AGREEMENT
This Agreement ("Agreement"), dated as of March 23, 1999, is
made among El Dorado Nitrogen Company, an Oklahoma corporation
with an office and principal place of business in Oklahoma City,
Oklahoma ("El Dorado Nitrogen"), El Dorado Chemical Company, an
Oklahoma corporation with an office and principal place of
business in Oklahoma City, Oklahoma ("El Dorado Chemical"), Bayer
Corporation, an Indiana corporation with an office and principal
place of business in Pittsburgh, Pennsylvania ("Bayer"), ICF
Kaiser Engineers, Inc., an Ohio corporation with an office and
principal place of business in Fairfax, Virginia ("Kaiser"), ICF
Kaiser International, Inc., a Delaware corporation with an office
and principal place of business in Fairfax, Virginia ("Kaiser
International"), and Acstar Insurance Company, a Connecticut
corporation with an office and principal place of business in New
Britain, Connecticut ("Acstar").
WITNESSETH:
WHEREAS, on August 26, 1997, El Dorado Nitrogen, Kaiser, and
Kaiser International, as guarantor of the performance of Kaiser,
entered into a contract, as amended, amended and restated,
supplemented or otherwise modified (the "Contract"), for the
design and construction of a certain nitric acid plant with a
production capacity of 1,265 short tons per day and all necessary
ancillary work and connections, located in Baytown, Texas, all as
more particularly described in said Contract (the "Project");
WHEREAS, El Dorado Nitrogen, as set out in the Contract,
acts as the duly authorized construction agent of the Project's
owner, First Security Bank, National Association, as trustee;
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WHEREAS, on September 10, 1997, Acstar, as surety, issued
for said Project a certain performance and payment bond (No.
7362) with Kaiser as the principal, and El Dorado Nitrogen and
Bayer as the dual obligees (the "Bond");
WHEREAS, in connection with the issuance of the Bond Kaiser
executed and delivered to Acstar an indemnification agreement
(the "Indemnification Agreement");
WHEREAS, Kaiser failed to complete the Project in the time
specified in the Contract;
WHEREAS, Kaiser, during the course of performance, failed to
make certain payments due certain subcontractors for labor and
materials provided to the Project;
WHEREAS, certain subcontractors or suppliers to Kaiser on
said Project have made claims, or have threatened to make claims,
or may in the future make claims, against the Bond for alleged
non-payment of labor and materials provided on the Project, which
claims (so far as they relate to the time period prior to
February 1, 1999) are set forth and described in Schedules A, B
and C attached hereto (the "Subcontractor Claims") and
subcontractors or suppliers making such claims are herein
referred to as the "Subcontractors";
WHEREAS, on or about January 29, 1999, El Dorado Nitrogen
issued a Notice of Default (the "Notice of Default") to Kaiser,
demanding that Kaiser cure certain Events of Default alleged
therein within ten (10) days or suffer a default termination;
WHEREAS, the Notice of Default was sent by El Dorado
Nitrogen to Acstar;
WHEREAS, Kaiser disputed certain allegations made by El
Dorado Nitrogen in the Notice of Default; and
WHEREAS, since January 29, 1999, the parties hereto have
been engaged in continuous discussions and other efforts to
resolve their disputes and disagreements;
2
NOW, THEREFORE, for good and valuable consideration and in
consideration of the mutual covenants contained herein, and
intending to be legally bound, the parties agree and covenant as
follows:
1. Acstar hereby waives and releases any and all rights it
has to conduct an investigation to determine what defenses it has
under the Bond and to assert any such defenses.
2. Acstar, Kaiser and Kaiser International hereby waive
and release any and all rights or claims they have to any unpaid
Contract funds , whether deemed unearned Contract balance or
earned retainage (the "Contract Funds"). Said Contract Funds
shall be expended by El Dorado Nitrogen for the completion of the
Project.
3. Kaiser represents and warrants to El Dorado Nitrogen,
El Dorado Chemical and Bayer that Schedules A, B and C comprise a
complete listing of Subcontractors and Subcontractor Claims and
cumulatively represent a complete listing of all amounts due and
owing through January 31, 1999 on the Project. Schedules A, B
and C are in all respects true and accurate to the best of
Kaiser's knowledge, after due inquiry, and represent invoices
(other than a claim of Shaw in the amount of $1,335,997 million
(the "Disputed Amount"), which amount is being deposited in an
escrow account pursuant to paragraph 5 hereof) that are due and
owing through January 31, 1999 to the indicated Subcontractor.
4. On a date no more than ten (10) business days after the
date hereof, Acstar agrees to pay to the Subcontractors listed in
Schedule B an amount equal to $11,564,003. The actual date of
such $11,564,003 payment and the deposit by Acstar of the
$1,335,997 into the escrow account pursuant to paragraph 5 hereof
is herein referred to as the "Effective Date." Prior to or
contemporaneously with the payments set forth on Schedule B,
Kaiser, Acstar, Bayer and El Dorado Nitrogen shall receive from
each such Subcontractor, as a condition of the payments set forth
3
on Schedule B, a full release of claims and liens for all work
performed prior to February 1, 1999, and a written
acknowledgement and waiver that such payment constitutes payment
of all amounts due to such Subcontractors for work performed or
materials provided prior to February 1, 1999. Acstar shall
receive from each Subcontractor listed on Schedule B a complete
and full release of any and all claims or rights such
Subcontractor may have against Acstar under the Bond, with the
exception of Shaw Constructors in the amount of $1.0 million, and
with the exception of Insulations Inc., which will provide the
same release upon receipt of the payment in paragraph 6.
5. Also on a date no more than 10 business days after the
date hereof, Acstar shall pay the Disputed Amount of $1,335,997
to Wilmington Trust Company, as Escrow Agent (the "Escrow Agent")
for El Dorado Nitrogen, El Dorado Chemical and Bayer, to be held
by it and distributed under and in accordance with the Escrow
Agreement, in the form attached hereto as Exhibit A (the "Escrow
Agreement"). Such payment to the Escrow Agent shall be final
and, except as specifically provided below, neither Kaiser nor
Acstar shall have any right or claim to recovery of any portion
thereof, whether or not paid to Shaw under the terms of the
Escrow Agreement. Kaiser and El Dorado Nitrogen shall cooperate
in the performance by Kaiser of the third party audit of the
invoices from Shaw Constructors. In the event that any portion of
the Disputed Amount is not paid to Shaw Constructors (the
"Recovery"), then Kaiser shall first receive reimbursement from
the Recovery of the out of pocket audit fees actually incurred by
Kaiser. After reimbursement of such audit fees, then the
Recovery, up to the amount of $600,000, shall be used by El
Dorado Nitrogen first for payment and satisfaction of its
obligation under paragraph 7 to make the El Dorado Payment. In
the event any funds remain in said Escrow Account after the full
disbursement of the amounts set forth in the preceding sentence,
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then provided Kaiser has made the payments under paragraph 6,
Kaiser may use any such remaining funds to pay for costs it
incurred at the Project other than the $500,000 amount pursuant
to paragraph 6 hereof.
6. With respect to Subcontractor Claims, Kaiser and Kaiser
International jointly and severally shall pay an amount equal to
$500,000 (the "$500,000 Amount") in two (2) installments of
$250,000 each. The first $250,000 installment shall be paid by
Kaiser no later than April 1, 1999. The second $250,000
installment shall be paid by Kaiser no later than May 1, 1999.
The payments of the $500,000 Amount shall be disbursed in
accordance with Schedule C attached hereto. All parties shall
receive, as a condition of the payments set forth on Schedule C,
a full release of liens for all work performed prior to February
1, 1999, and a written acknowledgement and waiver that such
payment constitutes full and final payment of all amounts due to
such Subcontractors for work performed or materials provided
prior to February 1, 1999. Acstar shall receive from each
Subcontractor listed on Schedule C a complete and full release of
any and all claims or rights such Subcontractor may have against
Acstar under the Bond.
7. Also, with respect to Subcontractor Claims, El Dorado
Nitrogen shall pay to Subcontractors, for Subcontractor Claims
only and in connection with this Agreement only, up to a maximum
total amount of $600,000 (the "El Dorado Payment"), towards
Subcontractor Claims set forth in Schedule A. Kaiser and Kaiser
International jointly and severally shall pay all additional or
other amounts necessary to make full payment and satisfy all
amounts owed to any Subcontractors, material providers,
consultants or other costs associated with the Project incurred
5
prior to February 1, 1999. As a condition of such payments,
Acstar, Kaiser, Bayer and El Dorado Nitrogen shall receive a
release of claims and liens for all work performed prior to
February 1, 1999 and a written acknowledgement and waiver that
such payment constitutes full and final payment of all amounts
due to such Subcontractors for work performed, or services
provided, or materials provided prior to February 1, 1999. The
party paying such Subcontractor listed on Schedule A shall use
best efforts to obtain from such Subcontractor a complete and
full release of any and all claims or rights such Subcontractor
may have against Acstar under the Bond.
8. If Kaiser and Kaiser International shall fail to pay
the $500,000 Amount described in paragraph 6 above on the due
date of each installment, on a date five (5) Business Days
following the date on which the conditions set forth below have
been satisfied, Acstar shall pay such amount to the
Subcontractors in accordance with Schedule C. Acstar's
obligations under this paragraph 8 shall be subject to (i) its
prior full recovery of an amount equal to $12.9 million under the
Indemnification Agreement, (ii) its determination, as evidenced
by an opinion of its counsel, that it has a present and
enforceable right to recover such $500,000 and its ability to
obtain full satisfaction of said right, under the Indemnification
Agreement. Amounts paid by Acstar under this paragraph 8 shall
be distributed as though paid by Kaiser under paragraph 6.
9. El Dorado Nitrogen and El Dorado Chemical, jointly and
severally, hereby agree to indemnify Acstar and hold it harmless
from and against any and all Subcontractor Claims and any and
all claims for labor or material provided by a Subcontractor or
supplier to the Project, including all reasonable attorneys' fees
and other costs of litigation incurred by Acstar in defending any
such claims, except such fees and costs incurred prior to the
Effective Date. The indemnification obligation hereunder is
conditioned on Acstar providing written notice of any claim to El
Dorado Nitrogen and El Dorado Chemical, within 15 business days
for claims and within seven (7) business days for lawsuits, of
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Acstar's receipt thereof. Upon receipt thereof, El Dorado
Nitrogen and El Dorado Chemical shall provide a defense for
Acstar against any such conforming claim.
10. On the Effective Date, the Notice of Default issued by
El Dorado Nitrogen against Kaiser shall be withdrawn without
prejudice.
11. Kaiser shall continue performance of the Contract as
EPC Contractor in accordance with the terms and conditions of the
Contract (except as expressly and specifically modified herein)
and provide, at no cost to El Dorado Nitrogen or El Dorado
Chemical, all the proper and appropriate supervisory personnel,
including, without limitation, all technical and engineering
personnel, all start-up and commissioning personnel, and such
other personnel necessary to manage and direct its Subcontractors
and perform all other necessary services to complete the Project,
as provided in the Contract, except as modified with respect to
Completion Dates by paragraph 13 hereof (the "Completion
Effort").
12. During said Completion Effort, El Dorado Nitrogen will
be represented by its consultant, Benham Constructors, Inc.
("Benham"), and Kaiser shall cooperate with Benham in its
participation in the Completion Effort. El Dorado Nitrogen shall
pay and be solely responsible for any and all compensation and
fees due Benham.
13. On the Effective Date, (i) a new deadline of April 15,
1999 will apply to the Project for initial production of Nitric
Acid, (ii) the Completion Date of the Project, as set forth in
Section 3 of the Contract, will be deemed to have been extended
to May 1, 1999 (the "Extended Completion Dates"),and Final
Completion and Final Acceptance, as set forth in Secion 4.7 of
the Contract, shall occur no later than June 1, 1999. Except for
initial production run testing and the performance test (as
required in the Contract), El Dorado Nitrogen shall determine the
operating rates and hours of operation of the Project. Kaiser
7
shall conduct the performance test (as required in the Contract)
at the earliest possible time after April 15, 1999, but no later
than May 15, 1999, but subject to El Dorado Nitrogen making the
Project reasonably available to Kaiser to perform the performance
tests and reasonably cooperating with Kaiser to facilitate the
performance tests. Expressly contingent on Kaiser's satisfaction
of those obligations set forth in paragraphs 6, 7, and 11 hereof,
on the Effective Date, El Dorado Nitrogen hereby releases and
waives any right it has to liquidated damages for accrued delays
prior to April 15, 1999. If, however, either of the Extended
Completion Dates is not achieved by Kaiser, as aforedescribed,
then Kaiser and Kaiser International, jointly and severally,
shall be liable to El Dorado Nitrogen for liquidated damages in
the amount of Forty-Four Thousand Dollars ($44,000) per day for
each day of the delay after April 15, 1999 or May 1, 1999, as the
case may be, until the requirement for that date is met, but in
no event shall the aggregate total of such liquidated damages
exceed $44,000 per day.
14. On the Effective Date, El Dorado Nitrogen and El Dorado
Chemical, on the one hand, and Kaiser and Kaiser International on
the other, hereby release each other from any and all claims,
causes of action, debts, damages, and demands whatsoever, each
ever had or now has against the other, or the other's parents,
subsidiaries or affiliates, arising out of or relating to the
liquidated damages under the Contract prior to April 15, 1999 or
the failure of Kaiser or Kaiser International to complete the
Contract or the Project prior to March 23, 1999, provided,
however, that this release in no manner affects any obligation
set forth in the Contract including, without limitation, all
warranty obligations, design obligations and Project performance
guarantees of Kaiser, Kaiser International or Kaiser's
Subcontractors under the Contract (unless and solely to the
extent such obligation is specifically and expressly modified by
this Agreement) or any of the obligations set forth in this
Agreement. The effectiveness of this release is subject to the
8
performance by El Dorado Nitrogen and El Dorado Chemical, on the
one hand, and Kaiser and Kaiser International, on the other hand,
of their respective obligations in this Agreement and in the
Contract.
15. Except as specifically and expressly modified in this
Agreement, all obligations and responsibilities of the parties
under the Contract remain unchanged and in full force and effect.
16. Upon satisfaction of Acstar's obligations in paragraph
4 and paragraph 8 (if any shall arise), El Dorado Nitrogen and
Bayer, as obligees under the Bond, and Kaiser as principal under
the Bond, hereby release Acstar as surety under the Bond from any
and all claims, causes of action, debts, damages and demands
whatsoever any ever had, now has or may have against Acstar, its
parents, subsidiaries or affiliates, arising out of or relating
to the Bond on the Project in any way whatsoever from the
beginning of the world to the date hereof.
17. Kaiser shall provide to El Dorado Nitrogen on behalf of
itself and its Subcontractors a complete set of documentation as
required by the Contractincluding, but not limited to, all
inspection reports, test reports, approvals and certifications of
the work, in accordance with Exhibit B.
18. This Agreement represents and contains the entire
understanding of the parties and may not be amended except by a
writing executed by all parties.
19. Subject to paragraph 3 hereof, the parties acknowledge
that Schedules A, B, and C may require adjustment in the event it
is determined that the exact amounts due to Subcontractors
differs from that set out in those schedules.
20. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties have made and executed this
Agreement on the date as first set forth above.
ATTEST: EL DORADO NITROGEN COMPANY
_________________________ By: _________________________
Its
_________________________ Duly Authorized
ATTEST: EL DORADO CHEMICAL COMPANY
__________________________ By: _________________________
Its
___________________________ Duly Authorized
ATTEST: BAYER CORPORATION
__________________________ By: _________________________
Its
__________________________ Duly Authorized
ATTEST: ICF KAISER ENGINEERS, INC.
_________________________ By: _________________________
Its
___________________________ Duly Authorized
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ATTEST: ACSTAR INSURANCE COMPANY
__________________________ By: _________________________
Its
__________________________ Duly Authorized
ATTEST: ICF KAISER INTERNATIONAL ,
INC.
__________________________ By: _________________________
Its
________________________ Duly Authorized
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SCHEDULE "A"
____________
Contract/PO Number Payor Value
___________ ______ _____ ______
Adrian 3003 EDNC $20,708.48
Cajun 3004 EDNC 41,657.00
Cooper Heat 3019 EDNC 17,616.0
Epcon 3103 EDNC 145,930.50
Grinnel 3015 EDNC 17,488.00
Tracer 3016 EDNC 103,518.81
Pace EDNC 100,000.00
Pipe Tech 3018 EDNC 114,671.74
Marley 3005 EDNC 18,736.00
Phillips 3007 EDNC 18,501.22
League City 3011 KAISER 6,843.00
Plant Maint. Service 3105 KAISER 1,568.00
Misc. Equip. KAISER 7,061.00
Heat Exchangers KAISER 1,872.00
Filters KAISER 7,588.00
Pumps KAISER 7,157.00
Electrical Equip. KAISER 17,684.00
Structural KAISER 3,487.00
Expansion Joints KAISER 14,865.00
Pipe/Fittings/Etc. KAISER 26,323.00
Pipe Supports KAISER 5,747.00
Start-Up Vendor PO's KAISER 102,092.00
___________
TOTAL $801,114.80
===========
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SCHEDULE "B"
____________
Contract/PO Number Value
___________ ______ _______
Shaw 3009 $11,624,600.93
ISC 3013 896,920.33
Insulation Inc. 3017 378,478.74
______________
TOTAL $12,900,000.00
==============
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SCHEDULE "C"
____________
Contract/PO Number Value
___________ ______ _____
April
_____
Insulation Inc. 3017 $212,812.19
Adrian 37,187.81
___________
SUBTOTAL - APRIL $250,000.00
May
___
Adrian 3003 $250,000.00
SUBTOTAL - MAY $250,000.00
___________
TOTAL -- APRIL & MAY $500,000.00
===========
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EXHIBIT "A"
ESCROW AGREEMENT
Escrow Agreement, dated as of March 23, 1999 (the "Escrow
Agreement"), by and among El Dorado Nitrogen Company, an
Oklahoma corporation ("EDNC"), as construction agent; El Dorado
Chemical Company, an Oklahoma corporation ("EDCC"); and Bayer
Corporation, an Indiana corporation ("Bayer"); and Wilmington
Trust Company, as escrow agent (the "Escrow Agent").
PRELIMINARY STATEMENT
WHEREAS, EDNC, EDCC, Bayer, ICF Kaiser Engineers, Inc., an
Ohio corporation ("Kaiser"), ICF Kaiser International, Inc., a
Delaware corporation ("Kaiser International"), and Acstar
Insurance Company, a Connecticut corporation ("Acstar"), are
parties to a certain Agreement dated as of March 23, 1999 (the
"Global Agreement"), pursuant to which certain funds are to be
held in escrow and disbursed in conformity with the terms hereof;
and
WHEREAS, the Escrow Agent is willing to act as escrow agent
hereunder;
NOW, THEREFORE, in consideration of the foregoing premises
and the respective agreements of the parties hereinafter set
forth, and intending to be legally bound, the parties hereto
agree as follows:
ARTICLE I
APPOINTMENT OF ESCROW AGENT;
DEPOSIT OF ESCROW AMOUNT
Section 1.1 Escrow Agent. The parties hereto hereby
appoint Wilmington Trust Company, as escrow agent hereunder and
Wilmington Trust Company hereby accepts such appointment and
agrees to serve as escrow agent, establish the Escrow Account (as
defined below) and to hold and dispose of the Escrow Amount (as
defined below) exclusively in accordance with the terms of this
Escrow Agreement.
Section 1.2 Deposit of Escrow Amount.
(a) Acstar shall deliver to the Escrow Agent
immediately available funds in the amount of One Million
Three Hundred Seventy-Four Thousand Six Hundred and 93/100
Dollars ($1,374,600.93) ("Escrow Amount") for deposit in
trust account #48183-0 (the "Escrow Account") at Wilmington
Trust Company, to be held in escrow and in trust by the
Escrow Agent; and
(b) The Escrow Agent will act as custodian of the
Escrow Amount. The Escrow Agent will receive, hold, invest
and release the Escrow Amount in accordance with the terms
of this Escrow Agreement.
Section 1.3 Investment of Escrow Amount.
(a) Until such time as the entire Escrow Amount has
been released pursuant to the terms hereof, the Escrow Agent
shall invest the Escrow Amount in the Money Market Portfolio
of the Rodney Square Fund, a mutual fund managed by Rodney
Square Management Corporation, a subsidiary of Escrow Agent.
The parties acknowledge that shares in this mutual fund are
not obligations of Wilmington Trust Company, are not
deposits and are not insured by the FDIC. Escrow Agent or
its affiliate is compensated by the mutual fund for services
rendered in its capacity as investment advisor, custodian
and/or transfer agent, and such compensation is both
described in detail in the prospectus for the fund under the
heading "Management of the Fund", and is in addition to the
compensation, if any, paid to Wilmington Trust Company in
its capacity as Escrow Agent hereunder. The Escrow Agent
shall have the power to sell or liquidate the foregoing
investments whenever the Escrow Agent shall be required to
distribute all or any portion of the Escrow Amount pursuant
to Section 2.1 hereof.
(b) Interest earned and credited on the Escrow Amount,
less escrow fees payable under Section 3.7 hereof, shall be
added to the principal deposited in the Escrow Account with
the Escrow Agent hereunder and distributed in conformity
with the provisions of Article II hereof. EDNC shall be
liable for and pay all taxes due and payable on any interest
earned and credited on the Escrow Amount. In connection
with any investment of the Escrow Amount, EDNC shall provide
the Escrow Agent with its taxpayer identification number.
(c) The Escrow Agent shall not have any liability for
any loss sustained as a result of any investment made in
accordance with this Section 1.3 (including as a result of
any liquidation of any such investment prior to its
maturity), except as a result of the Escrow Agent's bad
faith, gross negligence or willful misconduct.
Section 1.4 Manner of Payment. The Escrow Agent shall
release the Escrow Amount and any interest earned thereon in
accordance with the provisions of this Section 1.4 and Article II
hereof. Whenever the Escrow Agent shall be required by this
Escrow Agreement to deliver any Escrow Amount in conformity with
any disbursement request delivered by EDNC, EDCC and Bayer, the
Escrow Agent shall make such payment as provided in Article II
from any available Escrow Amount. All cash payments required to
be made hereunder by the Escrow Agent from the Escrow Amount
shall be made in United States Dollars by wire transfer or other
immediately available funds to the account and payee designated
by EDNC, EDCC and Bayer in the relevant Disbursement Request
(defined below).
2
ARTICLE II
RELEASE OF ESCROW AMOUNT
Subject to Section 3.1 hereof, the Escrow Agent shall
release the Escrow Amount and any interest earned thereon only as
follows:
Section 2.1 Release of Escrow Amount.
(a) Within seven (7) business days of the date hereof,
Kaiser is required pursuant to the terms of that certain
Agreement (the "Kaiser Agreement") of even date herewith between
Kaiser and Shaw Constructors (a/k/a United Crafts, Inc., a Shaw
Group Company) ("Shaw"), to commence an audit of certain
outstanding invoices of Shaw related to the performance of work
at the El Dorado Nitrogen nitric acid plant site in Baytown,
Texas (the "Project') prior to January 30, 1999 (the "Audit").
Subject to Sections 2.1(b) and (c), following completion of the
Audit, Kaiser is required pursuant to the Kaiser Agreement to
notify EDNC in writing (a "Kaiser Disbursement Notice") that
certain funds in the Escrow Account are to be released and paid
to Shaw, if the results of the Audit indicate that amounts are
undisputed and are due and payable to Shaw. Upon EDNC's receipt
of a Kaiser Disbursement Notice indicating that any portion of
the Escrow Funds is to be paid to Shaw, EDNC, EDCC and Bayer
shall in writing promptly advise the Escrow Agent ("Escrow
Release Notice") that the amount set forth in such Kaiser
Disbursement Notice shall be paid to Shaw by the Escrow Agent by
the second business day following receipt by the Escrow Agent of
such Escrow Release Notice.
(b) The Kaiser Agreement provides that in the event that
amounts payable to Shaw remain in dispute after completion of the
Audit, Kaiser and Shaw shall have thirty days to attempt to
resolve such dispute, and if the dispute is resolved within such
thirty day period, then the procedures described in clause (a)
above following completion of the Audit shall apply.
(c) The Kaiser Agreement provides that in the event that
Kaiser and Shaw are unable to resolve their dispute within the
thirty-day period described in clause (b) above, the dispute
shall be submitted to binding arbitration, and upon receipt of a
certified copy of the decision of the arbitrator(s), EDNC, EDCC
and Bayer shall promptly provide the Escrow Agent with an Escrow
Release Notice, directing the Escrow Agent to pay to Shaw on the
second business day following receipt by the Escrow Agent of such
Escrow Release Notice, the amount that the arbitrator(s) have
awarded to Shaw, to the extent not in excess of the Escrow
Amount.
(d) Following resolution of the amounts in dispute between
Kaiser and Shaw and payment to Shaw by the Escrow Agent pursuant
to clause (a), (b) or (c) above, as applicable, the Escrow Agent
shall distribute the remainder of the funds constituting the
Escrow Amount to EDNC, and EDNC shall pay such funds to itself or
Kaiser, as required pursuant to Section 5 of the Global
Agreement. In addition, such distributions may be made to EDNC
3
at any time prior to the resolution of the dispute between Kaiser
and Shaw if EDNC directs the Escrow Agent to make such
distributions pursuant to an Escrow Release Notice and certifies
to the Escrow Agent in writing that Shaw has provided written
consent to such release of funds to EDNC and that the results of
the Audit provide that such distributions should be made to EDNC
or Kaiser. EDNC shall immediately pay to Kaiser any portion of
such distributions to which it is entitled in accordance with the
results of the Audit.
ARTICLE III
ESCROW AGENT; RIGHTS AND OBLIGATIONS
Section 3.1 Resignation. Except as otherwise expressly
provided in this Section 3.1, the Escrow Agent may resign and be
discharged from its duties hereunder at any time by giving notice
of such resignation to the parties hereto specifying a date (not
less than thirty (30) days after the date of receipt by the
parties of such notice) when such resignation shall take effect.
Upon such notice, a successor escrow agent shall be appointed
with the mutual consent of the remaining parties, such successor
escrow agent to become Escrow Agent hereunder upon the
resignation date specified in such notice. If the parties are
unable to agree upon a successor Escrow Agent within thirty (30)
days after delivery of such notice, then anything to the contrary
in Article II hereof notwithstanding, the Escrow Agent may
deposit the Escrow Amount with a court of competent jurisdiction
in the State of Delaware. In such event, the Escrow Agent shall
have no further liability under this Escrow Agreement. The
Escrow Agent shall continue to serve until its successor accepts
the escrow and receives the Escrow Amount or the Escrow Amount is
deposited in a court of competent jurisdiction in the State of
Delaware. The parties (excluding the Escrow Agent) shall have
the right at any time upon their unanimous consent to appoint a
new escrow agent by giving notice thereof to the then-acting
Escrow Agent.
Section 3.2 Limitation of Duties. The duties and
obligations of the Escrow Agent shall be determined solely by the
express provisions of this Escrow Agreement. Except as otherwise
expressly set forth herein, the Escrow Agent shall not be bound
in any way by any other agreement or contract among any of the
parties.
Section 3.3 Reliance. The Escrow Agent may act in reliance
upon any writing, instrument or signature which it in good faith
believes to be genuine, may assume the validity and accuracy of
any statement or assertion contained in such writing or
instrument and may assume that any person purporting to give any
writing, notice, advice or instructions in connection with the
provisions hereof has been duly authorized to do so. The Escrow
Agent shall not be liable in any manner for the sufficiency or
correctness as to form, manner of execution, content or validity
of any instrument deposited in escrow, nor as to the identity,
authority or right of any person executing the same; and its
duties hereunder shall be limited to the safekeeping of such
certificates, moneys, instruments or other documents received by
4
it as such escrow holder, and for the disposition of the same in
accordance with the terms of this Escrow Agreement.
Section 3.4 Indemnification. Each party hereto jointly and
severally agrees to indemnify and hold harmless the Escrow Agent
from and against all claims, liabilities, losses, actions, suits
or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature, which the Escrow Agent may
incur or with which the Escrow Agent may be threatened by reason
of its acting as Escrow Agent under this Escrow Agreement and in
connection therewith to indemnify the Escrow Agent against any
and all expenses, including reasonable attorneys' fees of one
firm and the cost of defending any action, suit or proceedings or
resisting any claim under this Escrow Agreement. Notwithstanding
the foregoing, it is specifically understood and agreed that in
the event the Escrow Agent is determined to have acted in bad
faith, gross negligence or willful misconduct in the exercise of
its responsibilities hereunder or negligence in the handling of
funds, the indemnification provisions of this Escrow Agreement
shall to that extent not apply. Escrow Agent shall have a first
lien against the Escrow Account to secure the obligations of the
parties hereunder. The terms of this paragraph shall survive
termination of this Escrow Agreement.
Section 3.5 Parties Proceeding. If any two parties
(considering EDNC and EDCC as a single party) shall be in
disagreement about the interpretation of this Escrow Agreement,
or rights or obligations hereunder, or the propriety of any
action taken by the Escrow Agent hereunder, any one of the
parties (including the Escrow Agent) may, in its discretion,
commence a proceeding pursuant to Section 4.2 below to resolve
said disagreement. The Escrow Agent shall be indemnified for all
costs, including reasonable attorneys' fees, in connection with
such proceeding, and shall be fully protected in suspending all
or a part of its activities under this Escrow Agreement until an
order or judgment is received.
Section 3.6 Counsel. The Escrow Agent may consult with
independent counsel of its own choosing and shall have full and
complete authorization and protection for any action taken or
suffered by it hereunder in good faith in accordance with the
opinion of such counsel. The Escrow Agent shall otherwise not be
liable for any mistakes of fact or error of judgment or for any
acts or omissions of any kind unless caused by its gross
negligence or willful misconduct.
Section 3.7 Fees. The Escrow Agent shall be paid a fee of
U.S. $2,000.00, which shall be paid 50% by EDNC and 50% by
Kaiser. In addition, the Escrow Agent shall be reimbursed by the
parties for all reasonable expenses, disbursements and advances
incurred or made by the Escrow Agent in performance of its duties
hereunder. Expenses, disbursements and advances shall be paid
solely out of the Escrow Amount, on a quarterly basis. Escrow
Agent shall have a first lien against the Escrow Account to
secure the obligations of the parties hereunder. The terms of
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this paragraph shall survive termination of this Escrow
Agreement.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Termination. This Escrow Agreement shall
terminate upon the disbursement of all of the Escrow Amount
pursuant to the terms hereof.
Section 4.2 Governing Law and Dispute Resolution.
(a) The construction and interpretation of this
Agreement shall be governed by the internal laws of the State
of Delaware, without regard to its conflicts of laws
provisions.
(b) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the
District of Delaware (or, if subject matter jurisdiction in
that court is not available, in any state court located within
the City of Wilmington, Delaware) over any dispute arising out
of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees
that all claims in respect of such dispute or proceeding shall
be heard and determined in such court. The parties hereby
irrevocably waive, to the fullest extent permitted by
applicable Law, any objection which they may now or hereafter
have to the laying of venue of any such dispute brought in
such court or any defense of inconvenient forum.
(c) Each of the parties hereto hereby consents to
process being served by any party to this Escrow Agreement in
any suit, action or proceeding of the nature specified in
subsection (b) above by mailing of a copy thereof in
accordance with the provisions of Section 4.3 of this Escrow
Agreement.
Section 4.3 Notices. All notices, requests, demands and
other communications made hereunder shall be in writing and shall
be deemed duly given when delivered by overnight delivery or
personally against receipt or on the third day after deposit with
the post office by registered or certified mail, postage prepaid
and return receipt requested, as follows, or to such other address
or person as a party may hereafter designate by notice to the other
party:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Department
If to El Dorado Nitrogen and/or El Dorado Chemical:
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma 73107
Attention: President
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With copies to:
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma 73107
Attention: General Counsel
If to Bayer:
Bayer Corporation
100 Bayer Road
Pittsburgh, Pennsylvania 15205-9741
Attention: Barry Phillips, Ph.D.
Paul Berry, Esq.
With copies to:
Christopher B. Carson, Esq.
Cohen & Grigsby, P.C.
11 Stanwix Street
Pittsburgh, Pennsylvania 15222
Section 4.4 Amendments. This Escrow Agreement and the
provisions hereof, may be amended or modified only by a written
document specifically referring to this Escrow Agreement and signed
by the parties hereto.
Section 4.5 Entire Agreement. This Escrow Agreement
constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, oral and written, among the parties hereto with
respect to the subject matter hereof, except for the Global
Agreement.
Section 4.6 Counterparts. This Escrow Agreement may be
executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute but one and
the same instrument. Facsimile copies of the signed original of
this Agreement with originals to follow shall constitute execution
of this Escrow Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed and delivered on the date first-above
written,
EL DORADO CHEMICAL COMPANY
By:________________________________
Its:________________________________
EL DORADO NITROGEN COMPANY,
Construction Agent
By:________________________________
Its:________________________________
WILMINGTON TRUST COMPANY
As Escrow Agent:
By:________________________________
Its:________________________________
BAYER CORPORATION
By:________________________________
Its:________________________________
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EXHIBIT "B"
I. DOCUMENTATION REQUIRED FOR TURNOVER TO EDNC BEFORE "INITIAL
PRODUCTION OF ACID" DATE:
1. Piping and Instrument (P&I) Diagrams Fully updated, hand-
corrected version.
2. Hydrostatic Test Records
3. Pneumatic Test Records
4. Radiograph Reeder Sheets
5. Welder Certifications
6. Authorized Inspector (AI) Report of Boiler Code Facilities
(required before inspection by EDNC's insurer, see attached
information from Arkwright on insurer's documentation
requirements which also must be provided by ICF Kaiser)
7. Grounding Test Records
8. Loop Check Sheets (Certain non-critical loops may be waived by EDNC
to category II)
9. Relief Valve Certifications
10. List of Spare Parts Provided by ICF Kaiser
11. Electrical Breaker Settings
12. Preliminary Alarm and Trip Settings
13. Logic Diagrams
14. Instrument Locations and Tag Numbers (Acceptable as part of P&I
diagrams)
15. Letter from ICF Kaiser Attesting that all Required Certified
Drawings are Available.
16. Y2K Compliance Letters
17. Operating Manuals
18. Complete Set of Maintenance Manuals
19. Completed Process Hazards Review Documentation as Required by OSHA
20. Completed Pre-Start-Up Safety Review Documentation as Required by
OSHA.
* Records must be submitted in a timely fashion to allow review by
EDNC prior to "Initial Production of Acid" date.
II. Documentation Required for Turnover to EDNC by the later of "Final
Acceptance" Date, or if such is impractical and not necessary
for "Final Acceptance", by no later than June 1, 1999.
21. "As Built" Drawings and Final P&I Diagrams (Paper and CAD versions)
22. Three Dimensional Model of Phase 2 Facilities (current version)
23. Piping Isometrics (all existing drawings)
24. All Radiograph Records Records must be complete (actual
radiographs may be retained at ICF Kaiser or the
Subcontractor)
25. Weld Maps
26. All Other Applicable Non-Destructive Examination (NDE)
Documentation (to be determined)
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EXHIBT "B" CONTINUED
27. Instrument Calibration Records (or within 48 hours of subsequent
tests)
28. Punchlist (Final Status)
29. Records of Initial Equipment Preparation (e.g. Alignment,
30. Lubrication, Rotation, Test Records)
Equipment Maintenance Procedures (if not included in maintenance
manuals)
31. Mil Test Reports (may be retained by Subcontractor)
32. Final Alarm and Trip Settings
33. Certified Equipment Drawings as required by Code
Available Mil Thickness Reports on Protective Coatings (as
available)
34. Concrete and Masonry Compaction Reports (as available)
35. "As-Built" Drawings for Field-Constructed Vessels such as Storage
36. Tanks (including API certificates)
37. PLC Final Documentation
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