliate, and
instead begins selling such urea directly to unaffiliated
third parties, then the TNI Urea Price, with respect to each
Month after TNI ceases to sell substantially all of the urea
produced by TNI at the TNI Urea Plant to MCCLP or another
Affiliate, shall be the weighted average price per Ton,
excluding all taxes reflected therein, that TNI (or MCCLP or
the other relevant Affiliate, with respect to prior Months
during which MCCLP or another Affiliate purchased
substantially all of the prilled, granular and/or melt urea
produced by TNI for re-sale to unaffiliated third parties)
receives on all bulk, prilled, granular and/or melt urea
sales, FOB Donaldsonville, Louisiana, during the six (6)
Months immediately preceding such Month, excluding (i) sales
to MCI and to TNI's Affiliates, and (ii) intracompany
transfers. If for any reason the parties cannot determine
the TNI Urea Price by the method set forth above, or if at
any time after the second Contract Year either party shall
reasonably determine that the then-applicable TNI Urea Price
differs by more than ten percent (10%) from the average
prevailing spot market price of prilled (or other urea
form(s) being produced by TNI) urea produced and sold in the
Gulf region of the United States during the six (6) Months
immediately preceding the Month when such determination is
made, then such party may, by written notice to the other
party, request an adjustment in or substitute methodology
for the calculation of the TNI Urea Price. Authorized
representatives of the parties shall, within thirty (30)
days after either party's issuance of such written notice,
meet in good faith to negotiate a mutually satisfactory
adjustment in, or substitute methodology for, the
calculation of the TNI Urea Price. If, within forty-five
(45) days after the parties' first meeting to discuss such
issue, the parties are unable to agree upon an alternate
method of calculating the TNI Urea Price, then the Parties
shall submit such determination to the alternate dispute
resolution procedures set forth in Section 13.e hereof
(except that the negotiations described above shall
substitute for the negotiations and mediations described in
Sections 13.e.(1), (2) and (3)), which alternate dispute
resolution procedures will determine the method for
calculating the TNI Urea Price.
w. "TNI's Plant Expansion Cost Estimate" shall mean a
reasonable, good-faith estimate by TNI of the total capital
cost of the TNI Urea Plant Expansion, (including capitalized
interest prior to the TNI Urea Plant Expansion Date at the
prime rate as posted from time to time by Citibank, New
York, New York) based upon the assumption that the TNI Plant
Expansion would be sized for the sole purpose of
accommodating MCI's increased requirements for Urea Melt as
set forth in the MCI Plant Expansion Notice. The parties
agree that TNI's Plant Expansion Cost Estimate shall be
binding and non-adjustable for the purpose of calculating
the Facility Charge pursuant to Section 5 hereof; however,
TNI's Plant Expansion Cost Estimate shall not limit the
actual size of the TNI Urea Plant Expansion (it being agreed
that TNI may undertake the TNI Urea Plant Expansion to
increase its urea output beyond that necessary to meet MCI's
additional requirements, so long as the incremental cost of
such a larger plant expansion is not passed to MCI through
the Facility Charge).
x. "Ton" shall mean a net ton of two thousand (2,000) pounds.
y. "Urea Melt" shall mean industrial grade urea melt which
meets the specifications set forth in Exhibit B hereto,
which is made a part hereof by reference.
2. Term. This Agreement shall be effective as of the Effective Date
and shall remain in full force and effect for a term of twenty-
eight (28) years which shall expire on June 30, 2025. This
Agreement shall supersede and take the place of that certain
Feedstock Agreement dated April 30, 1987, as amended, between
Melamine Chemicals, Inc., and TNI (as successor in interest to
First Mississippi Corporation), which agreement is hereby
canceled and terminated as of the Effective Date.
3. Quantity. Quantities expressed herein for Contract Years of less
than three hundred sixty-five (365) days shall be proportionately
reduced.
a. Urea Melt
(1) Prior to the MCI Plant Expansion Date, TNI agrees to
sell and deliver to MCI, and MCI agrees to purchase and
receive from TNI, all of MCI's requirements of Urea
Melt for use in the MCI Plant up to two hundred ten
thousand (210,000) Tons of Urea Melt per Contract Year;
provided, however, after the third Contract Year, the
figure two hundred ten thousand (210,000) shall be
reduced to a figure equal to the number of Tons of Urea
Melt that MCI purchased from TNI hereunder during the
prior Contract Year during which MCI purchased the
largest quantity of Urea Melt, if such figure is less
than two hundred ten thousand (210,000) Tons, unless
MCI provides written notice to TNI within thirty (30)
days after the end of the third Contract Year that
MCI's requirements for Urea Melt (as reasonably and in
good faith determined by MCI) in the fourth Contract
Year will exceed such figure, in which case: (i) TNI
shall supply MCI's requirements for the fourth Contract
Year up to the lesser of (x) MCI's estimate of its
requirements of Urea Melt for the fourth Contract Year
as set forth in MCI's written notice or (y) two hundred
ten thousand (210,000) Tons; and, thereafter, (ii) the
figure two hundred ten thousand (210,000) shall be
reduced to the number of Tons of Urea Melt that MCI
purchased during the prior Contract Year (including the
fourth Contract Year) during which MCI purchased the
largest quantity of Urea Melt, if such figure is less
than two hundred ten thousand (210,000) Tons. This
Section 3.a.(1) shall not apply from and after the MCI
Plant Expansion Date, and the calculation set forth in
this Section 3.a.(1) is expressly made subject to the
provisions of Section 3.a.(7) below.
(2) MCI is evaluating whether to undertake the MCI Plant
Expansion (which, if undertaken, could increase the
total requirements for Urea Melt at the MCI Plant to as
much as three hundred fifteen thousand (315,000) Tons
per Contract Year). If, at any time prior to the end
of the fifth Contract Year, MCI decides to proceed with
the MCI Plant Expansion, it shall give TNI the MCI
Plant Expansion Notice. TNI shall, within one hundred
eighty (180) days following its receipt of the MCI
Plant Expansion Notice, give MCI written notice setting
forth one of the following elections: (i) that TNI
will sell and deliver to MCI all of its requirements of
Urea Melt for use in the MCI Plant up to an annual
quantity not to exceed the Post-Expansion Urea Supply
Obligation (as hereinafter defined), without
undertaking a TNI Plant Expansion; or (ii) that TNI
will sell and deliver to MCI all of MCI's requirements
of Urea Melt for use in the MCI Plant up to a quantity
per Contract Year not to exceed the Post-Expansion Urea
Supply Obligation (as hereinafter defined), and that in
connection with TNI's obligation to sell and deliver
such increased requirements, TNI will undertake the TNI
Urea Plant Expansion. Such notice by TNI shall
include: (w) TNI's calculation of the applicable Post-
Expansion Urea Supply Obligation (number of Tons) in
accordance with the definition thereof set forth below
(including any fluctuations over time due to the
existence of third-party urea sale contracts); (x) if
TNI is undertaking the TNI Urea Plant Expansion, the
estimated date that the TNI Urea Plant Expansion will
be complete and operational (which shall not be earlier
than ninety (90) days prior to the estimated date for
completion of the MCI Plant Expansion as set forth in
the MCI Plant Expansion Notice); (y) TNI's Plant
Expansion Cost Estimate; and (z) if TNI is undertaking
the TNI Urea Plant Expansion, TNI's decision as to
whether it will accept none, all or a specified portion
of the off-gases from the MCI Plant from and after the
date of the TNI Urea Plant Expansion (subject to such
off-gases meeting the specifications contained in the
MCI Plant Expansion Notice). MCI shall have thirty
(30) days following its receipt of TNI's response to
the MCI Plant Expansion Notice within which to revoke
the MCI Plant Expansion Notice by written notice to
TNI. If MCI revokes the MCI Plant Expansion Notice:
(A) MCI shall have no obligation to undertake the MCI
Plant Expansion, or to increase its requirements for
Urea Melt for use in the MCI Plant; and (B) TNI shall
have no obligation to undertake the TNI Urea Plant
Expansion, and there shall be no increase in TNI's Urea
Melt supply obligation beyond that set forth in Section
3.a.(1) above. If MCI does not revoke the MCI Plant
Expansion Notice, and TNI has elected in its response
to the MCI Plant Expansion Notice not to accept the
return of all of the off-gases from the MCI Plant
Expansion, then MCI, as lessee under the Lease, shall
be entitled to construct and operate facilities on the
leased premises to convert the off-gases produced by
the MCI Plant Expansion which TNI declines to accept
into Anhydrous Ammonia or into quantities of urea which
are no greater than .45 times the Urea Melt
requirements of the MCI Plant Expansion for MCI's own
consumption, provided that MCI commences construction
of such facilities within one (1) year of TNI's
response. TNI's consent to the use of the leased
premises for such purposes shall be binding upon all
successor landlords under the Lease and shall survive
the termination of this Agreement.
As used herein, the term "Post-Expansion Urea
Supply Obligation" shall mean a quantity of Urea Melt
equal to the lesser of: (i) the sum of (x) the maximum
quantity of Urea Melt that TNI is obligated to sell to
MCI pursuant to Section 3.a.(1) hereof during the
Contract Year during which the MCI Plant Expansion
Notice is given plus (y) the estimate of MCI's
increased requirements of Urea Melt as contained in the
MCI Plant Expansion Notice; or (ii) three hundred
fifteen thousand (315,000) Tons; provided, that if TNI
elects not to undertake the TNI Urea Plant Expansion or
is unable to complete the TNI Urea Plant Expansion,
then the Post-Expansion Urea Supply Obligation may be
reduced by TNI, but only if and to the extent necessary
due to contracts between TNI or Affiliates of TNI and
third parties for the sale of all forms of urea (i.e.,
prilled, granular and liquid) by TNI or Affiliates of
TNI in effect on the date of the MCI Plant Expansion
Notice, and then only for the remaining term of such
contracts, including any renewals and extensions
exercisable (and ultimately exercised) at the buyer's
option thereunder. Furthermore, such reduction must be
set forth in TNI's response to the MCI Plant Expansion
Notice; otherwise, the existence of third party
contracts shall not be taken into account in
establishing TNI's Post-Expansion Urea Supply
Obligation. If MCI does not revoke the MCI Plant
Expansion Notice as aforesaid, then with respect to
each Contract Year after the MCI Plant Expansion Date,
TNI shall be obligated to sell and deliver to MCI, and
MCI shall be obligated to purchase and receive from
TNI, all of MCI's requirements of Urea Melt for use in
the MCI Plant up to the Post-Expansion Urea Supply
Obligation; provided, however, that if the MCI Plant
Expansion Date does not occur within three years after
the MCI Plant Expansion Notice, then TNI shall, at its
option, be released from its obligations under this
Section 3.a.(2), unless MCI reasonably demonstrates to
TNI, on or before the third anniversary of the MCI
Plant Expansion Notice, that MCI has undertaken, and
will continue to undertake, all reasonable, good-faith
efforts to achieve the MCI Plant Expansion Date.
Within thirty (30) days after MCI's receipt of any
written request by TNI (which request shall not be made
prior to the third anniversary date of the MCI Plant
Expansion Notice), MCI shall submit to TNI the opinion
of an engineering or construction firm of recognized
standing that the MCI Plant Expansion Date can be
achieved within five (5) years after the MCI Plant
Expansion Notice. If either: (i) the MCI Plant
Expansion Date does not occur within three (3) years
after the MCI Plant Expansion Notice, and MCI fails to
provide TNI with the reasonable assurances required
above regarding MCI's ability to achieve the MCI Plant
Expansion Date within five (5) years after the MCI
Plant Expansion Notice; or (ii) notwithstanding such
assurances, MCI fails to achieve the MCI Plant
Expansion Date within five (5) years after the MCI
Plant Expansion Notice, then TNI may redesignate, in
its sole discretion, the maximum quantity (which
quantity shall not be less than the maximum quantity of
Urea Melt that TNI was obligated to sell to MCI
pursuant to this Agreement during the immediately
preceding Contract Year) of Urea Melt that TNI shall be
obligated to sell and deliver to MCI during each
Contract Year thereafter.
If both the MCI Plant Expansion and the TNI Urea
Plant Expansion are undertaken, the parties shall, to
the maximum extent practicable, coordinate the
completion dates of their respective expansions. If
the TNI Urea Plant Expansion is undertaken, but is not
complete and operational by the estimated date set
forth in TNI's response to the MCI Plant Expansion
Notice, then the provisions of Section 3.a.(4) shall
apply during the period of time between TNI's estimated
completion date and the date that the TNI Urea Plant
Expansion is complete and operational. If the TNI Urea
Plant Expansion is not completed within three (3) years
after the later of (A) the estimated completion date
for the TNI Urea Plant Expansion set forth in TNI's
response to the MCI Plant Expansion Notice or (B) the
MCI Plant Expansion Date, then MCI, as lessee under the
Lease, shall be permitted to construct and operate on
the leased premises, as described therein, a Urea Melt
plant having an annual production capacity which is no
greater than that necessary to cover the shortfall
created by such situation, and TNI's consent to the use
of the leased premises for such purposes shall be
binding upon all successor landlords under the Lease
and shall survive the termination of this Agreement.
If MCI begins construction of a Urea Melt plant in
accordance with the foregoing sentence, then TNI shall
waive the entire Facility Charge.
The Facility Charge set forth in Section 5 hereof,
and the rights set forth in this Section 3.a.(2) in
favor of TNI, shall constitute the sole and exclusive
remedies available to TNI with respect to any failure
by MCI to timely complete the MCI Plant Expansion, all
other remedies or damages hereby being waived;
likewise, the rights set forth in this Section 3.a.(2)
in favor of MCI shall constitute the sole and exclusive
remedies available to MCI with respect to any failure
by TNI to timely complete the TNI Urea Plant Expansion,
all other remedies or damages hereby being waived.
(3) Notwithstanding anything herein to the contrary except
the provisions of Section 3.a.(7) below (to which this
Section 3.a.(3) is expressly made subject): (i) with
respect to each Contract Year, after the third Contract
Year of the term hereof, occurring prior to the MCI
Plant Expansion Date (provided, however, that if MCI
gives the notice referenced in Section 3.a.(1), then
this subsection (i) shall not apply until after the
fourth Contract Year), TNI shall not be obligated to
deliver to MCI during any such Contract Year a quantity
of Urea Melt which is greater than one hundred twenty
percent (120%) of the quantity of Urea Melt sold and
delivered to MCI during the immediately preceding
Contract Year; and (ii) beginning with the second
Contract Year occurring after the MCI Plant Expansion
Date and for each Contract Year thereafter, TNI shall
not be obligated to deliver to MCI during any such
Contract Year a quantity of Urea Melt which is greater
than one hundred ten percent (110%) of the quantity of
Urea Melt sold and delivered to MCI during the
immediately preceding Contract Year.
(4) If: (i) TNI is unable or unwilling for any reason to
supply any or all of the Urea Melt that TNI is
obligated to supply hereunder; (ii) MCI properly
rejects any of the Urea Melt supplied by TNI hereunder
due to a failure of such Urea Melt to conform to the
specifications set forth in Exhibit B; and/or (iii) MCI
has requirements of Urea Melt in any Contract Year
which are in excess of TNI's maximum obligation to sell
and deliver Urea Melt (as set forth in this Section 3.a
and the further provisions hereof) and (in the case of
this subsection (iii))TNI does not agree in writing to
sell and deliver such excess quantities within thirty
(30) days after being requested to do so in writing by
MCI, then, in addition to any other remedies available
hereunder, during the period within which TNI is
unwilling or unable to supply all or a portion of MCI's
requirements of Urea Melt in conformity with the
applicable specifications, MCI shall be entitled to
purchase and receive from Affiliates or third party
sources such quantities of Urea Melt as MCI does not
obtain from TNI.
(5) MCI will keep TNI informed regarding its anticipated
requirements of Urea Melt and any significant changes
in such requirements.
(6) MCI shall purchase and accept Urea Melt at reasonably
uniform rates throughout each Contract Year. In no
event shall TNI be required to deliver more than
twenty-eight (28) Tons of Urea Melt during any hour or
more than six hundred sixty (660) Tons of Urea Melt in
any day prior to the MCI Plant Expansion Date (such
numbers being subject to pro rata reduction in Contract
Years where TNI's maximum Urea Melt supply obligation
is less than two hundred ten thousand (210,000) Tons)
or more than forty-five (45) Tons of Urea Melt during
any hour or more than one thousand eighty (1080) Tons
of Urea Melt in any day after the MCI Plant Expansion
Date (such numbers being subject to pro rata reduction
in Contract Years where TNI's maximum Urea Melt supply
obligation is less than three hundred fifteen thousand
(315,000) Tons).
(7) If and to the extent that a suspension or reduction in
deliveries of Urea Melt occurs as a result of: (i) any
force majeure event as described in Section 17 hereof;
(ii) a shutdown of the TNI Urea Plant under Section 14
hereof; or (iii) any other failure or refusal of TNI to
supply Urea Melt in accordance with this Agreement
(including without limitation any failure by TNI to
supply Urea Melt in accordance with the specifications
set forth in Exhibit B, resulting in a rejection of
such Urea Melt by MCI), then for purposes of
determining the quantities of Urea Melt purchased by
MCI in each Contract Year affected by one or more such
occurrences, which calculation in turn shall be used to
calculate the maximum quantities of Urea Melt that must
be supplied by TNI in succeeding Contract Years as
described in Sections 3.a.(1) and 3.a.(3), the actual
quantities taken by MCI during each such Contract Year
shall be increased by the excess of the product of the
(x) total days during which such suspensions or
reductions occurred during such Contract Year
multiplied by (y) the average daily quantities of Urea
Melt purchased during such Contract Year, exclusive of
the days during which such suspensions or reductions
occurred, over the actual quantities taken by MCI on
the days during which such suspensions or reductions
occurred. Furthermore, if the quantity of Urea Melt
purchased by MCI in any Contract Year is reduced as a
result of TNI's inability or refusal, for any reason,
to accept from MCI all Carbamate conforming to the
specifications contained in Exhibit C up to the maximum
quantity limit set forth in Section 3.c.(1), then for
purposes of calculating the quantities of Urea Melt
purchased by MCI in such Contract Year, and in turn
performing the calculations required under Sections
3.a.(1) and 3.a.(3), the actual quantities of Urea Melt
taken by MCI in such Contract Year shall be increased
to reflect the additional quantities of Urea Melt that
MCI would have taken had TNI been able or willing to
accept the return of such Carbamate. Notwithstanding
the foregoing, the parties agree that, with respect to
each of the calculations set forth in Sections 3.a.(1)
and 3.a.(3), no adjustment under this Section 3.a.(7)
shall be implemented for a given Contract Year unless
the aggregate adjustment under this Section 3.a.(7) for
such Contract Year would affect the outcome of such
calculation (i.e., the calculation of the maximum
quantity of Urea Melt that TNI is obligated to deliver
to MCI in the immediately succeeding Contract Year
under Section 3.a.(1) or 3.a.(3), as applicable) by
more than five percent (5%), and then such adjustments
shall be implemented only to the extent of the impact
on such calculation above the five percent (5%)
threshold.
b. Anhydrous Ammonia.
(1) TNI agrees to sell, and MCI agrees to purchase, the
entire Anhydrous Ammonia requirements of MCI's Plant,
not to exceed twenty-five thousand (25,000) Tons per
Contract Year.
(2) MCI will keep TNI informed regarding its anticipated
requirements of Anhydrous Ammonia and any significant
changes in such requirements.
(3) In the event that: (i) TNI is unable or unwilling for
any reason to supply any or all of the Anhydrous
Ammonia that TNI is obligated to supply hereunder; (ii)
MCI properly rejects any of the Anhydrous Ammonia
supplied by TNI hereunder due to a failure of such
Anhydrous Ammonia to conform to the specifications set
forth in Exhibit A; and/or (iii) MCI has requirements
of Anhydrous Ammonia in excess of twenty-five thousand
(25,000) Tons per Contract Year and (in the case of
this subsection (iii)) TNI does not agree in writing to
sell and deliver such excess quantities within thirty
(30) days after being requested to do so in writing by
MCI, then, in addition to any other remedies available
hereunder, during the period within which TNI is
unwilling or unable to supply all or a portion of MCI's
requirements of Anhydrous Ammonia in conformity with
the applicable specifications, MCI shall be entitled to
purchase and receive from Affiliates or third-party
sources such quantities of Anhydrous Ammonia as MCI
does not obtain from TNI.
(4) MCI shall purchase and accept Anhydrous Ammonia at
reasonably uniform rates throughout each Contract Year.
In no event shall TNI be required to deliver at a rate
of more than eight (8) Tons of Anhydrous Ammonia per
hour or more than one hundred (100) Tons of Anhydrous
Ammonia in any day.
c. Anhydrous Ammonia Equivalent.
(1) MCI, as a by-product of the manufacture of melamine in
the M-I Facility, will have available Anhydrous Ammonia
Equivalent in the melamine carbamate recycle (herein
called "Carbamate"). Subject to the provisions of
Sections 3.c.(2), 15 and 17 hereof, to MCI's option set
forth in the next paragraph, and to TNI's ability to
efficiently accept and process Carbamate delivered by
MCI, on each day during the term hereof, MCI will sell
and deliver to TNI and TNI will purchase and accept, a
quantity of Anhydrous Ammonia Equivalent, in the form
of Carbamate, which is approximately equivalent to .47
times the number of Tons of Urea Melt used by MCI in
the M-I Facility on such day, not to exceed a quantity
of Carbamate containing one hundred eighty (180) Tons
of Anhydrous Ammonia Equivalent per day or seven and
one-half (7 1/2) Tons in each hour. TNI intends to
modify the TNI Urea Plant in October 1997 to enhance
its efficiency, which modification may result in an
increase in the maximum daily quantity of Carbamate
that TNI is able to efficiently accept from MCI. TNI
will use its reasonable efforts to achieve the results
desired from the TNI Urea Plant modification. If TNI
determines, in its sole reasonable judgment, that such
TNI Urea Plant modification does not increase TNI's
ability to accept the return of additional Carbamate
from MCI, then TNI will notify MCI of such result as
soon as practicable after its completion of the
modification, and there will be no change in the
maximum quantity of Carbamate to be returned to TNI
hereunder. If TNI determines, in its sole reasonable
judgment, that such TNI Urea Plant modification does
increase TNI's ability to accept the return of some
amount of additional Carbamate from MCI without
additional incremental economic operating cost to TNI
(but excluding cost incurred by TNI in constructing the
TNI Urea Plant modification, including depreciation or
amortization), then TNI will notify MCI of such result
as soon as practicable after its completion of the
modification, and the parties will promptly modify this
Agreement to reflect the increase in the maximum daily
quantity of Carbamate that can be accepted by TNI
without TNI incurring any such additional incremental
operating costs (as designated by TNI in its sole and
reasonable judgment). If TNI determines, in its sole
reasonable judgment, that (A) such TNI Urea Plant
modification does increase TNI's ability to accept the
return of additional Carbamate from MCI but only at
additional incremental economic operating cost
(calculated as aforesaid) to TNI, or (B) if a portion
of the possible increase in TNI's ability to accept the
return of additional Carbamate has been or can be
achieved without additional incremental economic
operating cost to TNI, but the remainder of the
possible increase in TNI's ability to accept the return
of additional Carbamate can be achieved only at
additional incremental economic operating cost
(calculated as aforesaid) to TNI, then TNI will notify
MCI of such result as soon as practicable after its
completion of the modification, and the parties will
meet to discuss MCI's reimbursement of such increased
cost. If the parties are unable to reach agreement
within forty-five (45) days regarding MCI's
reimbursement of such increased cost to TNI, there will
be no change in the maximum quantity of Carbamate to be
returned to TNI hereunder in excess of the amount which
TNI is able to accept without incurring such additional
incremental economic operating cost (which amount, if
greater than one hundred eighty (180) Tons of Anhydrous
Ammonia Equivalent per day, will be documented by a
modification to this Agreement). If the parties are
able to reach agreement within forty-five (45) days
regarding MCI's reimbursement of such increased cost to
TNI, then the parties will promptly modify this
Agreement to reflect the increase in the maximum daily
quantity of Carbamate that can be accepted by TNI (as
designated by TNI it its sole and reasonable judgment)
and the agreed process by which MCI will reimburse
TNI's increased costs of accepting the return of such
higher quantity of Carbamate.
MCI shall operate the M-I Facility at approximately
historical production levels for the first ten (10)
calendar years of the term hereof, subject to the terms
and conditions of Section 15 hereof. As long as MCI
keeps the M-I Facility in operation (including any
period of operation after the tenth calendar year of
the term hereof), MCI will supply Carbamate to TNI in
accordance with the terms and conditions of this
Section. However, at any time after the tenth calendar
year of the term hereof, MCI shall have the option on
eighteen (18) months written notice to TNI (which
notice may be given up to eighteen (18) months prior to
the end of such tenth calendar year in order to become
effective as soon as such tenth calendar year has
elapsed) to shut down the M-I Facility for any reason
and permanently discontinue the delivery to TNI of
Carbamate in accordance with this Section 3.c.(1);
provided, however, that upon any shut-down of the M-I
Facility and permanent discontinuance by MCI of the
delivery of Carbamate, the price per Ton of Urea Melt
sold hereunder will revert to the TNI Urea Price less
Five and 00/100 Dollars ($5.00) per Ton, the price per
Ton of Anhydrous Ammonia will revert to the TNI
Anhydrous Ammonia Price less Five and 00/100 Dollars
($5.00) per Ton, and the price per Ton of Anhydrous
Ammonia Equivalent will revert to the TNI Anhydrous
Ammonia Price less Five and 00/100 Dollars ($5.00) per
Ton. For so long as MCI continues to operate the M-I
Facility after the end of the tenth calendar year of
the term hereof, MCI agrees to operate the M-I Facility
on a relatively continuous basis at approximately
historical production levels.
At any time after the tenth calendar year of the term
hereof, TNI shall have the option on three (3) years
prior written notice to MCI to permanently discontinue
the purchase and acceptance of Carbamate in accordance
with this Section 3.c.(1). If TNI exercises its option
to permanently discontinue the acceptance of Carbamate,
MCI shall have the right, exercisable by written notice
given within sixty (60) days from receipt of TNI's
notice, to reject the exercise of TNI's option. If MCI
rejects the exercise of TNI's option, then from and
after such rejection the price of Urea Melt sold
hereunder shall be the TNI Urea Price. In the event
that MCI does not reject the exercise of of TNI's
option, MCI, as lessee under the Lease, shall be
permitted to construct and operate a Urea Melt plant on
the leased premises to convert into Urea Melt all or
part of the Carbamate produced by the M-I Facility and
all or none of the off-gases produced by the other
facilities comprising the MCI Plant.
(2) If any Carbamate delivered hereunder shall fail to meet
the quality and composition standards set forth in
Exhibit C hereto, if TNI reasonably determines that it
cannot efficiently accept Carbamate, or if the TNI
production facilities are shut down for any reason, TNI
reserves the right not to accept such Carbamate. In
the event that TNI is operating under normal conditions
(i.e., the TNI Urea Plant is running and there is no
force majeure condition at the TNI Urea Plant, as
described in Section 17 hereof), then if the Carbamate
returned to TNI by MCI meets the specifications in
Exhibit C and does not exceed the quantities provided
in Section 3.c.(1) hereof, TNI will be presumed to be
able to take the Carbamate efficiently. In the event
that the TNI Urea Plant is operating under normal
conditions and the Carbamate returned by MCI fails to
meet the specifications in Exhibit C, unless TNI
reasonably feels that accepting such Carbamate will
have a significant adverse effect (operational or
financial) on the TNI Urea Plant, then before declining
to receive further Carbamate, appropriate officials of
TNI having decision-making authority will meet with
officials of MCI with decision-making authority to
discuss in good faith the failure to meet
specifications and the problems it is causing for TNI.
In such a circumstance, TNI officials will give a
reasonable opportunity to MCI to correct the problem
with the Carbamate content or make other adjustments
prior to declining to take further Carbamate. If a
force majeure situation exists within the scope of
Section 17 hereof, TNI shall have no responsibility to
accept the Carbamate whether or not it meets the
specifications in Exhibit C.
(3) If the MCI Plant produces Carbamate that TNI declines
to receive for any reason, MCI shall be entitled to
sell, or give away, and deliver such Carbamate to third
parties during the period TNI declines to receive such
Carbamate.
4. Prices and Credits.
a. Urea Melt.
(1) With respect to each Month prior to June 30, 2000, the
price per Ton of Urea Melt sold hereunder will be the
TNI Urea Price less Five and 00/100 Dollars ($5.00) per
Ton.
(2) With respect to each Month after June 30, 2000, the
price per Ton of Urea Melt sold hereunder will be the
TNI Urea Price less the lesser of (i) Ten and 00/100
Dollars ($10.00) per Ton or (ii) five percent (5%) of
the TNI Urea Price.
b. Anhydrous Ammonia.
(1) With respect to each Month prior to June 30, 2000, the
price per Ton of Anhydrous Ammonia sold hereunder will
be the TNI Anhydrous Ammonia Price less Five and 00/100
Dollars ($5.00) per Ton.
(2) With respect to each Month after June 30, 2000, the
price per Ton of Anhydrous Ammonia sold hereunder will
be the TNI Anhydrous Ammonia Price less the lesser of
(i) Ten and 00/100 Dollars ($10.00) per Ton or (ii)
five percent (5%) of the TNI Anhydrous Ammonia Price.
c. Anhydrous Ammonia Equivalent.
(1) With respect to each Month prior to June 30, 2000, the
price per Ton of Anhydrous Ammonia Equivalent sold
hereunder will be the TNI Anhydrous Ammonia Price less
Five and 00/100 Dollars ($5.00) per Ton.
(2) With respect to each Month after June 30, 2000, the
price per Ton of Anhydrous Ammonia Equivalent sold
hereunder will be the TNI Anhydrous Ammonia Price less
the lesser of (i) Ten and 00/100 Dollars ($10.00) per
Ton or (ii) five percent (5%) of the TNI Anhydrous
Ammonia Price.
(3) The price per Ton of Anhydrous Ammonia Equivalent, as
set forth in subsections (1) and (2) above, shall apply
to all Anhydrous Ammonia Equivalent sold by MCI to TNI,
whether in the form of Carbamate or through the return
of off-gases from the MCI Plant after the MCI Plant
Expansion has been completed.
5. Facility Charge. With respect to each of the seven (7)
consecutive Contract Years beginning on and immediately following
the TNI Urea Plant Expansion Date, MCI shall, on the last day of
each of such Contract Years, pay to TNI an annual facility charge
(the "Facility Charge"). The Facility Charge for each such
Contract Year shall be calculated as the amount equal to the
product of:
a. The annual payment required to amortize a seven (7) year
loan having a principal amount equal to TNI's Plant
Expansion Cost Estimate and which bears interest from the
TNI Urea Plant Expansion Date at an interest rate which is
250 basis points higher than the interest rate reported as
of the TNI Urea Plant Expansion Date for U.S. Treasury Notes
maturing seven (7) years after the TNI Urea Plant Expansion
Date; multiplied by
b. A fraction (which shall be no greater than one (1)), the
numerator of which is the positive remainder, if any, of:
(i) the number equal to the Post-Expansion Urea Supply
Obligation; minus (ii) the number of Tons of Urea Melt
purchased by MCI during the relevant Contract Year, and the
denominator of which is the remainder of: (A) the Post-
Expansion Urea Supply Obligation, but not less than two
hundred ten thousand (210,000); minus (B) two hundred ten
thousand (210,000);
subject, however, to all adjustments required by the further
terms of this Section 5.
The parties agree that if, due to the provisions of Section
3.a.(3) hereof, TNI offers to MCI a maximum quantity of Urea Melt
for any Contract Year that is less than the Post-Expansion Urea
Supply Obligation, then the Facility Charge for such Contract
Year shall be adjusted as follows: the adjusted Facility Charge
shall be calculated as the amount equal to the product of:
y. The annual payment calculated pursuant to the formula set
forth in subparagraph a. of this Section 5; multiplied by
z. A fraction (which shall be no less than zero (0) and no
greater than one (1)), the numerator of which is the
positive remainder, if any, of: (i) the maximum quantity of
Urea Melt made available by TNI to MCI for such Contract
Year; minus (ii) the number of Tons of Urea Melt purchased
by MCI during the relevant Contract Year, and the
denominator of which is the remainder of: (A) the maximum
quantity of Urea Melt made available by TNI to MCI for such
Contract Year; minus (B) two hundred ten thousand (210,000).
Furthermore, the parties agree that if and to the extent a
suspension or reduction in the deliveries of Urea Melt occurs as
a result of: (i) a force majeure event as described in Section
17 hereof affecting TNI's ability to deliver Urea Melt hereunder;
(ii) a shutdown of the TNI Urea Plant under Section 14 hereof; or
(iii) any other failure or refusal of TNI to supply Urea Melt in
accordance with this Agreement (including without limitation any
failure by TNI to supply Urea Melt in accordance with the
specifications set forth in Exhibit B, resulting in a rejection
of such Urea Melt by MCI), then for purposes of determining the
quantities of Urea Melt purchased by MCI in any Contract Year
affected by one or more of such occurrences, which determination
in turn shall be used to calculate the Facility Charge as set
forth above, the actual quantities taken by MCI during any such
Contract Year shall be increased by the excess of the product of
the (x) total days during which such suspensions or reductions
occurred during such Contract Year multiplied by (y) the average
daily quantities of Urea Melt purchased during such Contract
Year, exclusive of the days during which such suspensions or
reductions occurred, over the actual quantities taken by MCI on
the days during which such suspensions or reductions occurred.
Finally, in the event that the quantity of Urea Melt purchased by
MCI in any Contract Year is reduced as a result of TNI's
inability or refusal, for any reason, to accept Carbamate
supplied by MCI in conformity with the specifications contained
in Exhibit C up to the maximum quantity limit set forth in
Section 3.c.(1), then for purposes of calculating the quantities
of Urea Melt purchased by MCI in such Contract Year and in turn
performing the calculation of the Facility Charge for such
Contract Year, the actual quantities of Urea Melt taken by MCI in
such Contract Year shall be increased to reflect the additional
quantities MCI would have taken had TNI been able or willing to
accept the return of such Carbamate.
Notwithstanding the foregoing, the parties agree that the
Facility Charge calculation, as set forth in the first paragraph
of this Section 5, shall not be subject to the adjustments
thereafter described in this Section unless the aggregate
adjustments under this Section 5 for such Contract Year would
reduce the Facility Charge as calculated under the first
paragraph hereof by more than five percent (5%), and then such
adjustments shall be implemented only to the extent of the
reduction in the Facility Charge in excess of the five percent
(5%) threshold.
6. Taxes. For each calendar quarter, MCI agrees to pay any and all
taxes (other than corporate income taxes of TNI) in any way
related to the Anhydrous Ammonia and Urea Melt sold to MCI
hereunder, including, but not limited to, sales taxes. If a
"Superfund" tax is hereafter imposed on Anhydrous Ammonia and
Urea Melt sold for industrial uses, TNI shall be responsible for
its payment. MCI will reimburse TNI on a quarterly basis for any
such "Superfund" tax payments in an amount which is the greater
of (i) the amount of such tax monies that MCI is able to bill and
collect from purchasers of its manufactured products during the
preceding quarter or (ii) the amount of TNI's "Superfund" tax
payments on Anhydrous Ammonia and Urea Melt sold to MCI during
each quarter multiplied by the percentage of "Superfund" taxes
paid by TNI on Anhydrous Ammonia and Urea Melt sales to its other
customers for industrial use that TNI is able to collect from
such customers during the immediately preceding calendar quarter.
7. Payment. Within five (5) business days after the beginning of
each Month, TNI shall notify MCI in writing of the TNI Urea Price
and TNI Anhydrous Ammonia Price applicable during such current
Month. TNI shall invoice MCI for Anhydrous Ammonia and Urea Melt
sold and delivered to MCI hereunder during each Month within five
(5) business days after the end of such Month. Each such TNI
invoice shall include, with respect to each product: (a) the
quantity delivered; (b) the then-effective price per Ton; (c) the
total amount due for the quantity delivered; and (d) such other
information and detail as may be mutually agreeable to the
parties. Likewise, MCI shall invoice TNI for the Anhydrous
Ammonia Equivalent returned to TNI hereunder during each Month
within five (5) business days after the end of such Month. Each
such MCI invoice shall include: (i) the quantity of Anhydrous
Ammonia Equivalent returned; (ii) the then-effective price for
such Anhydrous Ammonia Equivalent; (iii) the total amount due for
the quantity returned; and (iv) such other information and detail
as may be mutually agreeable to the parties. Payment of invoices
shall be made by the indebted party (as determined by crediting
the amount of MCI's invoice against TNI's invoice for the same
month) within thirty (30) days from date of the other party's
invoice; provided, however, that if TNI and Affiliates of TNI
should change the payment terms generally applicable to their
sales of urea and other nitrogen products to industrial customers
then the payment terms hereunder shall be changed to be
consistent with such then-prevailing payment terms generally
applicable to sales by TNI and TNI Affiliates to industrial
customers. TNI shall separately invoice MCI for taxes quarterly
and for Facility Charges annually, and MCI shall pay such
invoices within thirty (30) days from the date thereof. Any
properly invoiced amounts not paid by the aforesaid due dates
shall accrue interest from the day following the applicable due
date until paid at an annual rate equal to the prime rate of
Citibank, New York, New York then in effect plus three percent
(3%).
8. Records. TNI shall keep, and shall cause (or require the
Guarantor hereunder to cause) MCCLP or any other relevant
Affiliate to keep, complete and accurate books and records on all
sales used to determine the TNI Anhydrous Ammonia Price, the TNI
Urea Price, and the Facility Charge and shall permit, on request
by MCI, an independent auditor selected by MCI, and to whom TNI
shall have no reasonable objection, to examine such books and
records for any period ending not more than two (2) years prior
to such request to determine the correctness of any price
hereunder. Said auditor shall not disclose any information
relating to said books or records except his opinions as to the
correctness of such price.
MCI shall keep complete and accurate books and records on all
suspensions or reductions in TNI's deliveries of Urea Melt, all
failures by TNI to accept the return of Carbamate by MCI, and
other matters relevant to (i) the calculations addressed in
Section 3.a.(7) and (ii) the Facility Charge adjustments
addressed in the final paragraph of Section 5, and shall deliver
to TNI a report on or before of the fifteenth (15th) day of each
Month relating to all such matters occurring during the previous
Month. TNI shall endeavor to raise objections (if any) to any
such report within thirty (30) days from its receipt thereof.
If TNI fails to raise objections to any report applicable to a
particular Contract Year within sixty (60) days after the end of
such Contract Year, such report shall be deemed to have been
accepted by TNI. If TNI objects in a timely manner to any
monthly report issued by MCI, MCI shall permit TNI, on written
request, to examine MCI's books and records for the relevant
period to determine the correctness of any calculations in the
MCI report being questioned. All calculations made by MCI with
respect to the adjustments under Section 3.a.(7) and/or the
Facility Charge adjustments referred to in Section 5 shall be
given effect unless and until TNI raises a timely objection
thereto and a determination is made either by mutual agreement of
the parties or in accordance with the dispute resolution
procedures of Section 13. No interest shall accrue on additional
payments to be made as a result of any such determinations until
the thirtieth (30th) day following the determination date, at
which time interest shall accrue at the rate specified in Section
7.
9. Delivery, Title, Custody and Control. During the life of this
Contract:
a. MCI shall provide transportation facilities for the
Anhydrous Ammonia and Urea Melt sold by TNI by pipeline from
a mutually agreeable point of connection within the battery
limits of the TNI Urea Plant or the TNI Anhydrous Ammonia
plant, as the case may be, or by other acceptable method.
Title, custody, possession, control and risk of loss of
Anhydrous Ammonia and Urea Melt so delivered shall pass from
TNI to MCI upon transfer of product by TNI to MCI, or if by
pipeline, at the mutually agreeable point of connection
within the battery limits of the TNI Urea Plant or the TNI
Anhydrous Ammonia plant, as the case may be.
b. MCI shall similarly provide transportation facilities for
the Carbamate to be delivered to TNI. Transportation and
delivery shall be by pipeline at a mutually agreeable point
of connection. Title, custody, possession, control and risk
of loss of Carbamate shall pass from MCI to TNI upon
delivery at such point of connection.
10. Testing and Metering Procedures.
a. Testing. The testing procedures as to all products
delivered hereunder shall be as follows:
(1) As to all Anhydrous Ammonia and Urea Melt delivered by
TNI hereunder, testing shall be performed jointly, with
TNI and MCI sharing equally in the cost of the tests,
based on generally accepted standard industry
practices.
(2) As to all Carbamate delivered by MCI to TNI hereunder,
TNI and MCI shall take samples at the Carbamate surge
tank simultaneously at a mutually agreeable time once
per day. Each party will also take two (2) additional
samples per day at the Carbamate surge tank at times of
its own choosing. Each party will perform necessary
analyses in keeping with standard industry practices.
The daily average of all samples will be used to
compute the amount of Anhydrous Ammonia in the
Carbamate. Specific gravity of the Carbamate will be
determined by generally accepted industry practices.
If a more accurate means of measuring Anhydrous Ammonia
content or Carbamate is developed, and both parties
ultimately agree, the sampling procedure described
previously may be amended.
b. Metering Procedures. Flow metering procedures as to all
products delivered hereunder shall be as follows: Each
party will maintain a flow meter in good working condition
for Anhydrous Ammonia, Urea Melt and Carbamate. Meters are
to be monitored and compared on a daily basis. Differences
or conflicts in meters will be resolved as soon as
practicable. At the earliest reasonable opportunity, all
Urea Melt and Carbamate meters shall be tested in series at
the same time with water flow tests. Anhydrous Ammonia
meters shall be tested at the same time by a method mutually
agreeable to the parties. Each party shall share equally in
the cost of these tests. No adjustments shall be made to
the meters without the other party's knowledge and consent,
such consent not to be unreasonably withheld. Adjustments
shall always be followed by repeat tests conducted in
accordance with this Section 10.b.
11. Warranties and Covenants. This Agreement contains the following
warranties and covenants:
a. As to Anhydrous Ammonia and Urea Melt delivered by TNI to
MCI hereunder:
(1) TNI warrants and covenants that all product sold and
delivered by TNI hereunder shall conform to the quality
and form, description and specifications set forth in
Exhibit A for Anhydrous Ammonia and Exhibit B for Urea
Melt.
(2) TNI warrants and covenants that it will convey good
title to such Anhydrous Ammonia and Urea Melt to MCI
and that products delivered by TNI shall be free from
any security interest or other lien or encumbrance.
(3) TNI warrants and covenants that the production and sale
of Anhydrous Ammonia and Urea Melt in accordance with
this Agreement will not infringe any valid patent
issued under the laws of the United States of America,
and in the event that any claim, action or suit
charging infringement of any such patent shall be
brought against it or MCI, TNI will, at its own
expense, defend any such action or suit and will hold
MCI harmless against any liability or cost whatsoever
arising from any such claim, action or suit, provided
that if any such claim, action or suit is brought
against MCI, it shall, within fifteen (15) days
thereof, notify TNI in writing with full particulars
concerning the same.
b. As to the Carbamate delivered by MCI to TNI hereunder, MCI
makes the identical warranties, covenants and indemnities as
those set forth in Section 11.a above, except the Carbamate
shall conform to the quality and composition standards set
forth in Exhibit C.
c. Each party hereby also warrants and covenants that it shall
conduct all of its Donaldsonville, Louisiana operations
safely and in material compliance with applicable laws,
rules and regulations. Each party agrees to indemnify,
defend and hold the other party harmless from and against
any liability or cost whatsoever arising out of the
indemnifying party's failure to comply with the foregoing
warranty.
d. TNI further represents and warrants to MCI that on and as of
the date hereof:
(1) TNI and Guarantor have all requisite power and
authority to carry on the respective businesses in
which they are engaged and to perform their respective
obligations under this Agreement;
(2) The execution and delivery of this Agreement by TNI and
Guarantor have been duly authorized and approved by all
requisite corporate action;
(3) TNI and Guarantor have all requisite power and
authority to enter into this Agreement and perform
their respective obligations hereunder;
(4) The execution and delivery of this Agreement by TNI and
Guarantor does not, and consummation of the
transactions contemplated herein will not, violate any
of the material provisions of their respective
organizational documents, any material agreement
pursuant to which TNI or Guarantor or any of their
respective properties are bound or, to its knowledge,
any material laws applicable to TNI and/or Guarantor;
and
(5) This Agreement is valid, binding, and enforceable
against TNI and Guarantor in accordance with its terms,
subject to bankruptcy, moratorium, insolvency, and
other laws generally affecting creditors' rights and
general principles of equity (whether applied in a
proceeding in a court of law or equity).
e. MCI further represents and warrants to TNI that on and as of
the date hereof:
(1) It has all requisite power and authority to carry on
the business in which it is engaged and to perform its
respective obligations under this Agreement;
(2) The execution and delivery of this Agreement have been
duly authorized and approved by all requisite corporate
action;
(3) It has all requisite power and authority to enter into
this Agreement and perform its obligations hereunder;
(4) The execution and delivery of this Agreement does not,
and consummation of the transactions contemplated
herein will not, violate any of the material provisions
of its organizational documents, any material agreement
pursuant to which MCI or its properties are bound or,
to its knowledge, any material laws applicable to MCI;
and
(5) This Agreement is valid, binding, and enforceable
against MCI in accordance with its terms, subject to
bankruptcy, moratorium, insolvency, and other laws
generally affecting creditors' rights and general
principles of equity (whether applied in a proceeding
in a court of law or equity).
12. Liabilities with respect to Product.
a. Provided that the Anhydrous Ammonia delivered hereunder
meets the specifications set forth in Exhibit A, TNI shall
have no liability for, and MCI shall indemnify and hold TNI
harmless against, all claims, losses, liabilities and
expenses on account of any injury or death of persons
(including MCI's or TNI's employees or contractors) or
damaged property (including MCI's or TNI's) arising out of
MCI's handling and/or use of such Anhydrous Ammonia,
including without limitation the unloading, storage,
handling, possession and/or use by MCI of Anhydrous Ammonia,
from and after the delivery thereof by TNI to MCI; provided,
however, that the indemnification set forth in this Section
12.a shall not apply to the extent that any such claims,
losses, liabilities and expenses arise as a result of the
negligence or misconduct of TNI, its employees, agents or
contractors.
b. Provided that the Urea Melt delivered hereunder meets the
specifications set forth in Exhibit B, TNI shall have no
liability for, and MCI shall indemnify and hold TNI harmless
against, all claims, losses, liabilities and expenses on
account of any injury or death of persons (including MCI's
or TNI's employees or contractors) or damaged property
(including MCI's or TNI's) arising out of MCI's handling
and/or use of such Urea Melt, including without limitation
the unloading, storage, handling, possession and/or use by
MCI of Urea Melt, from and after the delivery thereof by TNI
to MCI; provided, however, that the indemnification set
forth in this Section 12.b shall not apply to the extent
that any such claims, losses, liabilities and expenses arise
as a result of the negligence or misconduct of TNI, its
employees, agents or contractors.
c. Provided that the Carbamate delivered hereunder meets the
specifications set forth in Exhibit C, MCI shall have no
liability for, and TNI shall indemnify and hold MCI harmless
against, all claims, losses, liabilities and expenses on
account of any injury or death of persons (including TNI's
or MCI's employees or contractors) or damaged property
(including TNI's or MCI's) arising out of TNI's handling
and/or use of such Carbamate, including without limitation
the unloading, storage, handling, possession and/or use by
TNI of Carbamate, from and after the delivery thereof by MCI
to TNI; provided, however, that the indemnification set
forth in this Section 12.c shall not apply to the extent
that any such claims, losses, liabilities and expenses arise
as a result of the negligence or misconduct of MCI, its
employees, agents or contractors
Neither TNI nor MCI shall have any liability to the other for any
claims (except for any indebtedness of each to the other arising
directly or indirectly out of or in connection with this
Agreement) with respect to the products delivered hereunder
unless the claimant gives the other party notice of the claim,
setting forth fully the facts on which it is based, within thirty
(30) days after the date of the delivery, sale or other
occurrence giving rise to the claim.
13. Remedies.
a. In the event of (i) any Material Breach by MCI of any of the
provisions of this Agreement (as determined pursuant to the
dispute resolution procedures set forth in Section 13.e
below), other than a breach covered by Section 13.d below,
(ii) any material default by MCI under the Lease (as
determined by the dispute resolution procedures set forth
therein), or (iii) any default by MCI in the payment of any
indebtedness to TNI hereunder, and MCI's failure to remedy
such breach or such default within thirty (30) days after
the receipt from TNI of notice thereof, or in the event of
any voluntary or involuntary bankruptcy, receivership,
insolvency or reorganization proceedings by or against MCI,
TNI shall be entitled to exercise all rights and remedies
available at law or in equity, including without limitation
the right (A) to obtain injunctive relief or an order of
specific performance enforcing the terms and provisions
hereof, (B) to recover damages (subject to the provisions of
Section 13.h hereof), (C) to suspend deliveries hereunder,
(D) to require such security as TNI may deem satisfactory
and/or (E) to terminate this Agreement by written notice to
MCI. In the event of any other breach by MCI of any of the
provisions of this Agreement, other than a breach covered by
Section 13.d below, TNI's remedies shall be limited to those
set forth in subsections (A), (B), and (D) of this Section
13.a. TNI's right to require strict performance of MCI's
obligations shall not be affected in any way by any previous
waiver, forbearance or course of dealing.
b. In the event of (i) any Material Breach by TNI of any of the
provisions of this Agreement (as determined pursuant to the
dispute resolution procedures set forth in Section 13.e
below), other than a breach covered by Section 13.c below,
(ii) any material default by TNI under the Lease (as
determined by the dispute resolution procedures set forth
therein), or (iii) any default by TNI in the payment of any
indebtedness to MCI hereunder, and TNI's failure to remedy
such breach or such default within thirty (30) days after
the receipt from MCI of notice thereof, or in the event of
any repudiation of the guaranty set forth in Section 24 by
Guarantor, or any voluntary or involuntary bankruptcy,
receivership, insolvency or reorganization proceedings by or
against TNI or Guarantor, MCI shall be entitled to exercise
all rights and remedies available at law or in equity,
including without limitation the right (A) to obtain
injunctive relief or an order of specific performance
enforcing the terms and provisions hereof, (B) to recover
damages (subject to the provisions of Section 13.h hereof),
(C) to suspend deliveries hereunder, (D) to require such
security as MCI may deem satisfactory and/or (E) to
terminate this Agreement by written notice to TNI. MCI's
right to require strict performance of TNI's obligations
shall not be affected in any way by previous waiver,
forbearance or course of dealing. In the event of any other
breach by TNI of any of the provisions of this Agreement,
other than a breach covered by Section 13.c below, MCI's
remedies shall be limited to those set forth in subsections
(A), (B), and (D) of this Section 13.b.
c. In the event that TNI shall fail to deliver Anhydrous
Ammonia and/or Urea Melt hereunder which conform to the
warranties made by TNI in this Agreement, MCI shall not be
obligated to purchase such non-conforming product and shall
have the option in relation to such non-conforming product
as set forth in Section 3.a.(4) or 3.b.(3), as applicable.
MCI shall not be entitled to seek monetary damages or to
voluntarily suspend deliveries of Carbamate in response to
any unexcused failure by TNI to deliver conforming product;
however, MCI shall have the right to obtain injunctive
relief or an order of specific performance requiring the
delivery of conforming product and/or a determination
pursuant to the dispute resolution procedures set forth
below that such failure constitutes a Material Breach by TNI
entitling MCI to terminate this Agreement.
d. In the event that MCI shall fail to deliver Carbamate
hereunder which conforms to the warranties made by MCI in
Section 11 of this Agreement, TNI shall have the option in
relation to such non-conforming product as set forth in
Section 3.c.(2) hereof. TNI shall not be entitled to seek
monetary damages or to voluntarily suspend deliveries of
Anhydrous Ammonia and Urea Melt in response to any unexcused
failure by MCI to deliver conforming Carbamate; however, TNI
shall have the right to obtain injunctive relief or an order
of specific performance requiring the delivery of conforming
product and/or a determination pursuant to the dispute
resolution procedures set forth below that such failure
constitutes a Material Breach by MCI entitling TNI to
terminate this Agreement.
e. Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach or performance hereof,
including, but not limited to, any disputes concerning the
interpretation of the terms and provisions hereof, shall be
resolved through the use of the following procedures:
(1) The parties will initially attempt in good faith to
resolve any dispute, controversy or claim arising out
of or relating to this Agreement.
(2) Should the party representatives directly involved in
any dispute, controversy or claim be unable to resolve
same within a reasonable period of time, such dispute,
controversy or claim shall be submitted to the
respective senior officers of the parties with such
explanation or documentation as the parties deem
appropriate to aid such senior officers in their
consideration of the issues presented. The date the
matter is first submitted to the senior officers of the
parties shall be referred to as the "Submission Date."
The senior officers shall attempt in good faith,
through the process of discussion and negotiation, to
resolve any dispute, controversy, or claim presented to
them within forty-five (45) days after the Submission
Date.
(3) If the senior officers of the parties cannot so resolve
any dispute, controversy, or claim submitted to them
within forty-five (45) days after the Submission Date,
the parties shall attempt in good faith to settle the
matter by submitting the dispute, controversy or claim
to mediation under the American Arbitration Association
Mediation Rules within sixty (60) days after the
Submission Date, using any mediator upon which they
mutually agree. If the parties are unable to mutually
agree upon a mediator within seventy-five (75) days
after the Submission Date, the case shall be referred
for mediation to the American Arbitration Association
Mediation Division. The cost of the mediator will be
split equally between the parties unless they agree
otherwise in writing.
(4) If the matter has not been resolved pursuant to the
aforesaid mediation procedure within thirty (30) days
of the initiation of such procedure, either Party may
request that the matter be submitted to a board of
three (3) independent arbitrators. Either TNI or MCI
may institute such arbitration by giving written notice
to the other at any time after the thirtieth (30) day
following institution of the mediation procedure and
designating one (1) independent arbitrator. Within ten
(10) days thereafter, the other party shall designate a
second independent arbitrator, and such two (2)
arbitrators shall thereafter select the third
independent arbitrator. If the responding party shall
fail to appoint an arbitrator within the said ten (10)
day period provided above, the American Arbitration
Association shall be called upon by the other party to
appoint such arbitrator and such two (2) shall
thereupon select a third arbitrator and the three (3)
thus chosen shall constitute the board of arbitration.
All arbitrators shall be qualified by education or
experience within the chemical industry to decide the
issues presented for arbitration. No arbitrator shall
be: a current or former director, officer, or employee
of either party or its Affiliates; an attorney (or
member of a law firm) who has rendered legal services
to either party or its Affiliates within the preceding
three years; or an owner of a material amount of the
common stock of either party, or its Affiliates. A
hearing shall be held by the three (3) arbitrators at a
location mutually agreeable to the parties or if the
parties are unable to agree on a site, the arbitrators
shall select the site.
A decision of the matter submitted to the
arbitrators shall be rendered promptly and in
accordance with the rules of the American Arbitration
Association, except to the extent such rules are
modified by this Section 13.e or any other express
written agreement of the parties. In all arbitration
proceedings, with respect to each particular claim in
dispute other than those involving: (i) pricing
determinations; (ii) any adjustments to TNI's Urea Melt
supply obligation under Section 3.a.(7); or (iii) any
adjustments to the Facility Charge under Section 5, the
arbitrators shall be required to agree upon and approve
either one of the positions advocated by MCI or one of
the positions advocated by TNI, whichever best reflects
and implements the purposes and intent of this
Agreement. Any decision rendered by the arbitrators
(other than those involving (i) pricing determinations,
(ii) any adjustments to TNI's Urea Melt supply
obligation under Section 3.a.(7) or (iii) any
adjustments to the Facility Charge under Section 5)
which does not reflect either a position advocated by
MCI or a position advocated by TNI shall be beyond the
scope of authority granted by the arbitrators and
consequently may be overturned by either party. Each
party hereby irrevocably waives, to the fullest extent
permitted by law, any objection it may have to the
arbitrability of any such disputes, controversies or
claims. The decision of a majority of the arbitrators
shall be in writing and shall be final and binding upon
all parties hereto as to the issues submitted.
Judgment upon the award rendered may be entered in any
court having jurisdiction thereof. The cost of
arbitration shall be borne by the party whose
contention was not upheld by the arbitration
proceedings, unless otherwise provided in the
arbitration award.
In any dispute resolution proceeding relating to a
proposed adjustment in the methodology for calculating
the TNI Urea Price or TNI Anhydrous Ammonia Price, the
parties and the arbitrators, as applicable, shall make
their determination without regard to either (a) the
form in which the subject product is being delivered
(e.g., in the case of urea, whether it is being sold in
prilled, granular or liquid form) or (b) the value of
the Carbamate or other by-product being returned by MCI
to TNI (such value having been taken into account in
establishing the discounts set forth in Section 4
hereof). Any pricing determination resolved through
the use of the foregoing dispute resolution procedures
shall be given effect retroactively to the date of the
initial notice by the party requesting such pricing
determination.
Each party agrees to be bound by any determination
made in accordance with the dispute resolution
provisions set forth in the Lease with respect to any
matter resolved pursuant to the dispute resolution
provisions of the Lease. Any party may, however, raise
matters relative to the Lease in any pending dispute
resolution proceeding between TNI and MCI with respect
to this Agreement so long as such matters have not
previously been resolved in a dispute resolution
proceeding under the Lease. Likewise, any party may
raise matters relative to this Agreement in any pending
dispute resolution proceeding between TNI and MCI with
respect to the Lease, so long as such matters have not
previously been resolved in a dispute resolution
proceeding under this Agreement. In the event the
dispute resolution provisions of either this Agreement
or the Lease have been invoked, then either party shall
have the right to require that all then-existing
disputes under either the Lease or this Agreement be
resolved through the same dispute resolution procedure.
(5) All deadlines specified herein may be extended by
mutual written agreement of the parties. The
procedures specified herein shall be the sole and
exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this
Agreement; except, however, that a party may seek a
preliminary injunction or other preliminary judicial
relief from a court of competent jurisdiction pending
mediation and/or arbitration of a dispute, as well as
permanent injunctive relief from a court of competent
jurisdiction in accordance with the terms and
conditions of this Agreement. Despite any injunctive
relief the parties will continue to participate in good
faith in the procedures specified herein. All
applicable statutes of limitation, including, without
limitation, contractual limitation periods provided for
in this Agreement, shall be tolled while the procedures
specified in this Section are pending. The parties
will take all actions, if any, necessary to effectuate
the tolling of any applicable statutes of limitation.
f. Upon the termination of this Agreement, any monies due and
owing either party shall be paid to the other party pursuant
to the terms hereof and any refunds due either party shall
be made at the earliest possible time, and in any event no
later than sixty (60) days after the expiration or
termination of this Agreement. All audit rights shall
survive for the period prescribed by Section 8 hereof. All
indemnification obligations shall survive the expiration or
termination of this Agreement.
g. In the event that MCI terminates this Agreement pursuant to
this Section 13, MCI, as lessee under the Lease, shall be
permitted to construct and operate on the leased premises,
as described therein, a Urea Melt plant and/or an Anhydrous
Ammonia plant, having an annual production capacity which is
no greater than: (1) twenty-five thousand (25,000) Tons, in
the case of an Anhydrous Ammonia plant; and, (2) in the case
of a Urea Melt plant, the lesser of (A) MCI's maximum
anticipated current or future ability to consume Urea Melt
or (B) either two hundred ten thousand (210,000) Tons, if
the MCI Plant Expansion Notice has not been given, or three
hundred fifteen thousand (315,000) Tons, if the MCI Plant
Expansion Notice has been given. TNI's consent to the use
of the leased premises for the foregoing purposes shall be
binding upon all successor landlords under the Lease and
shall survive the termination of this Agreement.
h. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
UNDER ANY PROVISION OF THIS AGREEMENT (INCLUDING, WITHOUT
LIMITATION, ANY INDEMNITY PROVISION HEREOF) FOR PUNITIVE OR
EXEMPLARY DAMAGES IN TORT OR CONTRACT. FURTHERMORE, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER ANY PROVISION
OF THIS AGREEMENT FOR CONSEQUENTIAL, INCIDENTAL, OR INDIRECT
DAMAGES. THE PRECEDING SENTENCES SHALL NOT BE CONSTRUED,
HOWEVER, AS LIMITING THE OBLIGATION OF EITHER PARTY
HEREUNDER TO INDEMNIFY THE OTHER PARTY AGAINST CLAIMS
ASSERTED BY THIRD PARTIES, INCLUDING, BUT NOT LIMITED TO,
THIRD PARTY CLAIMS FOR PUNITIVE, EXEMPLARY, CONSEQUENTIAL,
INCIDENTAL, OR INDIRECT DAMAGES.
i. The parties acknowledge that irreparable damage may occur in
the event that certain 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.
(Without limiting the generality of the foregoing, the
parties acknowledge that any deliberate refusal to deliver
product in accordance with the terms of this Agreement shall
cause irreparable injury, loss or damage to the other
party.) Each of the parties therefore agrees that in any
such situation the non-defaulting party shall be entitled to
an injunction or injunctions to prevent nonperformance or
breach of such provisions of this Agreement and to enforce
specifically the terms and provisions hereof, without the
necessity of posting a bond or other security as may be
required by law, this being in addition to any other remedy
to which such party is otherwise entitled under this
Agreement, as awarded or issued in accordance with the
dispute resolution procedures provided in this Section 13.
14. Shutdown of TNI Facilities. NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, IN NO EVENT SHALL TNI BE REQUIRED TO MAKE
DELIVERIES DURING PERIODS WHEN TNI'S ANHYDROUS AMMONIA AND/OR
UREA PRODUCTION FACILITIES ARE NOT OPERATIONAL DUE EITHER TO A
FORCE MAJEURE EVENT OR REASONABLE MAINTENANCE. FURTHER,
NOTWITHSTANDING ANY LANGUAGE HEREIN TO THE CONTRARY, IN THE EVENT
THAT RESPONSIBLE OFFICIALS OF TNI DETERMINE THAT IT IS NOT IN
TNI'S ECONOMIC INTEREST TO RUN ALL OR A PORTION OF THE TNI
PRODUCTION FACILITIES, THEN SUCH FACILITIES SHALL BE SHUT DOWN
FOR SUCH PERIOD OF TIME AS TNI DEEMS TO BE IN ITS BEST ECONOMIC
INTEREST WITHOUT ANY LIABILITY WHATSOEVER TO MCI (PROVIDED,
HOWEVER, THAT MCI SHALL HAVE THE RIGHT TO TERMINATE THIS
AGREEMENT UNDER THE TERMS AND CONDITIONS SET FORTH BELOW). The
supply of Urea Melt and Anhydrous Ammonia is vital to MCI's
continuance in business and replacement of TNI with an alternate
supplier thereof could be a lengthy process involving the
installation of capital equipment. If the decision is made to
shut down or significantly reduce the output at the TNI
production facilities for economic reasons, TNI will notify MCI
as soon as practicable of the proposed shutdown or slowdown. TNI
is under no further obligation to MCI, but if MCI requests, MCI
and TNI will meet to determine what if anything can be done to
provide Anhydrous Ammonia and Urea Melt to MCI. IN ANY EVENT,
TNI SHALL BE RELIEVED OF ALL RESPONSIBILITY TO DELIVER ANHYDROUS
AMMONIA OR UREA MELT OR TAKE CARBAMATE DURING EACH SUCH ECONOMIC
SHUTDOWN OF TNI FACILITIES. If, however, any of the TNI
facilities are shut down or production capacity is reduced due to
either: (i) a determination by TNI that a shutdown or slowdown of
such facilities is in TNI's best economic interest; or (ii) a
force majeure event, and the result of such occurrence(s) is
that, during an aggregate period of seven (7) Months within any
period of twelve (12) consecutive Months, TNI is unable to
provide to MCI the lesser of (a) 50% of TNI's then-current
maximum supply obligation or (b) 50% of MCI's requirements of
either Anhydrous Ammonia or Urea Melt, MCI shall have the right
to terminate this Agreement on thirty (30) days' written notice
to TNI. In the event that MCI terminates this Agreement pursuant
to this Section 14, then MCI, as lessee under the Lease, shall
be permitted to construct and operate on the leased premises, as
described therein, a Urea Melt plant and/or an Anhydrous Ammonia
plant, each having an annual production capacity which is no
greater than: (1) twenty-five thousand (25,000) Tons, in the
case of an Anhydrous Ammonia plant; and, (2) in the case of a
Urea Melt plant, the lesser of (A) MCI's maximum anticipated
current or future ability to consume Urea Melt or (B) either two
hundred ten thousand (210,000) Tons, if the MCI Plant Expansion
Notice has not been given, or three hundred fifteen thousand
(315,000) Tons, if the MCI Plant Expansion Notice has been given.
TNI's consent to the use of the leased premises for the foregoing
purposes shall be binding upon all successor landlords under the
Lease and shall survive the termination of this Agreement.
15. Shutdown of MCI Plant. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IN NO EVENT SHALL MCI BE REQUIRED TO PURCHASE ANHYDROUS
AMMONIA AND UREA MELT DURING PERIODS WHEN THE MCI PLANT IS NOT
OPERATIONAL DUE EITHER TO A FORCE MAJEURE EVENT OR REASONABLE
MAINTENANCE, NOR SHALL MCI BE REQUIRED TO MAKE DELIVERIES OF
CARBAMATE DURING PERIODS WHEN THE M-I FACILITY, WHICH SUPPLIES
CARBAMATE, IS NOT OPERATIONAL DUE EITHER TO A FORCE MAJEURE EVENT
OR REASONABLE MAINTENANCE. FURTHER, NOTWITHSTANDING ANY LANGUAGE
HEREIN TO THE CONTRARY, IN THE EVENT THAT RESPONSIBLE OFFICIALS
OF MCI DETERMINE THAT IT IS NOT IN MCI'S ECONOMIC INTEREST TO RUN
ALL OR PART OF THE MCI PLANT (INCLUDING THE M-1 FACILITY, WHICH
SUPPLIES CARBAMATE), THEN ALL OR A PORTION OF SUCH FACILITIES
SHALL BE SHUT DOWN FOR SUCH PERIOD OF TIME AS MCI DEEMS TO BE IN
ITS BEST ECONOMIC INTEREST WITHOUT ANY LIABILITY WHATSOEVER TO
TNI; PROVIDED, HOWEVER, THAT TNI SHALL HAVE THE RIGHT TO
TERMINATE THIS AGREEMENT UNDER THE TERMS AND CONDITIONS SET FORTH
BELOW. EXCEPT FOR SHORT-TERM (NOT TO EXCEED A TOTAL OF SIXTY
(60) DAYS IN ANY PERIOD OF TWELVE (12) CONSECUTIVE MONTHS AND NOT
TO OCCUR MORE FREQUENTLY THAN TWO TIMES IN ANY PERIOD OF TWELVE
(12) CONSECUTIVE MONTHS) SHUT DOWNS OF THE M-I FACILITY FOR THE
SOLE PURPOSE OF CONTROLLING INVENTORIES OF THE TYPE AND FORM OF
MELAMINE PRODUCED BY THE M-I FACILITY ("INVENTORY CONTROL
SHUTDOWNS"), MCI AGREES THAT DURING THE FIRST TEN (10) CALENDAR
YEARS OF THE TERM HEREOF, THERE WILL BE NO REDUCTION OR
CURTAILMENT OF OPERATIONS IN THE M-I FACILITY WHICH REDUCE THE
DAILY QUANTITY OF CARBAMATE RETURN TO LESS THAN ONE HUNDRED FIFTY
(150) TONS UNLESS, DURING THE SAME PERIOD, THE OPERATIONS OF ALL
OTHER MELAMINE PLANTS COMPRISING THE MCI PLANT ARE REDUCED OR
CURTAILED BY A CORRESPONDING PERCENTAGE OF THEIR RESPECTIVE
NORMAL MELAMINE PRODUCTION RATES. MCI WILL ENDEAVOR TO REDUCE
THE IMPACT OF ANY INVENTORY CONTROL SHUTDOWN BY SELLING THE TYPE
AND FORM OF MELAMINE PRODUCED BY THE M-I FACILITY INTO MARKETS
FOR THE TYPE AND FORM OF MELAMINE PRODUCED BY THE OTHER MELAMINE
PLANTS COMPRISING THE MCI PLANT WHERE THE FORM OF MELAMINE
PRODUCED BY THE M-I FACILITY IS SUITABLE AND INTERCHANGEABLE.
DURING INVENTORY CONTROL SHUTDOWNS THE PRICE PER TON OF UREA MELT
SOLD TO MCI HEREUNDER WILL BE THE TNI UREA PRICE PLUS FIVE AND
00/100 DOLLARS ($5.00) PER TON. The supply of Carbamate is
important to TNI's maximization of its urea production, and
replacement of MCI with an alternate supplier thereof could be a
lengthy process involving the installation of capital equipment.
If the decision is made to shut down or significantly reduce the
output from the MCI Plant for economic reasons, MCI will notify
TNI as soon as practicable of the proposed shutdown or slowdown.
IN ANY EVENT, MCI SHALL HAVE NO RESPONSIBILITY TO PURCHASE
ANHYDROUS AMMONIA AND UREA MELT OR DELIVER CARBAMATE TO THE
EXTENT ITS ABILITY TO DO SO IS AFFECTED BY ANY ECONOMIC SHUTDOWN
OF THE MCI PLANT WHICH IS EXPRESSLY PERMITTED HEREUNDER. If,
however, any of the MCI facilities at the MCI Plant are shut down
or production capacity is reduced due solely to a determination
by MCI that a shutdown or slowdown of such facilities is in MCI's
best economic interest, and the result of such occurrence(s) is
that during an aggregate period of seven (7) Months within any
period of twelve (12) consecutive Months, MCI fails to purchase
the lesser of (i) 50% of TNI's then-current maximum annual supply
obligation for Urea Melt or (ii) 50% of MCI's average
requirements for Urea Melt during the preceding Contract Year
(determined by multiplying (a) MCI's average daily requirements
during such Contract Year on days when the MCI Plant was not shut
down or curtailed due to a determination by MCI that such
shutdown or curtailment was in its best economic interest by (b)
365), TNI shall have the right to terminate this Agreement on
thirty (30) days' written notice to MCI. Furthermore, if the M-I
Facility is shut down or production capacity is reduced due
solely to a force majeure event and, for a period of twelve (12)
consecutive months, MCI fails to deliver to TNI the quantity of
Carbamate required to be delivered pursuant to Section 3.c
hereof, then MCI must reasonably demonstrate to TNI, upon TNI's
written request, that MCI has undertaken, and will continue to
undertake, all reasonable, good faith efforts to eliminate or
rectify the force majeure situation; and that in any event such
situation can be eliminated or rectified within four (4) years
after the date it arose. If MCI fails to provide the reasonable
assurances required above within thirty (30) days after TNI's
written request therefor or, notwithstanding such assurances, MCI
fails to eliminate or rectify the force majeure situation within
four (4) years after the date it arose, then TNI shall have the
right to terminate this Agreement on thirty (30) days written
notice to MCI. During periods when MCI is not delivering
sufficient quantities of Carbamate due to a shutdown of the M-I
Facility, TNI shall be entitled to purchase and receive its
requirements of Carbamate from third parties.
16. Cooperation Regarding Planned Shutdowns and Slowdowns. TNI shall
provide to MCI at least sixty (60) days' notice of any shutdown
or slowdown of the TNI production facilities planned more than
sixty (60) days in advance, which notice shall include an
estimate or statement of the duration of such shutdown or
slowdown. MCI shall be entitled to rely on such notice for the
purpose of making any arrangements with alternate supplier(s) of
Anhydrous Ammonia or Urea Melt, as applicable. MCI shall provide
to TNI at least sixty (60) days' notice of any shutdown or
slowdown of the MCI Plant planned more than sixty (60) days in
advance, which notice shall include an estimate or statement of
the duration of such shutdown or slowdown. TNI shall be entitled
to rely on such notice for the purpose of making any arrangements
with alternate supplier(s) of Carbamate. The parties will work
together to coordinate shutdowns and slowdowns to prevent any
adverse impact that may be caused by a planned shutdown or
slowdown of the TNI production facilities or the MCI Plant.
17. Force Majeure. It is understood that under certain provisions
hereof, TNI may be relieved of its responsibility to deliver
Anhydrous Ammonia and Urea Melt and accept Carbamate hereunder,
and MCI may be relieved of its responsibility to purchase
Anhydrous Ammonia and Urea Melt and deliver Carbamate hereunder.
In addition thereto, if the delivery by TNI of product or the
acceptance by TNI of Carbamate in the quantities and of the
quality provided for hereunder or if the ability of MCI to take
product in such quantities and of such quality hereunder or to
deliver Carbamate as required hereunder or the performance of any
other obligation of either party hereto, other than the
obligation to pay money, is prevented, restricted or interfered
with by reason of fire, explosion, breakdown of plant, failure of
machinery, strike, lockout, labor dispute, casualty or accident,
lack or failure of usual transportation facilities, failure or
shutdown of the plant, epidemics, cyclone, flood, lack or failure
of sources of supply of labor, raw materials, power or supplies;
or war, revolution, civil commotion, acts of public enemies,
blockade or embargo or any law, order, proclamation, regulation,
ordinance, demand or requirement of any government or any
subdivision, authority or representative of any such government;
or any other acts, whatsoever, whether similar or dissimilar to
those above enumerated, beyond the reasonable control of a party
hereto, the party so affected, upon giving prompt notice to the
other party, shall be excused from such performance to the extent
of such prevention, restriction or interference, and quantities
so affected may be eliminated from this Agreement without any
liability, provided that subject to the other provisions hereof,
the party so affected shall use its reasonable efforts to avoid
or remove such causes of nonperformance and shall continue
performance hereunder with the utmost dispatch whenever such
causes are removed and, provided further, that if the output of
TNI's production facilities for a particular product is reduced,
as opposed to halted, due to a force majeure event that was in no
way caused by MCI, TNI shall be obligated to supply such product
to MCI on a pro rata basis (e.g., if TNI's production of Urea
Melt is reduced by 30%, TNI will reduce the amount of product
available to MCI by no more than 30%), so long as TNI's pro rata
supply of such products to MCI would not create or increase any
technical or operational hardships or costs to TNI.
18. Resale. MCI represents that the Anhydrous Ammonia and Urea Melt
purchased hereunder are for MCI's own consumption in the United
States for the production of melamine or urea/melamine compounds;
and if any portion thereof is sold or offered for sale by MCI
(except the Carbamate as provided herein), either within or
outside of the United States, TNI shall have the right to
terminate this Agreement unless MCI shall discontinue any such
sale immediately after receipt of written notice from TNI.
19. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and/or their affiliates with
respect to the sale and purchase of the products specified
herein, and no statements or agreements, oral or written, made
prior to or at the signing hereof, or varying or modifying the
written terms hereof, and no amendment, modification or release
from any provision hereof shall be valid and binding unless
reduced to writing and signed by both parties to this Agreement
and shall specifically state that it is an amendment,
modification or release respecting this Agreement.
20. Assignments. This Agreement or any part hereof may be assigned
by MCI or TNI to any bank or banks or other financial institution
as security for the assignor or pledgor, in which case the non-
assigning party shall recognize such transfer or assignment.
Upon request of either party's lender, the other party shall
deliver to such lender a written statement regarding the status
of this Agreement (stating whether this Agreement is in full
force and effect, whether this Agreement has been amended,
modified, supplemented or restated, and whether either party is
in default hereunder). Either party to this Agreement may assign
it in whole or in part with the other party's prior written
consent and, in the case of any such permitted assignment by TNI,
Guarantor shall be released from the guaranty contained in
Section 24 hereof as of the date of such assignment. Either
party to this Agreement may assign this Agreement in whole or in
part without the other party's prior written consent, if said
assignment is to an Affiliate or to a company growing out of a
consolidation or merger or acquisition of the assigning party;
provided, however, that in the event of such assignment, MCI or
Guarantor, as the case may be (or its successor by merger), shall
guarantee or reconfirm, as the case may be, all future
performance by the assignee (or successor by merger) under this
Agreement.
21. Notices. All notices and other communications hereunder shall be
validly given or made if in writing, when delivered personally
(by courier service or otherwise), when delivered by facsimile,
or when actually received when mailed by first-class certified
United States mail, postage prepaid and return receipt requested,
and all legal process with regard hereto shall be validly served
when served in accordance with applicable law, in each case to
the address of the party to receive such notice or other
communication set forth below, or at such other address as either
party hereto may from time to time advise the other party
pursuant to this Section:
If to TNI: Triad Nitrogen, Inc.
P.O. Box 1851
Owen Cooper Administration Building
Highway 49 East
Yazoo City, MS 39194
Attention: Rosalyn B. Glascoe
Secretary
Telephone: (601) 746-6302
Facsimile: (601) 751-2231
With a copy to: Mississippi Chemical Corporation
P.O. Box 388
Owen Cooper Administration Building
Highway 49 East
Yazoo City, MS 39194
Attention: Secretary
Telephone: (601) 746-6302
Facsimile: (601) 751-2231
If to MCI: Melamine Chemicals, Inc.
P.O. Box 748
39041 Highway 18
Donaldsonville, LA 70346
Attention: President and Chief Executive
Officer
Telephone: (504) 473-3121
Facsimile: (504) 473-0550
22. Governing Law. This Agreement shall be construed and the
respective rights of TNI and MCI shall be determined in
accordance with the laws of the State of Louisiana.
23. Headings and Exhibits. Section and paragraph headings are for
convenience of the parties and shall not control the
interpretation of this Agreement. All exhibits referred to
herein shall be attached hereto and, whether or not so attached,
are hereby incorporated by reference herein.
24. Guaranty. The undersigned Guarantor hereby intervenes into this
Agreement and unconditionally guarantees the full and faithful
performance by TNI of all of the terms, provisions,
representations, warranties and obligations of TNI pursuant to
this Agreement, including without limitation the indemnification
and remedial provisions of this Agreement. The Guarantor further
agrees that MCI 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, this Agreement; (ii) modify or amend
any provisions of this Agreement with the written consent of TNI
only; (iii) grant extensions or renewals of any of the
obligations of TNI; and (iv) in all respects deal with TNI 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 MCI 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 MCI of
any right it may have in respect of TNI. This guaranty
obligation is not intended to and shall not release or extinguish
any obligations of TNI to MCI. The provisions of this Section
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 being only for the benefit of MCI.
25. Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the
different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement in
duplicate originals on the day and year first above written.
MELAMINE CHEMICALS, INC. TRIAD NITROGEN, INC.
By: /s/ Martin F. Lapari By: /s/ Charles O. Dunn
--------------------- -------------------------
Name: Martin F. Lapari Name: Charles O. Dunn
Title: Vice President Title: President
Manufacturing and Engineering
MISSISSIPPI CHEMICAL CORPORATION, as Guarantor
By: /s/ Charles O. Dunn
Name: Charles O. Dunn
Title: President and Chief Executive Officer
Execution Counterpart
ACKNOWLEDGMENT
STATE OF MISSISSIPPI
COUNTY OF YAZOO
Before me, the undersigned authority, personally came and
appeared Charles O. Dunn, the President of Triad Nitrogen, Inc., to
me known to be the person mentioned in and who signed the foregoing
instrument, and who, being duly sworn, did acknowledge and declare in
the presence of the two witnesses whose names are subscribed to said
instrument, that he signed said instrument for and on behalf of said
corporation, being duly authorized so to act, for the purposes
mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal
of office on this the 9th day of October, 1997, at Yazoo City,
Mississippi.
WITNESSES: TRIAD NITROGEN, INC.
/s/ Witness By: /s/ Charles O. Dunn
- ------------ --------------------
Name: Charles O. Dunn
/s/ Witness Title: President
- ------------
/s/ Lynn Montgomery
--------------------
Notary Public
My Commission Expires: January 15, 1999
Execution Counterpart
ACKNOWLEDGMENT
STATE OF MISSISSIPPI
COUNTY OF YAZOO
Before me, the undersigned authority, personally came and
appeared Charles O. Dunn, the President and Chief Executive Officer
of Mississippi Chemical Corporation, to me known to be the person
mentioned in and who signed the foregoing instrument, and who, being
duly sworn, did acknowledge and declare in the presence of the two
witnesses whose names are subscribed to said instrument, that he
signed said instrument for and on behalf of said corporation, being
duly authorized so to act, for the purposes mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal
of office on this the 9th day of October, 1997, at Yazoo City,
Mississippi.
WITNESSES: MISSISSIPPI CHEMICAL CORPORATION
/s/ Witness By: /s/ Charles O. Dunn
- ------------ --------------------
Name: Charles O. Dunn
/s/ Witness Title: President and
- ------------ Chief Financial Officer
/s/ Lynn Montgomery
--------------------
Notary Public
My Commission Expires: January 15, 1999
Execution Counterpart
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ASCENSION
Before me, the undersigned authority, personally came and
appeared Martin F. Lapari, the Vice President - Manufacturing and
Engineering of Melamine Chemicals, Inc., to me known to be the person
mentioned in and who signed the foregoing instrument, and who,
being duly sworn, did acknowledge and declare in the presence of
the two witnesses whose names are subscribed to said instrument,
that he signed said instrument for and on behalf of said corporation,
being duly authorized so to act, for the purposes mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal
of office on this the 9th day of October, 1997, at Donaldsonville,
Louisiana.
WITNESSES: MELAMINE CHEMICALS, INC.
/s/ Witness By: /s/ Martin F. Lapari
- ----------- ---------------------
Name: Martin F. Lapari
Title: Vice President
Manufacturing and Engineering
/s/ Witness
- ------------
/s/ Monica B. Crews
--------------------
Notary Public
My Commission Expires: At death