UTILITIES AND SERVICES AGREEMENT
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AGREEMENT entered into as of the 28th day of July, 2000, by and between
BORDEN CHEMICAL, INC., a Delaware corporation with an office at 180 East Broad
Street, Columbus, Ohio 43215 (hereinafter called "BCI"), and BORDEN CHEMICALS
AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership with
offices at Highways 73 and 30, Geismar, LA 70734 (hereinafter called "BCP");
W I T N E S S E T H:
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WHEREAS, pursuant to an Agreement to Sell and Purchase dated January 26,
2000, BCP has sold to BCI approximately 8.7 acres of land located in Ascension
Parish, Louisiana, identified on the site plan attached hereto as Exhibit A and
made a part hereof, on which property BCI has erected facilities for the
production and storage of formaldehyde, meth-a-form and related products
(hereinafter referred to as the "New BCI Plant"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement BCI has, pursuant to a Conveyance and Transfer Agreement dated June
27, 2000 (the "Conveyance Agreement"), purchased certain assets from BCP located
in Ascension Parish, Louisiana, identified in Exhibit A, and the methanol dock,
formaldehyde plants, storage tanks and related equipment thereon (but excluding
certain assets related to the production of methanol, as to which BCI holds an
option to purchase under the Conveyance Agreement) (hereinafter referred to as
the "Acquired Plants"); and
WHEREAS, BCP shall continue to own and operate a chemical plant complex on
adjacent land in Ascension Parish, Louisiana, identified in Exhibit A
(hereinafter the
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"BCP Plant"), including, but not limited to facilities for the production and
distribution of certain utilities and services described herein; and
WHEREAS, BCI desires to procure from BCP certain services to support the
operation of the New BCI Plant and the Acquired Plants and BCP desires to
procure from BCI certain utilities and services to support the operation of the
BCP Plant;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
BCI and BCP agree as follows:
1 BCP Supplied Utilities.
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(a) Firewater Supply. BCP shall allow BCI to tie the New BCI Plant and
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the Acquired Plants into the firewater system for the BCP Plant at the
approximate tie-in locations shown in Exhibit B, attached hereto and
made a part hereof. BCP, at its own cost and expense, shall maintain
the firewater system in good condition and repair, in accordance with
past practice, up to the point of BCI's tie-ins. BCI, at its own cost
and expense, shall be responsible for maintaining the tie-ins and all
subsequent portions of the BCI firewater system. Water from the
firewater system will be used only for testing and emergency purposes.
All firewater supplied hereunder shall be supplied for the charge and
shall meet the specifications set forth in Exhibit C, attached hereto
and made a part hereof.
(b) Potable Water Supply. BCP shall sell, and BCI shall purchase and
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accept, BCI's requirements of potable water for the New BCI Plant and
the Acquired Plants at the Point(s) of Transfer shown on Exhibit B.
BCP, at its own cost and expense, shall be responsible for maintaining
the potable water system in
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good condition and repair, in accordance with past practice, up
to the Points of Transfer. BCI, at its own cost and expense,
shall be responsible for maintaining the valves and tie-ins at
the Points of Transfer and all subsequent portions of the BCI
Plant potable water system. All potable water supplied hereunder
shall be supplied for the charge and shall meet the
specifications set forth in Exhibit C.
(c) Demineralized Water Supply. BCP shall sell, and BCI shall
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purchase and accept, BCI's requirements of demineralized water
for the New BCI Plant and the Acquired Plants at the Point(s) of
Transfer shown on Exhibit B. BCP, at its own cost and expense,
shall be responsible for maintaining the demineralized water
system in good condition and repair, in accordance with past
practice, up to the Points of Transfer. BCI, at its own cost and
expense, shall be responsible for maintaining the valves and tie-
ins at the Points of Transfer and all subsequent portions of the
BCI demineralized water system. All demineralized water supplied
hereunder shall be supplied for the charge and shall meet the
specifications set forth in Exhibit C.
(d) Clarified Water Supply. BCP shall sell, and BCI shall purchase
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and accept, BCI's requirements of clarified water for the New BCI
Plant and the Acquired Plants at the Point(s) of Transfer shown
on Exhibit B. BCP, at its own cost and expense, shall be
responsible for maintaining the clarified water system in good
condition and repair, in accordance with past practice, up to the
Points of Transfer. BCI, at its own cost and expense, shall be
responsible for maintaining all valves and tie-ins at the Points
of Transfer and all subsequent
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portions of the BCI clarified water system. All clarified water
supplied hereunder shall be supplied for the charge and shall
meet the specifications set forth in Exhibit C.
(e) Instrument Air. BCP shall sell, and BCI shall purchase and
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accept, BCI's requirements of the Acquired Plants for instrument
air, up to a maximum of 250 SCFM, at the Point(s) of Transfer
shown on Exhibit B. BCP, at its own cost and expense, shall be
responsible for maintaining the instrument air system in good
condition and repair, in accordance with past practice, up to the
Point(s) of Transfer. BCI, at its own cost and expense, shall be
responsible for maintaining all valves and tie-ins at the Points
of Transfer and all subsequent portions of the instrument air
system of the Acquired Plants. Instrument air shall be delivered
for the charge and shall meet the specifications set forth in
Exhibit C. AT NO TIME SHALL BCI USE INSTRUMENT AIR AS BREATHING
AIR OR UTILITY AIR.
(f) Breathing Air. BCP shall allow BCI to tie the Acquired Plants
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into the breathing air system for the BCP Plant at the
approximate tie-in locations shown on Exhibit B. BCP, at its own
cost and expense, shall be responsible for maintaining the
breathing air system in good condition and repair, in accordance
with past practice, up to the point of BCI's tie-ins. BCI, at its
own cost and expense, shall be responsible for maintaining the
tie-ins and all subsequent portions of the BCI breathing air
system. Air from the breathing air system shall be used only for
emergency purposes. Breathing air shall be
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delivered for the charge and shall meet the specifications set
forth in Exhibit C.
(g) Nitrogen. BCP shall sell, and BCI shall purchase and accept,
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BCI's requirements of nitrogen for the Acquired Plants at the
Point(s) of Transfer shown on Exhibit B. BCP, at its own cost and
expense, shall be responsible for maintaining the nitrogen
delivery system in good condition and repair, in accordance with
past practice, up to the Points of Transfer. BCI, at its own cost
and expense, shall be responsible for maintaining all valves and
tie-ins at the Points of Transfer and all subsequent portions of
the nitrogen delivery system. All nitrogen sold hereunder shall
be supplied for the charge and shall meet the specifications set
forth in Exhibit C.
(h) Steam. BCP shall sell, and BCI shall purchase and accept,
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steam required for the Acquired Plants (in excess of steam
produced by the Acquired Plants), up to a maximum of 35,000
pounds per hour, at the Point(s) of Transfer shown on Exhibit B.
BCP, at its own cost and expense, shall be responsible for
maintaining the steam delivery system in good condition and
repair, in accordance with past practice, up to the Points of
Transfer. BCI, at its own cost and expense, shall be responsible
for maintaining all valves and tie-ins at the Points of Transfer
and all subsequent portions of the steam delivery system of the
Acquired Plants. All steam sold hereunder shall be supplied for
the charge and shall meet the specifications set forth in Exhibit
C.
(i) Electrical Distribution. BCP shall allow BCI to tie the
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Acquired Plants into the electrical distribution system for the
BCP Plant at the approximate tie-in
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locations shown on Exhibit B. BCP, at its cost and expense, shall
maintain the electrical distribution system in good condition and
repair, in accordance with past practices, up to the point of
BCI's tie-ins. The BCP electrical distribution system shall be
made available to BCI on the terms set forth in Exhibit C. BCP
shall have the right to determine and control the sequence of any
curtailment of electric power distributed though its system,
including electrical power to the Acquired Plants, pursuant to
the written curtailment plan developed by BCP and attached hereto
as Exhibit D. BCP shall be entitled, from time to time, to make
reasonable modifications to such curtailment plan, provided the
modifications are shared with BCI and such modified curtailment
plan shall provide a fair allocation of available power among the
parties. BCP shall charge BCI the infrastructure charge set forth
in Exhibit C. While BCI receives electric power for the Acquired
Plants through the BCP distribution system, BCI shall at all
times be required to purchase its electric power from a source
other than BCP which is not selling electrical power or
transmission/distribution services to BCI under this Agreement.
(j) Flare. BCP shall allow BCI to vent process waste gas from
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Formaldehyde Plant Number 1 (which is one of the Acquired Plants)
into the cold box flare system for the BCP Plant at the
approximate tie-in locations shown on Exhibit B. BCP, at its cost
and expense, shall maintain the flare system in good condition
and repair, in accordance with past practices, up to the point of
BCI's tie-ins. The BCP flare system shall be made available to
BCI on the terms set forth in Exhibit C.
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(k) Additional Capacity. BCI shall have the right, upon not less
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than six (6) months advance written notice to BCP, to acquire
from BCP additional capacities of demineralized water, clarified
water or potable water at either the New BCI Plant or the
Acquired Plants to accommodate improvements, alterations or
expansions at either the New BCI Plant or the Acquired Plants,
but not to exceed 130 gpm in the case of demineralized water, 180
gpm in the case of clarified water and 20 gpm in the case of
potable water (collectively the "Expansion Amount") over the flow
rates set forth in Exhibit C. In the event BCI shall exercise
this right, there shall be a corresponding proportional
adjustment in the infrastructure charge set forth in Exhibit C
for each type of water. In the event that BCI desires to increase
its usage in excess of the Expansion Amount, then BCP and BCI
shall negotiate in good faith regarding the terms, conditions and
costs on which such additional capacity may be provided. BCP
shall decide, in its sole discretion, whether to provide such
additional capacity. If BCP declines to provide such additional
capacity, BCI may elect to reduce the amounts purchased by it for
demineralized water, clarified water and potable water under this
Agreement by giving BCP not less than six (6) months advance
written notice of such election.
2. BCI Supplied Services.
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(a) Steam. To the extent that BCI generates steam as a result
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of formaldehyde production in the Acquired Plants which is not
required by BCI for its internal use, BCI shall sell to BCP, and
BCP shall, to the extent steam is required by the BCP Plant,
purchase and accept, such steam up to a maximum of 30,000
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pounds per hour, at the Point(s) of Transfer shown in Exhibit B;
but, in no event when steam is available from BCI, shall BCP
purchase less than the amount of steam BCI purchases for the
same period from BCP pursuant to Section 1(h). BCI, at its own
cost and expense, shall be responsible for maintaining the steam
delivery system in good condition and repair, in accordance with
past practice, up to the Points of Transfer, and BCP, at its own
cost and expense, shall be responsible for maintaining all
valves and tie-ins at the Points of Transfer and all subsequent
portions of the steam delivery system. All steam sold hereunder
shall be supplied for the charge and shall meet the
specifications set forth in Exhibit C.
(b) Vent Gas. To the extent that BCI generates vent gas as a
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result of formaldehyde production in the Formaldehyde I plant
(which is in the Acquired Plants) that is not required by BCI
for its internal use, including, but not limited to, use in the
urea plant incinerator acquired by BCI from BCP, BCI shall sell
to BCP, and BCP shall, to the extent vent gas is required by it
for use in BCP's VCM-E plant incinerator, giving such vent gas
preference over the use natural of gas but not over other
internal BCP sources of vent gas, purchase and accept, such vent
gas, up to a maximum of 40 million Btu's per hour, at the Points
of Transfer shown in Exhibit B. BCP agrees that, during the
initial two years of this Agreement, it will, if and to the
extent such quantity of vent gas is available from BCI at all
times when the VCM-E plant incinerator is operating normally,
purchase a minimum of 216,000 mm BTU's of vent gas per year from
BCI. BCI, at its own cost and expense, shall be
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responsible for maintaining the vent gas delivery system in good
condition and repair, in accordance with past practice, up to
the Point of Transfer, including all valves and tie-ins at the
Points of Transfer. BCP, at its sole cost and expense, shall be
responsible for maintaining from the Points of Transfer, all
subsequent portions of the vent gas delivery system. All vent
gas shall be sold for the charge and shall meet the
specifications set forth in Exhibit C.
3. Wastewater
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(a) BCI may discharge into the existing bio plant and deepwell
treatment facilities of the BCP Plant, at the Point(s) of
Transfer shown on Exhibit B, wastewater generated by the
Acquired Plants primarily consisting of process wastewater,
cooling tower and boiler blowdown and water from the existing
methanol scrubbers located in the tank farm and barge dock areas
conveyed by BCP to BCI as part of the Purchased Assets pursuant
to the Conveyance Agreement. BCI, at its own cost and expense,
shall be responsible for maintaining the process wastewater
delivery system for the Acquired Plants in good condition and
repair, in accordance with past practice, up to the Points of
Transfer, including all valves and tie-ins at the Points of
Transfer. BCP, at its sole cost and expense, shall be
responsible for maintaining from the Points of Transfer all
subsequent portions of the wastewater treatment system. BCI will
pay the charge specified in Exhibit C, and the wastewater
tendered by BCI hereunder shall also meet the specifications and
shall not exceed the limits set forth in Exhibit C. BCP retains
the right to refuse to accept any
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wastewater from BCI which does not meet the specifications set
forth in Exhibit C.
(b) BCP will allow BCI to install a three-inch connection, at the
approximate location shown on Exhibit B, to BCP's wastewater
outfall piping leading to the Mississippi River. BCI shall have
the right to use the outfall piping for the purpose of
discharging non-contact cooling water blowdown, boiler blowdown
and treated sanitary wastewater of the New BCI Plant. BCI agrees
to obtain its own separate LPDES permit for this discharge from
the Louisiana Department of Environmental Quality. This right
shall survive any termination of this Agreement.
(c) BCI shall be entitled to discharge sanitary waste from the
Acquired Plants into the sanitary sewer system for the BCP Plant
at the Point of Transfer shown on Exhibit B. BCP shall, at its
own cost and expense, be responsible for maintaining the
sanitary sewer system in good condition and repair, in
accordance with past practice, up to BCI's tie-ins. BCI shall,
at its own cost and expense, be responsible for maintaining all
subsequent (up stream) portions of BCI's sanitary sewer delivery
system. BCI will pay the charge specified in Exhibit C, and the
sanitary waste tendered by BCI shall also meet the
specifications and shall not exceed the limit set forth in
Exhibit C. BCP retains the right to refuse to accept any
sanitary waste from BCI which would cause BCP to be in violation
of any environmental, health or safety law, regulation, order or
permit.
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(d) BCI shall have the right, upon not less than six (6) months
advance written notice to BCP, to acquire from BCP additional
capacity for the discharge of wastewater from the Acquired
Plants meeting the specifications on quality set forth in
Exhibit C to accommodate improvements, alterations or expansions
at the Acquired Plants, but not to exceed 20 additional gpm of
wastewater to the bioplant and deepwell facilities (collectively
the "Wastewater Expansion Amount") over the maximum flow rates
set forth in Exhibit C. In the event BCI shall exercise this
right, there shall be a corresponding proportional adjustment in
the infrastructure charge set forth in Exhibit C for wastewater
to the bioplant and/or deepwell. In the event BCI desires to
increase its discharge volume in excess of the Wastewater
Expansion Amount, BCP and BCI shall negotiate in good faith
regarding the terms, conditions and costs on which such
additional capacity may be provided. BCP shall determine, in it
sole discretion, whether to provide such additional capacity and
the terms therefor. If BCP declines to provide such additional
capacity, BCI may elect to reduce the volume of wastewater
discharged by it into the BCP treatment facilities by giving BCP
not less than six (6) months advance written notice of such
election.
4. Truck Scales. BCI shall have the right to use BCP's truck
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scales located at the BCP Plant along Highway 73 near Gate 1 on
the terms set forth in Exhibit C.
5. Vinyl Esters and Methanol Load Out. When called upon to do so
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by BCP, BCI will provide properly trained operators, during
normal working
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hours, to operate the vinyl esters load-out equipment on the BCP
property adjacent to BCI's tank farm to load trucks provided by BCP
and to operate the methanol load-out equipment at the Acquired
Plants to load trucks for a charge of two cent per gallon and rail
cars for a charge of one cent per gallon (hereinafter the
"Throughput Fee") provided by BCP. The Throughput Fee shall be
adjusted as of October 1, 2001, and annually thereafter, by an
amount equal to the percentage increase, if any, in the hourly rate
of pay for the tank farm operating technician employed at the tank
farm area of the Acquired Plant (whether by BCI or an independent
contractor having a pay scale escalating reasonably within industry
norms) compared to the rate of pay for the same classification as of
October 1, 2000, or the last annual adjustment date, as the case may
be. BCP shall, at its sole cost and expense, be responsible for
maintaining all vinyl esters load out equipment in good order and
condition, in accordance with past practice, and BCI shall, at its
sole cost and expense, be responsible for maintaining all methanol
load out equipment in good order and condition, in accordance with
past practice. BCP shall be responsible for all other duties and
obligations with respect to the shipping and delivery of products to
BCP's customers. BCP shall give BCI reasonable advance notice of its
scheduled load-out requirements. BCI assumes no liability for loss
or contamination of vinyl esters or methanol.
6. Tankage. BCP shall be permitted to use the existing ammonia
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storage tank and all existing ammonia transfer lines within the
Acquired Plants for the storage and handling of ammonia for a period
of up to ninety (90) days
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following BCP's shut down of its ammonia plant, but not to extend beyond
December 31, 2000. BCP shall be responsible for maintaining the ammonia
tank and all ammonia pipelines and related equipment in good order and
condition. BCP shall de-inventory the ammonia tank and associated pipes
(excluding the barge dock pipeline) in accordance with Section 7.3(f) of
the Conveyance Agreement. For the first six (6) months following the
closing under the Conveyance Agreement and, if BCI does not exercise its
option under the Conveyance Agreement to purchase BCP's methanol
business, then (i) for remainder of the term of this Agreement or (ii)
until BCP gives BCI not less than 30 days advance written notice that it
has discontinued the operation of the methanol production assets under
the terms of the Conveyance Agreement, whichever is shorter, BCP shall
also be permitted to use, concurrently with BCI, the existing methanol
storage tanks and all existing methanol transfer lines within the
Acquired Plants for the storage and handling of methanol. During the
Interim Period and any Extended Period (as defined in the Conveyance
Agreement), BCP's quantity of methanol in the storage tanks shall at no
time exceed 5 million gallons (the "Storage Cap") and shall be determined
by survey of the methanol production day tanks that are transferred on a
batch basis to the methanol storage tanks. BCI employees may participate
in taking the daily readings. BCI may, at its option and sole expense,
install meters determining the flow from the production day tanks to the
methanol storage tanks. The parties shall meet monthly to reconcile any
differences between book and physical inventories, and any difference in
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excess of 1/2% shall be adjusted as required. If BCP continues to
own and operate the methanol business after the Interim Period or
any Extended Period, the Storage Cap in the preceding sentence may,
at BCP's option, which option may be exercised by giving BCI not
less than 30 days advance written notice, be increased to not more
than 7 million gallons. After the initial exercise of this option,
the Storage Cap shall be subject to further periodic adjustment by
BCP, up to the total of 7 million gallons, but not more often than
once every 12 months. BCP shall pay BCI a monthly facility fee for
the use of the methanol storage tanks and transfer lines measured by
multiplying the maximum Storage Cap in each month by $0.003 per
gallon.
7. Stormwater. BCI shall have a right to drain the surface of the
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Acquired Plants which is outside of diked areas into natural and
man-made drainage ditches, swales, culverts and tiles on the BCP
Plant. BCI shall also have the right to pump any stormwater from the
surface of the Acquired Plants which is inside of diked areas into
the BCP bio plant and deepwell treatment facilities, provided,
however, that BCI shall not allow contaminated surface waters to be
discharged onto the BCP Plant and provided, further, that BCI shall
obtain any LPDES permits that may be required from the Louisiana
Department of Environmental Quality for the collection or diversion
of surface waters by BCI. BCI will pay the charge specified in
Exhibit C, and all surface water tendered by BCI for discharge by
the BCP treatment facilities shall also meet the specifications and
not
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exceed the limits specified in Exhibit C. BCI's right under the first
sentence of this section shall survive any termination of this Agreement.
8. Fees and Charges.
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(a) Costs. In calculating the fees and charges for the utilities and services
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which are the subject of this Agreement and are set forth in Exhibit C,
all of BCP's costs of providing utilities and services, whether fixed or
variable, shall be determined pursuant to BCP's normal internal
accounting systems and procedures, in a manner consistent with the
existing policies of BCP for other operating units within the BCP Plant
as described on Exhibit C. BCI and BCP each represents and warrants to
the other that the accounting systems and procedures they employ will
conform to generally accepted accounting principles. BCP and BCI will
promptly inform each other of any changes in their standard accounting
procedures that would affect the prices of utilities or services provided
hereunder.
(b) Meters. The quantities of potable water, demineralized water, clarified
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water and nitrogen supplied by BCP hereunder shall be determined by
meters supplied and maintained by BCI. The quantities and heating content
of steam and vent gas supplied by BCI, or steam provided by BCP, and the
quantity and content of wastewater accepted by BCP into the BCP Plant
waste treatment system shall be determined by meters which shall be
supplied and maintained by BCI in the case of vent gas and wastewater
meters and supplied and maintained by BCP in the case of steam meters.
The quantities of electric power purchased by BCI from a third party
shall be determined by meters
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supplied by BCI and maintained by BCP, at the sole cost and expense of
BCI, at the points where the provider's transmission line ties into the
BCP distribution system and the point where BCI ties into the BCP system.
The party responsible for each meter shall have a mutually agreeable
independent contractor calibrate, prove and seal each meter at the time
it is placed into service hereunder and provide documentation of such
calibration to the other. All meters shall be recalibrated quarterly in
accordance with the recommendations of the manufacturer. Each party shall
be given reasonable notice of and the right to observe the calibration of
the other's meters. If during calibration any meter is found to be
inaccurate by more than two percent (2%), the parties shall endeavor to
agree on an appropriate adjustment to be made to billings for the period
from the previous calibration. If, following good faith negotiations, the
parties are unable to agree upon an appropriate adjustment, the readings
for the last half of the period since the prior calibration shall be
adjusted by the amount of the inaccuracy.
(c) Audit. BCP and BCI shall have the right, not more than once each year,
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to have all books and records pertaining to any fees or charges assessed
by the other hereunder based on costs, audited by an independent
accounting firm selected and paid for by the party requesting the audit.
Such accounting firm will maintain the confidentiality of books and
records being audited and shall either verify the correctness of the fees
and charges assessed hereunder, or advise the parties of the composite
adjustments required to correct any discrepancies for the period being
audited.
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(d) Invoicing. All annual charges set forth on Exhibit C shall be payable
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in advance beginning on the date hereof and thereafter on each
anniversary of such date. For all other utilities and services fees set
forth on Exhibit C, each party shall prepare and deliver to the other a
monthly invoice for the utilities and services it provided to the other
during the previous calendar month. The invoices shall separately
identify in reasonable detail the amounts owed for the various utilities
and services provided hereunder, including volume and cost per unit data
where applicable. Each invoice shall be payable in full within thirty
(30) days of the invoice date. All invoices shall include sales and uses
taxes, if any, payable by the purchaser of a particular utility or other
service.
9. Geismar Area Mutual Aid System; Safety Standards. BCP and BCI shall
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be members of the Geismar Area Mutual Aid System and shall comply with
its membership requirements.
10. Temporary Access. BCP and BCI shall each be provided temporary
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access over the BCP Plant and the Acquired Plants, respectively, using
such routes as the other party shall reasonably direct, as are reasonably
necessary, from time to time, in order for BCP or BCI to perform initial
construction or any maintenance, removal or replacement of those portions
of any improvements, facilities, devises or systems which either of them
is to install and/or maintain under this Agreement.
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11. Indemnities.
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(a) Indemnification by BCI. Subject to the terms, conditions and limitations
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of paragraphs (c) and (d), BCI shall hold harmless, indemnify and defend
BCP, its successors, permitted assigns and affiliates (other than BCI)
and their respective shareholders, partners, directors, officers and
agents (the "BCP Indemnitees") from and against all damages, losses,
liabilities, penalties, fines, assessments, judgments, settlement
payments, expenses (including reasonable fees of counsel and other
experts), claims, demands, and other legal or arbitration proceedings
("Losses") incurred by any BCP Indemnitee that result from or arise out
of any of the following:
(i) a default by BCI of its obligations under this Agreement that is
not cured by BCI within 30 days of its receipt of written notice
thereof from BCP;
(ii) any failure of BCI to comply with the terms of any EPA, LDEQ or
other governmental statute, regulation, authorization, permit or
order in providing or receiving utilities or services hereunder;
(iii) any claim brought by a third party based on or arising out of the
operation of the New BCI Plant or the Acquired Plants, including,
without limitation, any claim based, in whole or in part, on a
curtailment or outage of electrical power or a failure, curtailment
or delay by BCP, for any reason, to provide utilities or services
hereunder;
(iv) any release or discharge of wastewater or storm water by BCI in
violation of Section 3 or 7 hereof;
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(v) any property damage, injury or death suffered by any third party
caused by the negligence of BCI or its employees, agents,
contractors or invitees in connection with the performance of its
obligations with respect to the provision or receipt of utilities
or services under this Agreement; and
(vi) any property damage suffered by BCP, but only to the extent any
such Losses are caused by the gross negligence of BCI, its
employees and agents.
(b) Indemnification by BCP. Subject to the terms, conditions and
----------------------
limitations of paragraphs (c) and (d), BCP shall hold harmless, indemnify
and defend BCI, its successors, permitted assigns and affiliates (other
than BCP) and their respective shareholders, partners, directors,
officers and agents (the "BCI Indemnitees") from and against all Losses
incurred by any BCI Indemnitee that result from or arise out of any of
the following:
(i) a default by BCP of its obligations under this Agreement that is
not cured by BCP within 30 days of its receipt of written notice
thereof from BCI;
(ii) any failure of BCP to comply with the terms of any EPA, LDEQ or
other governmental statute, regulation, authorization, permit or
order in providing or receiving utilities or services hereunder;
(iii) any claim brought by a third party based on or arising out of the
operation of the BCP Plant, including, without limitation, any
claim based, in whole or in part, on a curtailment or outage of
electrical power or a failure, curtailment or delay by BCI, for any
reason, to provide utilities or services hereunder;
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(iv) any spill, release or loss of ammonia or other products in
connection with the services provided by BCI under Sections 5 and 6
hereof, except caused by the gross negligence or willful misconduct
of BCI;
(v) any property damage, injury or death suffered by any third party
caused by the negligence of BCP or its employees, agents,
contractors or invitees in connection with the performance of its
obligations with respect to the provision or receipt of utilities
or services under this Agreement; and
(vi) any property damage suffered by BCI, but only to the extent any
such Losses are caused by the gross negligence of BCP, its
employees and agents.
(c) Indemnification Procedures. The following procedures shall govern
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claims made hereunder:
(i) The party claiming indemnification (the "Claimant") shall expressly
notify the party from whom indemnification is sought (the
"Indemnitor") in writing of the basis for the Claimant's claim
hereunder promptly after the Claimant learns of any such claim;
provided, however, that the failure to so notify the Indemnitor
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shall not relieve the Indemnitor of its obligations hereunder,
except to the extent, if any, that the Indemnitor has been
prejudiced by the lack of timely and adequate notice.
(ii) With respect to claims between the parties, the Indemnitor shall
have 30 days to investigate the claim and the Claimant shall make
available information substantiating the claim.
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(iii) With respect to third-party claims, the Indemnitor shall have the
right to assume at its full cost and expense the control of all
legal proceedings, subject to the right of the Claimant to
participate (at its full cost and expense and with counsel of its
choice) in the defense, compromise or settlement thereof. The
Indemnitor will not compromise or settle any such claim or
proceeding without the prior written approval of the Claimant,
which approval will not be unreasonably withheld and in any event
will not be withheld if the settlement provides solely for a cash
payment and provides for a full and complete release of the
Claimant and its affiliates.
(d) Limitations. Notwithstanding anything in this Agreement to the contrary,
-----------
neither party makes any representations or warranties with respect to the
utilities or services provided hereunder, other than the limited warranty
to provide such utilities and services in accordance with the terms and
specifications provided herein. Each party's total liability to the other
party based upon a breach of such limited warranty or otherwise based
upon the quality or deficiencies of any of the utilities or services
supplied hereunder shall not exceed the fees paid for the applicable
utility or service for the period during which such utility or service
was noncompliant or deficient. In no event whatsoever shall either party
be liable, whether in contract, tort or otherwise, for any special,
indirect, punitive, incidental or consequential damages.
21
(e) Survival of Indemnities. Upon termination of this Agreement, the terms
-----------------------
and conditions of this Paragraph 11 shall survive until the lapse of the
applicable statute of limitations.
12. Further Assistance. To the extent reasonably required by either
-------------------
party to deliver or receive a utility or service under this Agreement,
BCI and BCP each agree, upon request of the other, (i) to cause the real
property to be subjected to servitude to be surveyed and a legal
description thereof to be prepared and (ii) to execute one or more
servitude agreements in recordable form as appropriate. BCI and BCP
shall share the cost of such surveys and agreements equally.
13. Assignment. Neither party may assign its rights or obligations
-----------
hereunder to any non-affiliated third party without the other party's
prior written consent; which consent shall not be unreasonably withheld;
provided, however, that either party may assign its rights and
obligations under this Agreement without the consent of the other party
if all of the following applicable conditions are met:
(a) If BCI is the party making the assignment, the assignee acquires all
or substantially all of BCI's right, title and interest in and to
the new BCI Plant or the Acquired Plants; and
(b) If BCP is the party making the assignment, the assignee acquires
substantially all of BCP's right, title and interest in and to those
portions of the BCP Plant necessary to deliver the utilities and
services to be furnished hereunder; and
22
(c) The assignee expressly assumes and agrees to perform the obligations
of the assignor under this Agreement and delivers a signed copy of
such assumption to the other party.
14. Insurance. BCI shall provide insurance coverage for the New BCI
--------------
Plant and the Acquired Plants and its property located on the real
property of BCP. BCP shall provide insurance coverage for the BCP Plant
and any of its property located on the real property of BCI. Each party
hereto shall have and maintain worker's compensation insurance in
compliance with the laws of the State of Louisiana, and employer's
liability insurance with a minimum limit of $500,000. Each party shall
provide the other party with satisfactory evidence of General Liability
insurance coverage with a combined bodily injury and property damage
single limit of no less than $5,000,000.00. Each party hereto agrees to
release and waive, and hereby releases and waives, all rights of
subrogation against the other possessed by its insurers to the extent
permitted under its policies of insurance. BCI or BCP may self-insure,
at its election, any of its obligations under this Section 14.
15. Notices. All notices under this Agreement shall be in writing and
-------------
shall be sent registered or certified mail, return receipt requested,
addressed to the proper party at the address shown below, unless said
address shall have been changed by written notice:
BORDEN CHEMICAL, INC.
180 East Broad Street
Columbus, Ohio 43215
Attn: President
23
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
Highway 73 and 30
Geismar, LA 70734
Attn: Vice President - Manufacturing
16. Modifications. This Agreement shall not be modified or changed,
-------------------
except by written instrument executed by a duly authorized officer of
both of the parties hereto.
17. Applicable Law. The place of performance of this Agreement is the
--------------------
State of Louisiana, and the laws of said state shall govern the rights of
the parties hereto.
18. Invalidity of Particular Provisions. If any term or provision of
-----------------------------------------
this Agreement or the application thereof to any person or circumstance
shall to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision
of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
19. Term. The term of this Agreement shall commence as of the date
----------
hereof and continue for an initial term of ten (10) years. Thereafter,
the term shall be automatically extended on a year to year basis, unless
and until BCI gives BCP not less than three hundred sixty (360) days, or
BCP gives BCI not less than 24 months, advance written notice of
termination prior to the end of the initial term or any anniversary
thereof. In the event this Agreement is terminated by BCP, or in the
event BCP declines a request by BCI for
24
increased capacities under Section 1(k) or 3(d) hereof, and in the
further event that it is necessary for BCI to obtain easements or rights
of way across the BCP Plant in order to procure any utilities or services
from other sources, then BCP agrees that it will grant such easements or
rights of way to BCI along mutually agreed, reasonably convenient routes.
Notwithstanding the foregoing, BCI may, at any time upon not less than
three hundred sixty (360) days written notice to BCP, discontinue the
receipt of any one or more utilities or services hereunder, without
terminating this Agreement with respect to any remaining utilities or
services.
20. Force Majeure. No party hereto shall be deemed in default with
-------------------
respect to any of the terms, covenants and conditions of this Agreement
which are to be performed, to the extent that the party's failure to
timely perform the same is caused by any strike, lockout, labor trouble,
civil disorder, injunction, governmental law, regulation rule or order,
riots, insurrections, fire, sabotage, explosion, war, acts of God,
inability to obtain raw materials or electric power, equipment outage or
loss of equipment beyond the reasonable control of the non-performing
party, or any other cause beyond the reasonable control of the non-
performing party. Such party shall promptly notify the other party of
the occurrence of such event and shall use its reasonable best efforts to
remedy such event as soon as practicable, provided that the settlement of
any strike, lockout or labor trouble shall be within the sole discretion
of the affected party. If any force majeure event affects only part of
BCP's or BCI's capacity to provide a utility or service hereunder, then
the affected party shall,
25
to the extent permitted by its contractual obligations to others existing
on the date hereof, allocate its available utility or service hereunder
in a fair and equitable manner between its own requirements and its
obligations to the other party under this Agreement. If either party is
prevented from performing for any of the foregoing reasons, it shall
cooperate with the other party's efforts to obtain an alternate supply of
the affected utility or service.
21. Coordination of Outages and Curtailments. Except in the event of
---------------------------------------------
unplanned outages or equipment problems and other emergencies, each party
shall provide written notice to the other at least 7 days prior to
commencing any maintenance, repair or replacement that could reasonably
be expected to stop or materially reduce its demand for or ability to
supply any one or more utilities or services, as the case may be. To the
maximum extent commercially practicable, the parties will work together
to coordinate outages and production curtailments in order to prevent or
minimize the adverse impact, if any, on their respective plants and
operations resulting from decreases in the demand for or ability to
supply utilities or services as the case may be.
22. Provisions Binding; No Third Party Beneficiaries. All rights and
------------------------------------------------------
liabilities herein given to, or imposed upon, the respective parties
hereto shall extend to and bind the several and respective successors and
permitted assigns of said parties. Nothing contained in this Agreement
is intended or shall be construed to afford any person, other than a
party hereto (including any successor or permitted assign) or the persons
expressly entitled to
26
indemnification under Section 11(a) or (b) hereof, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any
provision hereof.
23. Captions. The captions and headings used throughout this Agreement
--------------
are for convenience of reference only and shall not affect the
interpretation of this Agreement.
24. Relationship of Parties. Nothing contained in this Agreement shall
----------------------------
be deemed or construed by the parties hereto, or by any third party, to
create the relationship of principal and agent or of partnership or of
joint venture or of any association whatsoever between BCP and BCI, it
being expressly understood and agreed that no provisions contained in
this Agreement, nor any act or acts of the parties hereto, shall be
deemed to create any partnership, joint venture, or agency relationship
between BCI and BCP.
25. Entire Agreement. This Agreement constitutes the entire
---------------------
understanding between the parties with respect to the utilities and
services to be provided hereunder, and supercedes all prior
contemporaneous agreements between the parties hereto in respect of the
subject matter hereof as well as the previous Utilities and Services
Agreement between the parties dated January 26, 2000.
27
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers to be effective as of the day
and year first above written.
BORDEN CHEMICAL, INC.
By:________________________________
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
BCP Management, Inc., General Partner
By: _______________________________
28
EXHIBIT C
----------
to
--
UTILITIES AND SERVICES AGREEMENT
--------------------------------
BCP UTILITY INFORMATION
GEISMAR, LOUISIANA
1. Demineralized Water
-------------------
A. Cost basis: Actual unit cost + 5% until 12/31/2002 and
10% thereafter = Charge to BCI
Plus Annual Infrastructure charge = $5,000 until 12/31/2002 and
$10,000 thereafter
B. Specifications:
Total hardness less than 0.2ppm
pH 8.0 minimum
Silica less than 0.5ppm
Conductivity less than 15 micromhos, 24 hour average
Conductivity less than 30 micromhos, any 60 minute average
C. Delivery conditions:
New Plant Acquired Plant
----------------------------------
Flow: 220 gpm minimum 200 gpm minimum
Pressure: 85 psig minimum 85 psig minimum
D. Preheated Boiler Feed Water is included at an upcharge based on BTU
content
2. Clarified Water
---------------
B. A. Cost basis: Actual unit cost + 5% until 12/31/2002 and
10% thereafter = Charge to BCI
Plus Annual Infrastructure charge = $10,000 until 12/31/2002 and
$20,000 thereafter
B. Specifications:
Turbidity less than 5 NTU
Total hardness 80-120 ppm
PH 9.8-10.5
C. Delivery conditions:
New Plant Acquired Plant
----------------------------------
29
Flow: 300 gpm minimum 350 gpm minimum
Pressure: 70 psig minimum 70 psig minimum
3. Potable Water
-------------
A. Cost basis: Clarified water charge less $0.05/1000 gallons + 5% until
12/31/2002 and 10% thereafter = Charge to BCI
Plus annual infrastructure charge = $2,500 until 12/31/2002 and
$5,000 thereafter
B. Specification:
Chlorine 0.25-1.0 ppm
Turbidity 1.0-1.5 NTU (typical)
C. Delivery conditions:
New Plant Acquired Plant
------------------------------------
Flow: 35 gpm minimum 35 gpm minimum
Pressure: 100 psig minimum 100 psig minimum
4. Firewater
---------
A. Cost basis:
Standby charge only = $12,500 until 12/31/2002 and 25,000 per
year thereafter
B. Specifications:
Same as clarified water.
C. Delivery conditions:
Flow 1300 gpm minimum
Pressure 150 psig minimum
5. Steam
-----
A. Cost basis: Actual unit cost + 5% until 12/31/2002 and 10% thereafter
= Charge to BCI
B. Cost basis: Same cost as A = Charge to BCP
Plus annual infrastructure charge to both BCP and BCI
= $5,000 until 12/31/2002 and
$10,000 thereafter
30
C. Specifications:
Pressure = 150 psig minimum
Temperature = 365F minimum (saturated)
D. Delivery conditions:
New Plant Acquired Plant
--------------------------------------
Flow N/A 65M lbs/hr minimum
Pressure N/A 150 psig minimum
6. Nitrogen
--------
A. Cost basis: Actual unit cost + 5% until 12/31/2002 and 10% thereafter
= Charge to BCI
Plus annual infrastructure charge = $2,500 until 12/31/2002 and
$5,000 thereafter
B. Specifications:
Oxygen content 40 ppm max
C. Delivery conditions:
New Plant Acquired Plant
------------------------------------
Flow N/A 200 SCFM minimum
Pressure N/A 35 psig minimum
7. Instrument Air
--------------
A. Cost basis: Annual infrastructure charge only = $5,000 until 12/31/2002
and $10,000 thereafter
B. Specifications:
Dew point - 40F maximum
C. Delivery conditions:
New Plant Acquired Plant
------------------------------------
Flow: N/A 300 SCFM minimum
Pressure: N/A 60 psig minimum
31
8. Wastewater to BioPlant
----------------------
A. Cost basis: Actual unit cost +5% until 12/31/2002 and 10% thereafter
= Charge to BCI
Plus annual infrastructure charge = $10,000 until 12/31/2002 and
$20,000 thereafter
B. Specifications:
Wastewater from BCI Acquired Plants must only be from routine
operations. Non-routine wastewater (i.e. from spills) must be
contained until advised by BCP that water is ready for processing. In
addition, water from UFC production must be approved before
processing.
C. Delivery conditions:
100 GPM maximum into process sump
9. Wastewater to Deepwell
----------------------
A. Cost basis:
Actual unit cost + 5% until 12/31/2002 and 10% thereafter
= Charge to BCI
Plus annual infrastructure charge = $5,000 until 12/31/2002 and
$10,000 thereafter
B. Specifications:
Wastewater to be only blowdown from cooling towers and will not
contain materials in sufficient quantities to cause the blowdown
stream to be a hazardous material as defined in RCRA regulations.
C. Delivery conditions:
Flow 20 gpm maximum
Pressure 50 psig minimum
10. Water to Sanitary Sewer
-----------------------
A. Cost basis: Annual usage charge only = $7,500 until 12/31/2002 and
$15,000 thereafter
B. Specifications: Normal sanitary sewer water containing no organic waste
material
C. Delivery conditions: Flow 10 GPM max
32
11. Electrical Distribution System
------------------------------
A. Cost basis:
Annual infrastructure charge only = $17,500 until 12/31/2002 and
$35,000 thereafter
Plus cost of direct maintenance on electrical breakers and feeders
serving the Acquired Plants.
B. Specifications: Not applicable
C. Delivery conditions: Not applicable
12. Breathing Air
-------------
A. Cost basis: Annual usage charge only = $2,500 until 12/31/2002 and
$5,000 thereafter
B. Specifications:
Oxygen 20% (vol.) minimum
CO 20 ppm maximum
C. Delivery conditions:
Flow: Emergency usage only
Pressure: 50 psig minimum
13. Vent Gas
--------
A. Cost basis: Actual unit cost (based on 50% of BTU content) + 5% until
12/31/2002 and 10% thereafter = Charge to BCP
B. Specifications: Not applicable
C. Delivery conditions:
Pressure: Slightly positive to allow flow to incinerators
14. Truck Scales
------------
A. Cost basis: Use as required without charge.
15. Cold Box Flare System
---------------------
A. Cost Basis: Annual use charge only = $5,000 until 12/31/2002 and
$10,000 thereafter
33