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Exhibit 10.13
EXECUTION COPY
AMENDED AND RESTATED
PLANT SERVICES AGREEMENT
BETWEEN
THE GEON COMPANY
AND
THE B.F.GOODRICH COMPANY
(Relating to Manufacturing Facility Located in
Calvert City, Kentucky)
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TABLE OF CONTENTS
Page
Recitals
ARTICLE I: DEFINITIONS
1.1 General Definitions 2
1.1.1. Agreement Term 2
1.1.2. BFG Assets 2
1.1.3. BFG Services 2
1.1.4. Common Facility or Line 2
1.1.5. Dedicated Facility or Line 3
1.1.6. Delivery Point 3
1.1.7. Environmental Coordinator 3
1.1.8. Environmental Services 3
1.1.9. Exceedance 3
1.1.10. Geon Assets 4
1.1.11. Geon Services 4
1.1.12. Improvement 4
1.1.13. Laws 4
1.1.14. Line or Facility 4
1.1.15. Maintenance 5
1.1.16. Party or Parties 5
1.1.17. Plant Site 5
1.1.18. Price 6
1.1.19. Provider 6
1.1.20. Recipient 6
1.1.21. Representative 6
1.1.22. Service 6
1.1.23. Technical Committee 6
1.1.24. Term of Service 6
1.1.25. Utility 7
1.2 Other Definitions 7
1.3 General 7
ARTICLE II: GENERAL STRUCTURE AND PRINCIPLES
FOR PROVISION OF SERVICES
2.1 General Description 7
2.2 Term; Termination 8
2.2.1. Term 8
2.2.2. Early Termination 8
2.2.3. Procedures for Early Termination 9
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TABLE OF CONTENTS (Cont'd)
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2.3 Pricing 9
2.3.1. Pricing In General 10
2.3.2. Cost Indexing 10
2.4 Intentionally Omitted 10
2.5 Cooperative Conduct Between Parties 11
2.6 Performance 11
2.7 Maintenance 12
2.8 Improvements 13
2.8.1. Productivity and Cost Reduction Improvements 13
2.8.2. Expansion Activities 14
2.8.3. Prior Discussion 15
2.8.4. Cooperation 15
2.9 Allocation in Event of Shortage 15
2.10 Rules 16
2.11 Particular Rules Governing Environmental Services 16
2.11.1. Wastewater Quality 16
2.11.2. Disposal Sites 17
2.11.3. Changes in Influent 17
A. Permanent Changes 17
B. Decrease in Capacity 18
C. Payment for Changes 18
D. Temporary Changes 18
E. Stormwater Changes 19
2.11.4. Suspension of Wastewater Treatment and
Stormwater Management Services for Cause 19
2.11.5. Dispute Resolution in Connection with
Environmental Services 20
A. Resolution by Technical Committee 20
B. Resolution by Third Party 20
C. Resolution Factors 21
2.11.6. Notices Relating to Environmental Services 21
2.11.7. Environmental Records 21
2.12 Unforeseen Economic Conditions 22
2.13 Legal and Consultant Costs 22
2.14 Easements 23
2.15 Compliance With Laws 23
2.16 Change In Laws 23
2.17 Unique Equipment or Expertise 24
2.18 Independent Contractors 24
2.19 Shutdown Cooperation 25
2.20 Fences 26
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TABLE OF COMMENTS (Cont'd)
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ARTICLE III: SERVICE PROVIDED
3.1 [Intentionally Omitted] 26
3.2 [Intentionally Omitted] 26
3.3 Services to be provided at the Calvert City Plant 26
3.4 [Intentionally Omitted] 26
3.5 [Intentionally Omitted] 26
3.6 [Intentionally Omitted
ARTICLE IV: ALLOCATION OF RISK AND LIABILITIES
4.1 Foreign Matter 26
4.2 Limitation of Remedies Between Parties for
Non-Material Breach 27
4.3 Insurance 28
4.4 Exclusive Remedies as to Claims Between the Parties 30
4.5 Indemnification for Third Parties Claims 31
4.5.1. Arising out of Breach or Negligence 31
4.5.2. Arising out of Environmental Services 31
4.5.3. Survival 32
4.6 Time Period to Make Claims 32
4.7 Warranties 32
4.7.1. In General 32
4.7.2. Relief for Poor Quality Service 33
4.8 Confidentiality 34
4.9 Force Majeure 34
4.10 Use of Equipment 36
4.11 Acknowledgment 36
ARTICLE V: PAYMENT TERMS AND COVENANTS
5.1 Payment Terms 37
5.1.1. Terms 37
5.1.2. Invoices 37
5.1.3. Taxes 37
5.1.4. Disputes 38
5.1.5. U. S. Dollars 38
5.2 Right to Audit 38
5.3 Installation of Meters 38
ARTICLE VI: GENERAL PROVISIONS
6.1 Assignment 39
6.2 Amendment 41
6.3 Non-Waiver 41
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TABLE OF CONTENTS (Cont'd)
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6.4 Notices 41
6.5 Governing Law 44
6.6 Third Party Rights 44
6.7 Severability 44
6.8 Counterparts 44
6.9 Exhibits 44
6.10 Dispute Resolution 44
6.10.1. Mediation Between Parties 44
6.10.2. Arbitration 45
6.11 Material Omission 46
6.11.1. Negation of Partnership 46
EXHIBITS
Exhibit 1.1. Description of BFG Assets and Geon Assets
Exhibit 1.1.18. Financial Terms
Exhibit 3.3 (A) Calvert City Plant Services
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PLANT SERVICES AGREEMENT
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This AMENDED AND RESTATED PLANT SERVICES AGREEMENT (the
"Agreement") is entered into effective as of the date at which the Registration
Statement to be used for the Initial Public Offering by Geon is declared
effective by the Securities and Exchange Commission (the "Effective Date"). This
AMENDED AND RESTATED PLANT SERVICES AGREEMENT is between THE GEON COMPANY, a
corporation organized and existing under the laws of the State of Delaware
("Geon") and THE B.F.GOODRICH COMPANY, a corporation organized and existing
under the laws of the State of New York ("BFG").
WITNESSETH:
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WHEREAS, Geon formerly operated, in part, as an unincorporated division
of BFG;
WHEREAS, with the incorporation of Geon as a separate company, Geon and
BFG have agreed that Geon will own and operate certain assets related to
environmental remediation measures being implemented at a manufacturing facility
located in Calvert City, Kentucky;
WHEREAS, by this Agreement, Geon and BFG wish to provide for the
delivery of certain services to each other at the Calvert City, Kentucky
manufacturing facility;
NOW, THEREFORE, the Parties hereto agree as follows:
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ARTICLE I: DEFINITIONS
1.1. GENERAL DEFINITIONS. As used in this Agreement, the following terms,
when used with initial capital letters, shall have the following respective
meanings:
1.1.1. "AGREEMENT TERM" means a period expiring at the end of
longest Term of Service provided in the Exhibits to this Agreement, unless, as
to one or more Services, the Term of Service and the term of this Agreement are
extended beyond such Term by mutual agreement of the parties hereto.
1.1.2. "BFG ASSETS" means those portions of the Plant Site,
including, without intent of delimitation, both real property and fixtures,
machinery and equipment, where BFG carries the book value on its property
records. The location of BFG Assets is generally as set forth in Exhibit 1.1,
with the understanding that real property conveyance documents, as recorded,
shall control over Exhibit 1.1.
1.1.3. "BFG SERVICES" means the Services to be provided by
BFG to Geon hereunder pursuant to the provisions of Article III herein.
1.1.4. "COMMON FACILITY OR LINE" means a Line or Facility that
is a part of a system providing a Service to the Plant Site and which portion
services both Geon Assets and the BFG Assets, regardless of whether such portion
is located on, under or immediately adjacent to real property or personal
property controlled by only one Party hereto. Incidental, occasional or
temporary use of a Facility or Line by more than one Party hereto shall not,
alone, cause such Facility or Line to be deemed to be a Common Facility or Line.
A Common Facility or Line shall be deemed to become a Dedicated Facility or
Line, for purposes of this Agreement, at the point when, after departing the
boundaries of the BFG Assets or the Geon Assets, as the case may be, while
remaining a part of an integrated system providing Services, it no longer serves
both the BFG Assets and the Geon Assets.
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1.1.5. "DEDICATED FACILITY OR LINE" means a Facility or Line
or portion thereof that is used exclusively for the benefit of one Party and any
Facility or Line specified as such. Temporary, occasional or incidental use of a
Facility or Line by the other Party hereto shall not change the nature of the
Facility or Line from a Dedicated Facility or Line to a Common Facility or Line
for purposes of this Agreement.
1.1.6. "DELIVERY POINT" means the point at which one Party
hereto shall deliver and the other Party shall receive a Service provided to it
under this Agreement, and shall generally be at the place where the Line
transmitting the Service crosses from the real property boundary of the
providing Party to the real property boundary of the receiving Party. "Delivery
Point" shall mean for purposes of wastewater treatment and stormwater the
locations identified in those Exhibits that specifically relate to wastewater
treatment and stormwater services.
1.1.7. "ENVIRONMENTAL COORDINATOR" shall mean the person
designated by a Party as a member of the Technical Committee, who will be the
initial contact for any environmental issues that arise and will receive any
environmental notices required under Section 2.11.6 of this Agreement.
1.1.8. "ENVIRONMENTAL SERVICES" shall mean those Services
supplied by a Provider to a Recipient that relate to compliance with applicable
environmental Laws, and/or those Services that provide treatment, storage or
disposal of Recipient's industrial wastes, including but not limited to
wastewater treatment, sludge disposal, or storage of solid waste. Particular
rules governing Environmental Services appear in Section 2.11.
1.1.9. "EXCEEDANCE" shall mean a failure to comply with
applicable environmental Laws. No knowledge, finding or action by any unit of
government shall be required for a finding of Exceedance.
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The determination of whether an Exceedance exists shall be subject to dispute
resolution.
1.1.10. "GEON ASSETS" means those portions of the Plant Site,
including, without intent of delimitation, both real property and fixtures,
machinery and equipment, which are owned and operated by Geon for the purpose of
implementing the environmental remediation measures which Geon is undertaking at
the Plant Site. The location of Geon Assets is generally as set forth in Exhibit
1.1, with the understanding that real property conveyance documents, as
recorded, shall control over Exhibit 1.1.
1.1.11. "GEON SERVICES" means the Services to be provided hereunder
by Geon to BFG pursuant to Article III of this Agreement.
1.1.12. "IMPROVEMENT" means the upgrading of, or the addition or making
of an improvement to, a Service system, or portion thereof, or any similar
enhancement of such Service system or portion thereof, but excludes any
Maintenance to such Service system.
1.1.13. "LAWS" means any law, rule, judgment, regulation, order, writ,
injunction, interpretation by a court or governmental judicial body, decree of
any court or governmental agency, bureau or division, and any decision or ruling
of any arbitrator to which a Party or its assets or property is bound or
affected, whether local, state or federal, foreign or domestic, and
specifically, but without limitation, includes air, water and simIlar emissions
permits, and any other similar authorizations, standards or limitations that
deal with health or the environment imposed by Law.
1.1.14. "LINE OR FACILITY" means one or a series of interconnected
pipelines, transmission lines, pole lines, high lines utility lines, sewer
lines, viaducts, drainage channels, meters, metering stations, or similar
Service carrying or Service transmitting instrumentalities servicing the Plant
Site or any portion thereof, as the context may require, whether on, above or
below ground, which comprise in whole or part a system for delivering a Service
and which specifically includes, without intent of delimitation, all
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generation and other equipment used principally in creating, conveying, or
providing one or more Services, as well as all roadways, entrances, tracks
and/or walkways servicing the Plant Site or any part or portion thereof as the
context may require.
1.1.15. "MAINTENANCE" means the routine and/or periodic
inspection, repair, overhauls, equipment replacements, servicing and prevention
of deterioration of equipment, facilities and building by performing preventive
and/or corrective maintenance, and those items which the Parties have
traditionally considered as maintenance capital. Such activities shall include,
without intent of delimitation: the visual or physical examination and
monitoring of equipment; equipment cleaning; maintaining lubrication levels;
lubricant changes-outs; alignment; adjustment; electrical repair;
instrumentation (including calibrations and resolutions of control problems);
vibration checks; tightening and/or adjustment of bolts; repair and/or
replacement of piping; fittings and valves; tuck pointing; painting; roof and
other leak repair; ground maintenance such as maintaining drains and general
housekeeping; sealing; replacement of broken parts or components and
miscellaneous parts such as gaskets, screws, filters, seals, nuts and bolts; and
replacement of wear or sacrificial parts, all in the context of keeping a system
providing a Service or a part or portion thereof, in "good" operating condition
and working order consistent with operating practices in the chemical industry.
1.1.16. "PARTY OR PARTIES" shall mean BFG and/or Geon, and
their respective employees, agents, successors and assigns.
1.1.17. "PLANT SITE" means the following facilities previously
owned entirely by BFG and now owned in part by BFG, and in part by Geon,
including all real and personal property associated therewith, tangible or
intangible:
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The "Calvert City Plant" located at
Highway 1523 Industrial Loop
P.O. Box 527
Calvert City, Kentucky 42029
1.1.18. "PRICE" means, with respect to a Service, the
particular amount provided herein to be paid with respect to such Service. The
Price for each Service is set forth in the Exhibits. The general guidelines for
the pricing of services is set forth in Exhibit 1.1.18 (the General Financial
Guidelines).
1.1.19. "PROVIDER" shall mean the Party who supplies
Services to Recipient.
1.1.20. "RECIPIENT" shall mean the Party who receives
Services from a Provider.
1.1.21. "REPRESENTATIVE" means the individual or individuals
to whom a Party hereto has delegated the authority to communicate or act with
respect to a particular matter or with respect to this Agreement or the subject
matter hereof in general, and, where authorized, such person's designees.
1.1.22. "SERVICE" means any Utility, commodity, service, work,
or other function heretofore supplied or performed as a part of the integrated
operations of the Plant Site, and to be provided by one Party to the other after
the Effective Date of this Agreement pursuant to Article In hereof.
1.1.23. "TECHNICAL COMMITTEE" shall mean a committee
established at the Plant Site to discuss and resolve Environmental Services
disputes pursuant to the environmental dispute resolution clause in Section
2.11.5.; Representatives who sit on the Technical Committee shall include the
Environmental Coordinator from the Plant Site, a person from each Party who has
authority to commit that Party to a solution or course of action, and other
persons designated by the Parties.
1.1.24. "TERM OF SERVICE" means, with respect to a
particular Service, the period of time during which such Service is to be
provided by one Party hereto to the other under
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this Agreement. The Term of Service for each Service is listed in the
appropriate Exhibit describing that Service at the Plant Site.
1.1.25. "UTILITY" means steam, cooling towers, city water,
well water, water treatment, wastewater treatment, fire water, fire alarm,
electricity factory air, plant air, instrument air and/or inert gas Services.
1.2. OTHER DEFINITIONS. All other capitalized terms used herein which are
defined in the recitals and in the following Articles of this Agreement shall
have the meanings therein provided Certain other terms may be defined in the
Exhibits attached hereto.
1.3. GENERAL. Words importing the singular number only shall include the plural,
and vice versa Words importing the masculine gender shall include the feminine
and neuter genders. Words importing persons shall include firms and corporations
and vice versa Words such as "hereunder," "hereto," "hereof," "herein," and
other words commencing with "here" shall, unless the context clearly indicates
to the contrary, refer to the whole of this Agreement (including the Exhibits
hereto) and not to any particular article or section hereof.
ARTICLE II: GENERAL STRUCTURE AND PRINCIPLES
--------------------------------------------
FOR PROVISION OF SERVICES
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2.1. GENERAL DESCRIPTION. This Agreement governs the manner by which Services
used at the Plant Site and elsewhere shall be provided and obtained among the
Parties hereto. As to the nature of Services to be provided among the parties,
and the Prices, terms and conditions of the providing of such Services, this
Agreement and the Exhibits to this
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Agreement shall be controlling. This Agreement is intended to provide the
general terms and conditions governing the provision of Services. The Exhibits
are intended to provide specific terms and conditions governing each separate
Service at the Plant Site. Where there is a conflict between this Agreement and
the Exhibits, the Exhibits will prevail.
2.2. TERM: TERMINATION.
2.2.1. TERM. The Party obligated to supply each Service
hereunder shall continue to provide that Service for the Term of Service set
forth on the applicable Exhibit at the Prices set forth in the applicable
Exhibit.
2.2.2. EARLY TERMINATION. Except as otherwise provided in
Subsection 2.2.3. and in the Exhibits hereto, each of Geon and BFG may terminate
this Agreement as it relates to any particular Service PRIOR to the end of the
applicable Term of Service only in one or more of the following circumstances:
(a) if both BFG and Geon agree in writing; (b) subject to the obligation to
negotiate in good faith as set forth in Sections 2.15 and 2.16 ("Compliance With
Laws" and "Changes In Laws"), and subject to the procedures governing suspension
of wastewater treatment and stormwater management "for cause" as set forth in
Section 2.11.4., if a Party shall make in good faith a well-considered, knowing
and willful determination that the continued provision or receipt of a Service
in accordance with the terms hereof is contrary to any applicable Law; or (c) if
a Party shall commit a material breach of one or more of its obligations under
this Agreement which relate to a particular Service (including, without
limitation, a failure by one Party to maintain any of its Facilities or Lines in
good working order, and as a result thereof, the other Party reasonably
determines that the continued provision or receipt of a particular Service to
the first Party would materially disrupt one or more of the other Party's
ongoing operations), and such alleged material breach remains unremedied after a
reasonable period of time after
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the Party alleging the breach has given the other Party written notice of the
particular details of such alleged breach. In the event that a Service is
terminated under Section 2.2.2.(b) above, the Party making the decision that a
violation of Law exists (the Indemnitor) will indemnify, defend and hold
harmless the other Party (the Indemnitee) from all losses, costs, and expenses,
including lost profits, consequential damages and attorneys fees, which the
Indemnitee may suffer as a result if such determination of illegality is in
error. The burden of proof of demonstrating that a violation of Law exists is
upon the Indemnitor.
2.2.3. PROCEDURES FOR EARLY TERMINATION. Except with respect
to a termination under clause (a) or (b) of Subsection 2.2.2. hereof, a Party
desiring to terminate a particular Service under Subsection 2.2.2. shall give
written, commercially-reasonable advance notice of not less than ninety (90)
days to the other as specified in Article 6.4 ("Notices") hereof; provided that
any such Service which is necessary to the operations of the BFG Assets or the
Geon Assets, as the case may be, shall continue to be provided in accordance
herewith until an alternate Service is obtained No Party hereto shall have the
right to terminate or cause a discontinuance of a particular Service under
Subsection 2.2.2. in circumstances where to do so would cause a material
slowdown or stoppage of the production operations of the Party receiving the
Service (other than for necessary Maintenance, or as the result of Force Majeure
as defined in Section 4.9 or as the result of a determination of a violation of
Law as set forth in Section 2.2.2.(b)), if the Party receiving the Service has
used and continues to use its best efforts to arrange for an alternative to
receipt of such Service under this Agreement, in which case the Party supplying
the Service shall, on request, provide reasonable assistance in arranging such
alternative.
2.3. PRICING. The Prices set in the Exhibits for Services have been agreed
to by the Parties in the context of each Party's operations at the Plant Site
as of January 1, 1993. The
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Term of Service set in each Exhibit is a commitment from the Provider of
Services to provide, and the Recipient of Services to take, that Service for
that number of years.
2.3.1. PRICING IN GENERAL. In general, Pricing as reflected in
the various Exhibits has been determined by the Provider charging the Recipient
an appropriate portion of the Provider's "1993 Full Plant Cost," less any 1993
separation program head count reductions in effect on the Effective Date. The
general financial guidelines used by the Parties to establish this Pricing are
set forth in Exhibit 1.1.18. In all cases, the specific Exhibits control over
the General Financial Guidelines.
2.3.2. COST INDEXING. Where indicated in the Exhibits to this
Agreement, at the beginning of February of each calendar year, the Prices
charged for all Services (except as excluded below) will be adjusted based upon
the change in the Index for January to December (e.g., December 31, 1992 Index
divided by December 31, 1991 Index) of the prior calendar year. Prices and costs
excluded from indexing include all Services except as otherwise indicated in the
Exhibits hereto.
The Index is defined as the weighted average change in the
following two inflation indices:
(i) the Employment Cost Index for Private Industry weighted Thirty Three
Percent (33%); and
(ii) the Producers Price Index for Total Finished Goods Excluding
Consumer Foods weighted Sixty-Seven Percent (67%),
both as published (or a suitable replacement the Parties agree upon should
publishing of these indices cease).
In the Exhibits, all references to "an index," "indices
supplied by the home office," "indexed for inflation" or any other similar
references shall mean the Index as defined above.
2.4. BUSINESS DISCONTINUANCE. Intentionally Omitted.
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2.5. COOPERATIVE CONDUCT BETWEEN PARTIES. Each Party hereto shall conduct its
operations at the Plant Site in a safe and prudent manner, and, to the extent
such operations affect, or could foreseeably affect, the operations of the other
Party hereto, shall make use of the Services and the Common Lines and Facilities
and conduct its operations at the Plant Site in such a manner as to not
unreasonably interfere with the operations of the other Party hereto. If one
Party can reasonably foresee that its operations, or changes in operations, will
have an materially adverse effect on the other Party, the first Party shall be
obligated to inform the other Party, as far in advance as possible. Both parties
shall then negotiate in good faith to agree upon a course of conduct that will
minimize the impact upon the second Party.
2.6. PERFORMANCE. All Services shall be provided by personnel employed from time
to time by Geon or BFG as the case may be, in connection with the provision of
similar Services for each Party's own facilities or by contractors engaged
pursuant to contracts for provision of such Services. Such personnel shall be,
in the good faith judgment of the Party retaining or contracting with the
contractors, qualified and competent to perform the tasks for which they were
engaged. All Services supplied by Provider shall be provided in accordance
with good engineering and/or industry practices used by persons knowledgeable
about that particular Service or industry, with the understanding that the
quality of Service to the Recipient will be comparable to the quality of Service
provided prior to the separation of Geon from BFG. The Party who owns or is
operating the Geon Assets or the BFG Assets, as the case may be, or providing a
particular Service, has the responsibility to perform all health, safety,
environmental and other regulatory reporting requirements, and comply with all
applicable Laws, regulations and permits governing or relating to the operation
of each Party's respective Assets or the providing of such Services; the Party
receiving the Services shall not do or anything, or suffer the doing of anything
by third
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parties which would in any manner cause or contribute to the Provider failing to
conform to, or disabling the Provider from conforming to its duties and
responsibilities under this paragraph. Both parties endorse the principles of
The Chemical Manufacturers Association's Responsible Care(R) Codes.
2.7. MAINTENANCE.
2.7.1. Except as otherwise specifically stated herein, the
Provider of a Service shall have the obligation to maintain in good working
order and perform Maintenance (as defined in Section 1.1.) upon all Facilities,
lines and Service systems which are part of the Service system.
2.7.2. The Provider of the Services will maintain the
Common Lines and Facilities.
2.7.3. The cost of Maintenance to Dedicated Facilities or
Lines shall be borne solely by the Party owning or using the Dedicated line or
Facility.
2.7.4. In the event that a Party fails, after notice, to
complete in a timely manner any Maintenance to be performed by it on a Dedicated
or Common Facility or Line, which failure materially affects the operations of
the other Party or the other Party's ability to provide or consume any Service,
the other Party shall have the right to perform the necessary Maintenance. A
Party may enter the other Party's area of operations to the extent necessary to
cure any unfulfilled Maintenance obligations, at the defaulting Party's expense,
after reasonable advance notice of its need to enter. Less than 48 hour notice
shall be deemed unreasonable except in the case of emergency or urgent
Maintenance; the risk or fact of serious loss of materials or goods; the serious
risk of adverse material environmental contamination; or in other highly
dangerous or unusual circumstances. At the option of the Party who owns the
Assets, the entering Party and its contractors, employees and agents may be
required to be accompanied by the owner's Party's representative, who may
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designate a reasonable route of access to and from the repair site and enforce
compliance with the owner' s Party's safety rules and regulations.
2.7.5. Each Party hereto shall notify the other Party promptly of any
defect, damage, malfunction, state of disrepair, problem or other dysfunctional
characteristic of the Common Facilities or Lines controlled or operated by it if
the existence thereof could adversely affect the operation or functioning of the
entire Service system in question, or the portions thereof utilized by the other
Party. If the Party receiving the Services hereto believes that a defect,
damage, malfunction, state of disrepair, problem or other dysfunctional
characteristic exists in a Common Line or Facility controlled or operated by the
other Party hereto, it shall notify the other Party promptly.
2.7.6. When one Party performs Maintenance to a portion of a Common or
Dedicated Line or Facility, which Maintenance will or could require shutdown of
a Plant Site or portions thereof or could affect the operation or functioning of
an entire Service system, or the portions thereof utilized by the other Party,
the Party performing the Maintenance shall give the other Party reasonable
notice under the circumstances with respect to the nature and timing thereof.
The Parties will cooperate in good faith to minimize the impact on one another.
The Parties will try to schedule planned Maintenance as far in advance as
possible, and will coordinate turnarounds and planned maintenance to the maximum
extent possible.
2.7.7. The Parties shall cooperate with one another to assure that the
systems providing the Services for the BFG Assets and the Geon Assets are
maintained in good working order and continue to efficiently service the
operations of such Assets.
2.8. IMPROVEMENTS.
2.8.1. PRODUCTIVITY AND COST REDUCTION IMPROVEMENTS. For
productivity and cost reduction capital investment, the Provider of the
Services will propose capital
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investment opportunities to the Recipient, and will make the capital investment.
The Provider will, in appropriation request form, clearly and in detail identify
the source (base cost or variable cost efficiency) of the expected savings from
the project.
The Recipient will have two choices:
(i) Provide cash up front on a shared basis and receive its pro-rata
share of the benefits; or
(ii) Do not elect to provide cash on its pro-rata share, and do not
receive any of the benefits.
The Recipient will respond to any productivity or cost savings
proposals within three (3) weeks.
2.8.2. EXPANSION ACTIVITIES. The Provider of a Service is not
required to supply capacity beyond the Service system capacity existing at the
time of execution of this Agreement. Generally, capital required due to
expansion of activities, along with any additional operating costs, will be
borne by the expanding Party. When one Party's expansion activities require
additional Utility usage, the 1992 actual Utility usages will form the basis for
allocated Utility reserve capacity. The difference between system capacity for
the particular Utility in 1992 and the sum of each Party's actual 1992
consumption of that Utility comprises the reserve for that Utility. The Parties
will split the reserve into a BFG reserve and a Geon reserve proportional to
their respective actual 1992 usages. Each Party may use the Utility up to the
1992 system capacity so long as the sum of all usages for that utility do not
exceed the 1992 system capacity for that Utility. When the combined usages for
that Utility will exceed the 1992 system capacity for that Utility, each Party
shall determine the difference between its then-current usage and its 1992
usage, and to the extent that difference exceeds that Party's reserve, the Party
shall share the costs of procuring the required Utility in excess of the 1992
capacity for that Utility in a ratio of
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that Party's excess over its reserve to the other Party's excess over the other
Party's reserve. The Parties' will work cooperatively in their joint and
singular best interest in selecting the capacity option to be used. If only one
Party has exceeded its reserve, absent an agreement to the contrary, that Party
will bear all the additional costs of securing quantities of the Utility in
excess of the 1992 capacity.
2.8.3. PRIOR DISCUSSION. Before any Party decides to make
Improvements m any Utility or any Common Facility or Lines, the Party desiring
to make Improvements will inform the other Party of the reasons why the
Improvements are desirable, the cost of the Improvements, and how the
Improvements will affect and benefit the operations of both the parties. Both
Parties shall negotiate in good faith to reach agreement on how and when the
Improvements will be made, and whether, or how, the cost of the Improvements
will be shared.
2.8.4. COOPERATION. When one Party makes an Improvement to a
portion of a Common or Dedicated Line or Facility, which Improvement will
require shutdown of a Plant Site or portions thereof or could affect the
operation or functioning of an entire Service system, or the portions thereof
utilized by the other Party, the improving Party shall give the other Party
reasonable notice under the circumstances with respect to the nature and timing
thereof. The Parties will cooperate in good faith to minimize the impact on one
another.
2.9. ALLOCATION IN EVENT OF SHORTAGE. In the event that there are shortages
of particular Services such that all requirements of the BFG Assets and the Geon
Assets cannot be met, the Parties will allocate the affected Service(s) among
all users thereof as follows:
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(a) First, so as to avoid danger or injury to human health or safety
or the environment to the maximum extent possible under the
circumstances, then any excess of the Service(s) thereover;
(b) So as to avoid damage to tangible property, real or personal of
both parties to the maximum extent possible under the
circumstances, then any excess of the Service(s) thereover;
(c) As specifically stated in the Exhibit relating to a particular
Service; then any excess of the Service(s) thereover;
(d) In proportion to the then-current average annual anticipated
usage among ALL users for the Services affected; then any excess
thereover
(e) As mutually agreed.
Both Parties will work together in a cooperative manner to
shed or re-allocate the loads of the major Utilities in a manner that is
proportional to usage prior to the shortage.
2.10. RULES. Each Party hereto shall cause its employees, contractors or agents,
while on the premises of the other Party hereto, to observe all safety rules and
procedures, and all other procedures or policies of the Party owning the Assets.
Each Party shall enter onto the other's premises at its own risk, and shall be
responsible for damages to its property, or injury to its employees, contractors
or agents while on the other's premises, except to the extent that such damage
or injury is caused by the willful misconduct, recklessness or gross negligence
of the other Party or its employees, agents or contractors; provided, however,
that this sentence shall not apply to members of a responding fire brigade or
emergency response team.
2.11. PARTICULAR RULES GOVERNING ENVIRONMENTAL SERVICES.
2.11.1. WASTEWATER QUALITY. All wastewater sent by Recipient to
Provider for
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treatment shall be of a quality that Provider's facility is capable of treating
adequately to comply with all permit requirements.
2.11.2. DISPOSAL SITES. In the case of disposal of wastewater
treatment sludge, prior to the use by the Provider of a new or alternate
disposal site, both Parties must agree upon and approve the use of the disposal
site selected. The Environmental Coordinators after consulting with their
respective corporate or divisional environmental functional heads, or, if
necessary, the Technical Committee, shall give such approval.
2.11.3. CHANGES IN INFLUENT.
A. PERMANENT CHANGES. If Recipient intends to permanently
change the flow, loading or the kind of contaminants
discharged to any wastewater treatment system such that
the operation or permits for the wastewater treatment
system may be affected, Recipient shall first give
reasonable notice to Provider. Any such change shall be
consistent with Recipient's agreed percentage of use as
shown on the Exhibits relating to Wastewater Treatment.
If the change is acceptable to Provider, Recipient may
begin such discharge. If Provider refuses permission
(which permission shall not be unreasonably withheld),
Recipient may resort to dispute resolution. If
Recipient changes its flow, loading or contaminants
discharged and such change results in personal injury,
damage to or contamination of property, or violation of
Law, the Recipient shall be liable to Provider as set
out in paragraph 4.1 ("Foreign Matter").
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B. DECREASE IN CAPACITY. If Provider modifies the
wastewater treatment system resulting in a decrease in
the system's capacity, Recipient shall continue to have
the right to discharge to the treatment system the same
volume of flow and loading that was available to it on
the Effective Date of this agreement.
C. PAYMENT FOR CHANGES. In the event either Party
materially changes its flow, loading or kind of
contaminants discharged to the wastewater treatment
system such that the operation or permits for the
system may be affected, the change in cost associated
with such changes shall be reflected in the percentage
or ratio used to determine the amount paid by Recipient
to Provider for the Service.
D. TEMPORARY CHANGES. If Recipient causes a temporary
condition or change that could impact the operation of
a wastewater treatment system, Recipient shall give
prompt notice to Provider of such condition and shall
take all reasonable steps to minimize the impact of
such condition. If the condition is one that is planned
or likely to occur at a specific time, Recipient shall
give notice to Provider prior to instituting the
actions that will or are likely to create the condition
and will work with Provider to minimize the impact. In
the event the temporary condition or change entails
extraordinary Out-Of-Pocket expenses related to the
temporary change, Recipient shall reimburse Provider
for such extraordinary expenses.
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E. STORMWATER CHANGES. In the event a greater or lesser
portion of a shared facility becomes subject to
stormwater permitting, the relative percentages of each
Party for purposes of determining cost of Services for
stormwater shall be recalculated based on the acreage
of each Party subject to such permit.
2.11.4. SUSPENSION OF WASTEWATER TREATMENT AND STORMWATER
MANAGEMENT SERVICES FOR CAUSE. In case of actual or anticipated Exceedance of
any wastewater treatment permit, Provider has the right to suspend Service by
preventing Recipient's influent from entering the wastewater treatment system
and/or by ceasing operation of or discharge from the wastewater treatment
system. The suspension of Service will continue for so long as the circumstance
giving rise to the suspension continue to exist. The procedures to turn this
suspension into a permanent termination are set forth in Section 2.2.2.(b). Such
suspension of Service shall be taken only if Provider cannot reasonably prevent
damage to its system or exceedance of its permit by taking other actions,
including but not limited to diversion of flow, addition of chemicals or
adjustment of other process flows. Provider's action shall be deemed to be fully
in compliance with this Agreement if the discontinuance of Service is caused by:
1. Force Majeure
2. Routine Maintenance (after reasonable notice)
3. Installation of new equipment or repairs to existing
equipment (after reasonable notice).
4. Recipient's failure to provide wastewater of sufficient
quality to allow adequate treatment and/or prevent
exceedance of any permit limit.
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Discontinuation of Services for the above causes shall not
relieve Recipient from its obligation to make payment for such Services.
Provider's action shall not be deemed to be "for cause" unless discontinuance of
Service is caused by:
1. Provider's negligent or willful failure to properly
operate the wastewater treatment system.
2. Any Exceedance caused by discharge of Provider's
wastewater to the treatment system.
If Provider causes either of the above two events to happen,
Recipient is relieved from making payment.
2.11.5. DISPUTE RESOLUTION IN CONNECTION WITH ENVIRONMENTAL
SERVICES.
A. RESOLUTION BY TECHNICAL COMMITTEE. The Technical
Committee at the Plant Site will be convened upon
notice by either Party to the Environmental Coordinator
of the other and will meet to resolve any issues or
disputes concerning Environmental Services at the Plant
Site between the Parties. Each Party must be
represented at meetings of the Technical Committee and
each shall have one vote. Minutes and/or a report of
the proceedings of the Technical Committee will be
prepared and maintained. Disputes not resolved by the
Technical Committee will be elevated to each Party's
management for resolution as described in Section
6.10.1.
B. RESOLUTION BY THIRD PARTY. If within thirty (30) days
from the initial Technical Committee meeting, there is
still no resolution of the dispute, Section 6.10.2.
("Arbitration") shall govern its resolution.
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C. RESOLUTION FACTORS. In resolving issues or disputes
under this paragraph, the following considerations
shall apply, but number one shall be a threshold issue
that shall take precedence over all other
considerations:
1. Compliance with all applicable environmental Laws;
2. The continuing need for the Environmental Services
by the Recipient;
3. The technical feasibility of providing those
Environmental Services;
4. Modifications to the Environmental Services; and
5. The cost effectiveness of the Environmental
Services as opposed to any other alternatives
both from the perspective of the Provider and
the Recipient.
2.11.6. NOTICES RELATING TO ENVIRONMENTAL SERVICES. In the
event of any Exceedance, notice from any regulatory agency, suit, or inspection,
the Party receiving information concerning such event shall notify the
Environmental Coordinator for the non-recipient Party, unless such event only
involves the Party receiving such information. Copies of any such notices or
correspondence shall be furnished to the non-recipient Party.
To the extent the non-recipient Party is impacted by such
information, the receiving Party shall discuss and agree upon the appropriate
response with the non-recipient, subject to dispute resolution.
2.11.7. ENVIRONMENTAL RECORDS. All existing records
concerning any shared facilities that are required to be maintained by
applicable environmental Laws shall be the property of: 1) BFG if it is
required by law to maintain such records or 2) the Party continuing the
activity covered by such records. In the event both Parties are required to
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maintain records, BFG shall have custody and control of such records and shall
allow Geon access to them at reasonable times for review and copying. Other
records shall be the property of the Party having possession of them, subject to
the right of the other Party to access and copying.
2.12. UNFORESEEN ECONOMIC CONDITIONS. This Section 2.12 is intended to provide
relief to a Party where unforeseen economic events not addressed elsewhere in
this Agreement cause either Party to suffer undue, inequitable economic distress
under the then current Pricing arrangements for one or more Services. This
Section 2.12 does not apply to events of Force Majeure, changes in Laws,
business discontinuance, etc., since those events are handled elsewhere in this
Agreement. For a Party to invoke Section 2.12, two materiality triggers must
occur:
(1) A significant event occurs which causes the hardship question to be
raid.
(2) A 20% increase or decrease in the "Full Plant Cost" of the specific
Service contract under discussion. (This 20% threshold is tested
against the original Service contract Full Plant Cost +- cumulative
cost index adjustments up to the period when the event occurs.)
A Party that believes itself entitled to relief under Section
2.12 will give written notice to the other Party, detailing why it believes the
two materiality triggers have been met. If the Parties agree that the triggers
are satisfied, "Full Plant Cost" will be recalculated and used beginning at the
first day of the month following the significant event month.
If the Parties do not agree the triggers are met, the matter
will be submitted to audit or arbitration as set forth elsewhere in this
Agreement.
2.13. LEGAL AND CONSULTANT COSTS. In addition to the Prices set forth in
the Exhibits, part of the cost of providing a Service includes any costs of
outside consultants (such as legal,
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technical, etc.) needed to provide a Service in compliance with Laws. The
Provider of the Service will hire such legal or technical attorneys or
consultants. The costs associated with such outside attorneys or consultants
will be paid by each Party in proportion to each Party's use of the particular
Service.
2.14. EASEMENTS. Each Party is granted an easement to enter upon the land of the
other to do all things necessary to carry out the intent of this Agreement.
Prior to the execution of this Agreement, the Parties attempt to identify the
specific locations where permanent easements or rights of way are necessary.
Such easements or rights of way will be recorded in the appropriate real estate
records as soon as possible after execution of this Agreement. If other
necessary easements or rights of way are later identified, the Parties will take
all appropriate action to cause those easements or rights of way to also be
recorded.
2.15. COMPLIANCE WITH LAWS. Any Service or substance tendered by a Party to this
Agreement to the other Party hereto for use or treatment shall be of a quality
that enables the receiving Party, consistent with the intended use or treatment
and the other Party's normal operations at the Plant Sites, to be or remain in
compliance with all applicable Laws.
2.16. CHANGE IN LAWS. During the Agreement Term, Laws may change or a judicial
interpretation of existing Laws may change or emerge, which necessitate changes
in a Party's operations at a Plant Site, or in the manner, mechanism or
permissibility of the delivery of one or more of the Services, or changes to
Lines or Facilities, or in the discontinuance of a Service. Both Parties shall
have a duty to keep informed as to changes in Laws affecting their respective
operations and obligations under this Agreement, and how those changes may
impact the providing of Service over Dedicated and Common Lines and Facilities.
When a Party becomes aware of a proposed or actual change in Law which may
affect the cost, method or permissibility of delivery or receipt of a Service,
the
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Party will promptly inform the other Party. Both parties shall then negotiate in
good faith to reach a reasonable, equitable amendment to the Price or other
affected contractual clause in the Exhibit such that the Service can continue to
be provided or received in a cost effective manner and in conformance with the
new or revised Law. As a general principle, any increased costs will be borne by
the parties in proportion to the relationship the change in Law bears to each
Party's operations or products. For capital investment requirements due to
regulatory, legal or other mandatory obligations, the capital investment will be
made by the Provider, but will be funded (cash provided) based on the Party(s)
to which the regulation is directed, shared based on relative contribution, or
shared consistent with their utilization of asset, depending on circumstances.
2.17. UNIQUE EQUIPMENT OR EXPERTISE. Should at any time during the Term of this
Agreement, any Party hereto finds it necessary to obtain the use of any
equipment not readily obtainable under the circumstances, or should that Party
require the advice or assistance of an individual with unique or highly
specialized expertise, which equipment or person has, as a result of the
separate incorporation of Geon, come within the control of the other Party, then
upon request and reasonable advance notice, the Party controlling the person or
equipment shall use reasonable efforts to make such person or equipment
available to the requesting Party. Upon the providing of such person or
equipment, the requesting party shall reimburse the providing Party for the
reasonable rental value of any such equipment, or, in the case of an individual,
a reasonable consulting fee in accordance with the general principals of the
exchange of personal services at the Plant Site concerned pursuant to the
Exhibits to this Agreement.
2.18. INDEPENDENT CONTRACTORS. The Parties hereby engage each other, and
each Party hereby undertakes as an independent contractor and not as an agent
of the other, to provide to the other Party such Services as are identified on
the Exhibits attached hereto. The
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Recipient shall not have the power or authority to direct or control the
Provider in the means, methods, employee negotiations, manner of performance of
the Services to be provided hereunder. The Provider in carrying out the Terms of
this Agreement is acting independently and as an independent contractor with the
full power and authority and responsibility to select means, methods and manner
of performing the Services required hereunder, but the Provider shall use its
best efforts to cooperate with the Recipient and to coordinate its Services with
the desires of the Recipient. The Parties may develop and agree upon general
instructions to facilitate said cooperation and coordination.
2.19. SHUTDOWN COOPERATION. The Parties will cooperate to assure the efficient
utilization of shutdowns and minimal overall down time of manufacturing and/or
production facilities. Should a Party plan a shutdown that would have an impact
on the operations of another Party or user or Provider of a Service hereunder,
the Party planing such shutdown shall give the affected Parties, users and
Providers at least sixty (60) days' advance notice thereof and shall give
affected users and Providers an opportunity to participate in the planning
and/or timing of such shutdown. Should one Party suffer an involuntary shutdown
which results in a shutdown at another Party, such other Party shall use such
down time to complete any scheduled or planned Maintenance, or Improvement, the
making of which requires a shutdown or withdrawal from service, all to the
extent reasonably practicable. Should a Party suffer a voluntary or involuntary
shutdown that would have an impact on the operations of another Party hereto or
a user or provider of a Service, the Party suffering such shutdown shall consent
to reasonable extensions of such shutdown if required in order to complete
Maintenance or Improvements undertaken during such shutdown by another Party
hereto or user or Provider of Service, in order to minimize overall down time in
accordance with the first sentence of this paragraph.
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2.20. FENCES. At locations where the Parties occupy opposite sides of a road
which one Party owns and the other Party has a fight or easement to use,
placement of fences will occur on the owner's side of the road.
ARTICLE III: SERVICES PROVIDED
------------------------------
3.1. [Intentionally Omitted]
3.2. [Intentionally Omitted]
3.3. The Services to be provided at the Calvert City Plant shall be as set
forth in the Exhibits hereto, and any other Exhibits added by mutual
agreement after the Effective Date.
3.4. [Intentionally Omitted]
3.5. [Intentionally Omitted]
3.6. [Intentionally Omitted]
ARTICLE IV: ALLOCATION OF RISKS AND LIABILITIES
-----------------------------------------------
4.1. FOREIGN MATTER. In the event that one Party hereto introduces into a
Line or Facility or Service system, a substance or matter other than that which
such Line, Facility or Service system ordinarily accepts by design or common
occurrence, and, as a result, said property or any person (including one of the
Parties) suffers damage, cost, expenses or contamination & a violation of Law
occurs by reason of said presence, the introducing Party shall, promptly upon
notice, cease such practice and reimburse the affected Party for its
Out-Of-Pocket Costs arising as a result of the improper introduction.
"Out-Of-Pocket Costs" include, without limitation, the repair of damaged
equipment or buildings, the
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replacement of ruined raw materials, work-in-process or finished goods or
machinery, extra energy or labor costs, scrap disposal, clean-up of the released
material, and any fines or penalties assessed pursuant to Law caused by the
event, and reasonable outside lawyers' attorneys fees incident to handling these
matters. "Out-Of-Pocket Costs" do not include: lost profits; punitive, indirect,
consequential, or exemplary damages; and changes to premiums on insurance
policies.
NOTWITHSTANDING THE FOREGOING, NO PARTY HERETO SHALL BE RESPONSIBLE FOR
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES UNDER THIS SECTION 4.1., UNLESS ThE
ACT OF INTRODUCTION OF SUCH FOREIGN SUBSTANCE OR MATTER WAS THE RESULT OF THE
GROSS NEGLIGENCE, RECKLESSNESS, OR WILLFUL MISCONDUCT OF THE INTRODUCING PARTY
OR ITS AGENTS OR EMPLOYEES. In the event of such an introduction, each Party
shall use best efforts to take all steps feasible to mitigate the impact of any
such introduction, and particularly to prevent the Spread or worsening of any
damage or injury due to non-response or inaction by any Party.
4.2. LIMITATION OF REMEDY BETWEEN PARTIES FOR NON-MATERIAL BREACH. Except for
any reimbursement due under Sections 4.1. ("Foreign Matters") or 4.10. ("Use of
Equipment"), neither Party to this Agreement shall incur any obligation or
liability to the other Party arising out of any non-material breach of this
Agreement or non-material failure by such Party to discharge its obligations
hereunder, other than a breach or failure which relates to the payment of money.
For purposes of this Agreement, a breach or failure shall be considered material
only if (a) the resulting damages exceed $25,000 per occurrence or $25,000 in
the aggregate for similar breaches or failures which occur on a repeated basis;
or (b) it results in a violation of Law being attributed to the affected Party.
This Section 42.
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shall not limit or diminish the operation of Section 4.5. hereof, relating to
indemnification as to claims of third parties.
4.3. INSURANCE.
4.3.1. Each Party hereto shall maintain insurance as listed in
Section 4.3.4. below to include all risk property insurance, business
interruptions, boiler and machinery and extra expense to its own portions of the
Plant Site, and comprehensive general liability covering third party bodily
injury and property damage. Such insurance shall name the other Party hereto as
an additional insured to the extent of its interests under this Agreement. In
addition to any other limitations on remedies contained in this Article IV, to
the extent that any destruction, damage, liability, loss or expense to the BFG
Assets or the Geon Assets, as the case may be, is paid or reimbursed by
insurance proceeds, it shall be paid by the insurer, subrogation rights shall be
waived, and the other Party shall have no responsibility or liability with
respect thereto.
4.3.2. All insurance policies shall be issued by insurance
companies properly licensed to do business in the United States of America and
having a rating issued by A.M. Best of B+/12 or better, except where insured
through a captive insurance company. Certificates of Insurance evidencing such
insurance shall be submitted by each Party to this Agreement to the other. All
insurance contracts and Certificates of Insurance issued hereunder shall include
a clause providing the other Party hereto with not less than thirty (30) days
prior notice in the event of any cancellation of any policy or any material
change in the same.
4.3.3. Each Party hereto shall cooperate fully with the other
in performing insurance-related activities. Notice shall be provided immediately
of any event that may result in destruction, damage, liability, loss or expense
including, but not limited, to the introduction of foreign material. Each Party
shall release all necessary information to
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adjust the claim, permit issuance and other representatives of each Party on the
premisses to collect such information and perform periodic loss prevention
engineering inspections.
4.3.4. The following Insurance Coverage will be maintained by
both Parties, unless otherwise recommended by Risk International Services, Inc.,
the risk management advisor for both Parties, or by another recognized insurance
professional organization that regularly advises the chemical industry:
Type of Coverage Minimum Insured Limits
----------------- ----------------------
Comprehensive General Liability $200,000,000 (occurrence/aggregate)
Automobile Liability $200,000,000 (occurrence/aggregate)
Products Liability $150,000,000 (occurrence/aggregate)
Workers Compensation Statutory
Excess Workers Compensation $10,000,000 (occurrence)
Employers Liability $1,000,000 (occurrence)
Property Damage Repair and Replacement Value
(occurrence/aggregate
Business Interruption $150,000,000 (occurrence(aggregate)
Extra Expense $20,000,000 (occurrence/aggregate)
Boiler & Machinery $50,000,000 (occurrence/aggregate)
4.3.5. INCREASED INSURANCE RATES. There is a possibility the
separation of The Geon Company from BFG may result in higher insurance rates for
both Parties. To the extent that these higher insurance rates impact the costs
of operating long-term infrastructure asset Service contracts, the Parties agree
to discuss fair and equitable adjustments to the Service contracts covering
Services provided from these long-term infrastructure assets. Until December
31, 1996, either Party may raise this issue. After December 31, 1996, it will be
assumed that the insurance premiums are properly reflected in the rate structure
for these long-term infrastructure contracts, and this covenant will expire.
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4.4. EXCLUSIVE REMEDIES AS TO CLAIMS BETWEEN THE PARTIES: The Parties recognize
that the provision of Services under this Agreement may from time to time
suffer from interruptions which may or may not arise to the level of a Force
Majeure, or from defects in quality or some other specification pertaining to
the properties of the Service: Each Party promises to use diligent and
reasonable efforts to maintain the Service(s) it has an obligation to provide,
and the Recipient promises to cooperate in every reasonable manner in assisting
the Provider of a Service to work through such interruptions and
quality/out-of-specification situations with a minimum of interruptions, cost
and inconvenience to both Parties. In the event of a material breach of this
Agreement, the injured Party's sole remedies shall be (i) (a) re-performance or
re-delivery of a Service, in the case of a breach or failure which relates to
the provision of any Service, or (b) if a providing Party shall refuse or be
unable to perform its obligation to provide a Service hereunder following a
written demand by the Party to whom Service is to be provided, the reasonable
cost or expense in excess of the Price which would have been payable hereunder
which the obtaining Party incurs to obtain substitute provision of such Service
from a third person, subject to the limitations set forth in Section 4.2 above;
(ii) reimbursement for the injured Party's Out-Of-Pocket Costs, as defined in
Section 4.1; and (iii) if a Service is wrongfully terminated under Section
2.2.2.(b) ("wrongfully terminated" means that the terminating Party fails to
sustain its burden of proof that the continued provision or receipt of the
Service is contrary to Law), for indemnity as set forth in Section 2.2.2.(b).
EXCEPT AS SET FORTH IN THIS AGREEMENT AND THE EXHIBITS HERETO, NO PARTY HERETO
SHALL HAVE ANY OTHER LIABILITY TO THE OTHER PARTY HERETO WITH RESPECT TO ITS
PERFORMANCE OF OR FAILURE TO PERFORM ANY SERVICE UNDER THIS AGREEMENT,
INCLUDING BUT NOT LIMITED TO ANY LIABILITY FOR SPECIAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OR LOSS
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OF PROFITS, CAUSED BY OR ARISING OUT OF ANY MATERIAL BREACH OF THIS AGREEMENT.
4.5. INDEMNIFICATION FOR THIRD PARTY CLAIMS.
4.5.1. ARISING OUT OF BREACH OR NEGLIGENCE. Each Party hereto
(the "Indemnitor") shall indemnify and defend and hold harmless the other Party
hereto (the "Indemnitee") from and against, loss, damages, cost or expense
(except to the extent covered by insurance) suffered by the Indemnitee as a
result of (i) a claim of any third Party against the Indemnitee (including any
penalties or fines under applicable Law), which results from a wrongful act or
omission by the Indemnitor in Indemnitor's performance of an obligation or duty
under this Agreement, regardless of whether such claim resulted from
recklessness, willful misconduct, simple or gross negligence or other action; or
(ii) any damage to the property of the Indemnitee caused by the Indemnitor, its
agents or employees, while performing the Indemnitor's obligations or duties
pursuant to this Agreement. This Section 4.5.1. does not relate to indemnity
arising out of Environmental Services.
4.5.2. ARISING OUT OF ENVIRONMENTAL SERVICES.
A. Recipient shall defend, indemnify and hold harmless
Provider for any cost, damage, liability or loss,
arising from Recipient's use of the Environmental
Services, including but not limited to claims
(including reasonable attorneys' fees) for personal
injury or property damage, fines and penalties, and
contamination of the environment (including clean-ups),
to the extent such claims are not caused by Provider's
negligence or breach of the conditions under which
Environmental Services are provided. Recipient's
obligation to indemnify shall be proportionate to its
contribution to the events causing the claim.
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B. Provider shall defend, indemnify and hold harmless
Recipient for any cost, damage, liability or loss,
resulting from Provider's use or operation of the
Environmental Services, including but not limited to
claims (including reasonable attorneys' fees) for
personal injury or property damage, fines and
penalties, and contamination of the environment
(including clean-ups), to the extent such claims are
not caused by Recipient's negligence or breach of the
conditions under which Environmental Services are
provided. Provider's obligation to indemnify shall be
proportionate to its contribution to the events causing
the claim.
4.5.3. SURVIVAL The indemnifications contained in this
Section 4.5 shall survive termination of this Agreement.
4.6. TIME PERIOD TO MAKE CLAIMS. Any claim relating to, resulting from or
arising out of any dispute or disagreement concerning the amount, kind, scope,
quality or manner of performance of any of the Services to be provided hereunder
shall be waived by the obtaining Party, unless made in writing as soon as
possible but no longer than one (1) year after the date of discovery of the
performance, non-performance, delivery, non-delivery or breach of the Service to
which such claim relates. Any claims for indemnity arising out of any harm,
loss, cost, damage or expense suffered by third parties shall be made in writing
as soon as possible but no longer than one (1) year after the Indemnitee learns
of the significance of the event giving rise to the claim for indemnity and has
received a written demand from the third Party; provided however, that the
Indemnitor is only relieved of responsibility by the extent it has been harmed
by the lack of notice.
4.7. WARRANTIES.
4.7.1. IN GENERAL. The Services to be delivered under this
Agreement shall conform to all specifications set forth in the Exhibits hereto.
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Each Party acknowledges that the other Party is not in the business of providing
to the public the respective Services provided for in this Agreement.
4.7.2 RELIEF FOR POOR QUALITY SERVICE. The service Recipient
is generally entitled to a quality of service equal to that which was being
enjoyed prior to the Effective Date of this Agreement, unless specified
differently in the specific Service contract Exhibit. In the event of Service
quality deterioration, the Service Provider will make good faith efforts to
resolve the issue. If the problem is not corrected within a reasonable time, the
Recipient is entitled to cost relief as provided in this Agreement (generally,
Section 4.4).
If the Recipient feels they have a quality issue, Recipient
should follow the procedure set forth in Section 6.10.
4.7.3. It is understood that occasional transitory
perturbations typically occur in the industrial supply of certain utilities
(such as pressure, moisture, content, low voltage, etc.), and that the same do
not comprise an out-of-specification condition so long as the Services
substantially comply with the Services as experienced/provided prior to the
Effective Date of this Agreement.
4.7.4. Except as otherwise stated in this Agreement, NO
PARTY HERETO MAKES ANY WARRANTY TO THE OTHER THAT ANY OF THE PARTICULAR
SERVICES OF UTILITIES CONTEMPLATED FOR PURCHASE AND/OR SALE UNDER THIS
AGREEMENT SHALL BE MERCHANTABLE OR FIT FOR ANY PARTICULAR PURPOSE, NOR DOES ANY
PARTY MAKE ANY OTHER WARRANTY WITH RESPECT THERETO, EXPRESS OR IMPLIED. Each
Party acknowledges that the other Party is not in the business of providing to
the public the respective Services provided for in this Agreement.
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4.8 CONFIDENTIALITY. Each of BFG and Geon (including their respective employees,
agents and Representatives) shall maintain in confidence all proprietary and
confidential business information to which it might become privy as a result of
the transactions contemplated herein. No restrictions are placed upon a Party
hereto respecting the use or disclosure of any such information which: (i) is or
becomes through no fault of the disclosing Party within the public domain; (ii)
was legally acquired by the disclosing Party from an unaffiliated third Party
who had a fight to convey same without obligation of secrecy and who did not
obtain such information directly or indirectly from a Party affiliated with the
disclosing Party; or (iii) is required to be disclosed by binding court order or
other requirements of Law. Specific items of confidential information shall not
be deemed to fall within the foregoing exceptions merely because they may be
embraced within a body of generally available information within such exception,
nor shall any combination of features be deemed to fall within such exception
merely because the individual features are within such exception.
4.9. FORCE MAJEURE. Each Party shall be relieved from liability hereunder for
failure to perform any of the obligations herein imposed, except any obligations
to make payments for Services already rendered, for the time and to the extent
of such failure to perform, if the failure to supply, take, use or consume the
Service, or the failure to make delivery of the Service, is occasioned by: (a)
Acts of God, fire, explosion, flood, hurricanes; (b) strikes, lockouts or other
industrial disturbances or riots; (c) war, declared or undeclared; (d)
compliance with any applicable Law, including priority, rationing, allocation or
preemption orders or regulations, or non-voluntary cancellation of a Party's
license to operate its plant or equipment; (e) shortage or breakdown of a
Facility or Line or other failure of facilities used for manufacture or
transportation, or shortage of labor, power, fuel or raw materials; (f) total or
partial shutdown due to normal plant turnaround (which, to the extent possible,
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shall be scheduled in accordance with Section 2.7.6. above); or (g) any other
unanticipated cause beyond the control of the Party failing to perform, whether
similar to or dissimilar from the enumerated causes (any such cause herein
called "Force Majeure"). In the event of a Party being rendered unable by Force
Majeure to carry out its obligations under this Agreement, other than any
obligation to make payments due hereunder, such Party shall give notice and full
particulars including the expected duration of such Force Majeure in writing or
by telegraph to the other Party not later than seventy-two (72) hours after the
occurrence of the cause relied on, and upon the giving of such notice the
obligations of the Party giving such notice, so far as they are affected by such
Force Majeure shall be suspended during the continuance of any inability so
caused (but for no longer period), and such cause shall be so far as possible
remedied with all reasonable dispatch. Upon the cessation of the cause or causes
for any such failure or delay, performance hereof shall be resumed, but such
delay shall not, except by mutual agreement. operate to extend the term of this
Agreement or obligate the Provider to make up deliveries or the Recipient to
purchase or receive quantities so missed. A Recipient shall continue to be
obligated for the fixed fee portion, if any, of the applicable Price during any
Force Majeure, regardless of whether the Force Majeure affects the Recipient or
the Provider. It is understood and agreed that the settlement of strikes or
lockouts involving the parties hereto shall be entirely within the discretion of
the Party having the difficulty, and that the above requirements that any Force
Majeure shall be remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands of the employees
involved, when such course is inadvisable in the discretion of the Party having
the difficulty. In no event shall a Provider be required to purchase Services
from third persons in the event it invokes one of the above mentioned Force
Majeure clauses, nor will it be liable for any cost increases suffered by the
Recipient in purchasing such Services from a third Party.
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4.10. USE OF EQUIPMENT. In the event that a Party hereto makes use of vehicles,
equipment, tools, the Fitness Center or other similar items of personal property
of the other Party hereto, other than Common Lines or Facilities (which are
provided for elsewhere in this Agreement), such use shall be at the sole risk of
the using Party. The using Party shall use due and reasonable care not to damage
or destroy such items, and shall return such items promptly and in the same
condition, ordinary wear and tear excepted. If a third Party or an employee of
the borrower of such equipment is injured by the borrower's use of such
equipment and makes a claim against the owner of the equipment, the borrower of
the equipment shall indemnify the owner of the equipment as set forth in Section
4.5 relating to Indemnification as to Claims of Third Parties.
4.11. ACKNOWLEDGMENT. Except as specifically stated herein, each Party hereto
assumes all risks and liability arising from receiving, unloading, discharging,
storing, handling, consuming and using of the Services contemplated for purchase
or sale under this Agreement.
4.11.1. Each Party agrees that it qualifies as a
"sophisticated user" of the same as the term "sophisticated user" has meaning
under the Laws.
4.11.2. Each Party hereto acknowledges that the other has
furnished to it Material Safety Data Sheets, including warnings and safety and
health information concerning the products and/or the containers for such
products provided to it hereunder. Each Party will disseminate such information
in a manner which will give warning of possible hazards to persons whom the
Party receiving the Service can reasonably foresee may have exposure to such
hazards, including, but not limited to, its employees, agents, contractors, and
customers, as appropriate.
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ARTICLE V: PAYMENT TERMS AND COVENANTS
--------------------------------------
5.1. PAYMENT TERMS.
5.1.1. TERMS. Variable Costs payment will be due on the 12th day
following receipt of the invoice; generally, Variable Costs will be invoiced on
the 1st day of the month following the month in which Service was received.
Fixed Plant Costs payment will be due on the 12th day following receipt of
invoice; generally, Variable Costs will be invoiced on the 1st day of the month
in which Services are received Payments which are made more than forty-five (45)
days after the date of invoice will bear interest at the prime rate in effect on
the first day of each calendar year.
5.1.2. INVOICES. The Recipient of a Service will turn in all required
meter readings on the first working day of the new month. The Recipient will
receive from the Provider, on the first or second work day, a single billing for
all Variable Costs for the prior month and Fixed Plant Costs for the current
month.
Variable Cost billings will be based on the prior month volume units
consumed priced at the actual cost from the month previous to the consumption
month.
Fixed Cost billings will include inflation for the prior calendar year
(will be applied to billings from February through January).
The Supplier will provide all Variable Cost pricing detail (utility
bills) with each month's bill. This should prevent any need to audit on the
Variable Cost areas.
5.1.3. TAXES. Any sales tax, use tax or similar tax which is incurred
by a Party as part of its costs of obtaining any Service which is provided
hereunder to the other Party shall be included in the costs to be reimbursed by
the Recipient, whether or not specifically included in the applicable exhibit.
If any sales tax, use tax or similar tax is imposed upon any Service provided
under this Agreement, the Recipient of such Service shall bear such tax in
proportion to its use of the Service.
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5.1.4. DISPUTES. A dispute concerning a portion of an
invoice will not relieve a Party of its obligation to pay the invoice timely as
to amounts not reasonably in dispute. The existence of a reasonable dispute will
not allow a Supplier to discontinue the provision of a Service to the Recipient.
The right to receive interest as set forth in Section 5.1.1. will be an
aggrieved Party's only remedy.
5.1.5. U.S. DOLLARS. All payments except as otherwise
provided will be in U.S. Dollars, deposited to the accounts designated by the
Parties.
5.2. RIGHT TO AUDIT. The Recipient of Services has the right annually, upon
request, to have an independent auditing firm having a nationwide operation (but
not Ernst & Young) review the books, records and other detailed supporting
information of the Party supplying the Services, for purposes of determining the
correctness of the Prices as to a particular Service. All such audits shall be
undertaken at reasonable times and in conformance with generally accepted
auditing standards. The information generated by such audit shall be
confidential information and treated as set forth in Section 4.8
("Confidentiality") hereof.
5.3. INSTALLATION OF METERS.
5.3.1. Each Plant Site shall arrange for installation of any
additional meters required for purposes of establishing the quantities consumed
needed to determine the Price under the Exhibits hereto, which shall be
installed at appropriate locations. The expense of such installation shall be
shared equally by Geon and BFG. The operation of such meters shall be consistent
with contemporary industry standards and practices for the accurate measurement
of the particular Service in question.
5.3.2. At reasonable intervals, the Parties shall calibrate
and test such meters and instruments. The expense of such calibration and
testing will be shared proportionally; except for the expense of such
calibration and testing on meters installed on Dedicated Lines and Facilities,
which will be for the expense of the owner.
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5.3.3. The Party not reading a meter shall have the right to
be present for such reading and a copy of such meter reading, shall be supplied.
5.3.4. Notwithstanding the foregoing, if for any reason the
meter is out of service, out of repair or is found registering inaccurately (off
by more than plus or minus two percent (2%)) and the duration of the error is
not determinable by ordinary tests, so that the quantity of the particular
Service in question delivered through such meter cannot be ascertained or
computed from the reading thereof, the quantity of the particular Service in
question delivered during the period the meter is out of service, out of repair
or is found to be registering inaccurately, shall be estimated and agreed upon
by the parties hereto upon the basis of the best available data, using the first
of the following methods which is feasible:
(a) By correcting the error if the percentage of error is ascertainable by
calibration, special test, or mathematical calculation; or
(B) By calculation based upon historical consumption and operating rates
(for example steam/#product); or
(c) By such other method as may be agreed by the parties hereto.
ARTICLE VI: GENERAL PROVISIONS
------------------------------
6.1. ASSIGNMENT. Except as permitted in this Section 6.1., neither this
Agreement nor any of the rights or duties under this Agreement may be assigned
or delegated by either Party hereto without the prior written consent of the
other Party. If one Party (the "Assignor") sells or transfers to any person or
entity (the "Assignee") all or substantially all of its assets within the Plant
Site, the other Party (the "Non-Assigning Party") agrees not to unreasonably
withhold its consent to the assignment of this Agreement to such Assignee,
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provided that such Assignee (i) continues to use such assets for substantially
the same purposes, (ii) covenants and agrees in writing with the Non-Assigning
Party that the Assignee is bound by, and will observe, perform and fulfill each
and every covenant, proviso, obligation, term and condition on the part of the
Assignor in this Agreement to the same extent as if the Assignee had been
originally named as a Party to this Agreement in the place and stead of the
Assignor, and (iii) assumes in writing each and every obligation and liability
of the Assignor under the Agreement and further undertakes and agrees to perform
and discharge all the obligations and liabilities of the Assignor arising under
the Agreement, all to the same extent as though the Assignee had been originally
named in the place and stead of the Assignor. If an Assignor sells or transfers
all or substantially all of its assets within the Plant Site, and if the
Assignee does not assume all the rights and perform all obligations under the
Service contracts between Assignor and the Non-Assigning Party under this Plant
Services Agreement related to the Plant Site, the Assignor will either continue
to perform those Service contracts for the benefit of the Non-Assigning Party,
or the Assignor will be liable to the Non-Assigning Party for all costs and
expenses, including Out-Of-Pocket Costs, incidental and consequential costs, and
lost profits, that the Non-Assigning Party incurs in replacing the Services.
A Party may withhold its consent, among other reasons, if the
proposed Assignee prior to assignment engages in material and direct competition
with the Non-Assigning Party, and the Non-Assigning Party can demonstrate direct
and substantial probable harm to its competitive position as a result of such
assignment and/or delegation.
The giving of consent to an assignment by the Non-Assigning
Party shall not be deemed to be a release of the Assignor, unless such release
shall be separately agreed to in writing by the Non-Assigning Party, nor shall
such consent be deemed to be a consent to or waiver with respect to any future
assignment by the Assignee.
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Notwithstanding any of the foregoing, BFG shall have the right
to assign this Agreement to a subsidiary of BFG without any consent from Geon In
such event, the term "BFG" as used herein shall include both BFG and such
subsidiary. Geon shall not have the right to assign to a subsidiary without
consent from BFG.
This Agreement shall be binding upon and insure to the benefit
of any authorized successor or assign, as set forth herein above.
6.2. AMENDMENT. This Agreement may be amended or modified only by an instrument
in writing duly executed by each of the parties hereto. No amendment or
modification shall be effected by acknowledgment or acceptance of any purchase
order or other forms at variance with this Agreement. The Parties agree that
from time to time the Parties and/or the Plant Site may agree upon a need to
modify, amend, supplement, or otherwise alter one or more of the Exhibits to
this Agreement. In such event, the Parties agree that each shall regard the
Exhibits as "living," in other words a substitute Exhibit agreed upon by both
Parties and bearing the signature of an authorized representative of each Party
can replace an Exhibit herein without need to republish this entire Agreement.
6.3. NON-WAIVER. Any waiver by either Party of any breach of, or failure to
comply with, any provision of this Agreement by the other Party shall not be
construed as, or constitute, a continuing waiver of such provision, or a waiver
of any other breach of, or failure to comply with, any other provision of this
Agreement.
6.4. NOTICES. Any notices or other communications required or permitted to be
given by any Party hereto to the other Party hereto pursuant to this Agreement
shall be in writing and shall be deemed to have been given when (i) delivered
personally to the Representative of such other Party designated below, (ii) when
deposited in the United States mail, certified or registered mail, postage
prepaid, return receipt requested, addressed to the
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Representative of such other Party designated below, or (iii) when transmitted
by facsimile to the other Party, with receipt by such Party confirmed by
telephone.
6.4.1. Notices or communications which relate to a request for
consent to assignment of all or a part of this Agreement, shall be given in
writing to the Representatives below:
If delivered to Geon, to:
President
The Geon Company
6100 Oak Tree Boulevard
Cleveland, Ohio 44131
Telephone: (216/447-6547)
Fax: (216/447-6146)
with a copy to:
Vice President, General Counsel
The Geon Company
6100 Oak Tree Boulevard
Cleveland, Ohio 44131
Telephone: (216/447-6001)
Fax: (216/447-6146)
If delivered to BFG, to:
President, Specialty Polymers & Chemicals Division
The B.F.Goodrich Company
9911 Brecksville Road
Cleveland, Ohio 44141-3247
Telephone: (216/447-5777)
Fax: (216/447-5730)
with a copy to:
Division Counsel, Specialty Polymers & Chemicals Division
The B.F.Goodrich Company
9911 Brecksville Road
Cleveland, Ohio 44141-3247
Telephone: (216/447-5798)
Fax: (216/447-5730)
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6.4.2. Notices or communications other than a request for
consent to assignment of this Agreement as it relates to the Plant Site shall be
given to the designated Plant Site Representative for the Plant Site, as
designated below, with copies to:
If delivered to Geon, to:
Vice President, Operations
The Geon Company
6100 Oak Tree Boulevard
Cleveland, Ohio 44131
Telephone: (216/447-6332)
Fax: (216/447-6146)
with a copy to the Vice President, General Counsel,
The Geon Company
If delivered to BFG, to:
Vice President, Finance
Specialty Polymers & Chemicals Division
The B.F. Goodrich Company
9911 Brecksville Road
Cleveland, Ohio 44141-3247
Telephone: (216/447-5888)
Fax: (216/447-5710)
with a copy to the Division Counsel, SP&C Division of BFG
6.4.3. CALVERT CITY PLANT SITE REPRESENTATIVES. Notices
which affect the Calvert City Plant shall be given to the following
Representatives:
If delivered to Geon, to: The Geon Company Plant Manager
with a copy to the Vice President, General Counsel, The Geon Company
If delivered to BFG, to: The B.F.Goodrich Company Plant Manager
with a copy to the Division Counsel, Specialty Polymers & Chemicals
Division
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6.5. GOVERNING LAW. This Agreement shall be construed and enforced in accordance
with and shall be governed by the Laws of the State of Ohio and of the United
States of America, without giving effect to the principles of conflict of Laws
thereof.
6.6. THIRD PARTY RIGHTS. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person other than the parties
hereto any rights or remedies under or by reason of this Agreement.
6.7. SEVERABILITY. If any term of this Agreement or the application thereof to
any person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such term to any other Party,
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by Law.
6.8. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
6.9. EXHIBITS. The Exhibits to this Agreement which are attached hereto and
referred to herein shall be deemed to be part of this Agreement for all
purposes. It is contemplated that various Exhibits may need to be amended from
time to time. Such amendments will be in a writing executed by appropriate
Representatives of each Party.
6.10. DISPUTE RESOLUTION. AlI disputes arising in connection with this Agreement
will be settled as set forth below. The parties agree that no disputes will be
submitted to litigation in any court, unless a Party shall refuse or
unreasonably delay in going forward with the alternative dispute resolution
procedures set forth herein.
6.10.1. MEDIATION BETWEEN PARTIES. The Parties agree to use their best
efforts to resolve between themselves any controversy or dispute arising out of
or in connection with this Agreement, its interpretation, performance, or
termination. Disputes will be resolved by discussions at the Plant Site level,
appealing to the Plant Managers. If unresolved, then
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by discussions at the home office and appealing to the chief manufacturing
managers of each Party. If still unresolved, then by discussions between the
presidents of the respective Parties. If those efforts are unsuccessful, the
Parties will submit to binding arbitration before arbitrators chosen as set
forth below.
6.10.2. ARBITRATION. Any controversy or dispute arising out of or in
connection with this Agreement, its interpretation, performance, or termination,
which the Parties are unable to resolve within a reasonable time after written
notice by one Party to the other of the existence of such controversy or
dispute, may be submitted to arbitration by either Party and, if so submitted by
either Party, shall be finally settled by arbitration in accordance with the
rules of arbitration of the American Arbitration Association ("AAA") in effect
on the effective date of this Agreement. Such arbitration shall be conducted
before a single arbitrator selected as set forth herein. Any such arbitration
shall take place in the City of Cleveland, Ohio, United States of America. The
arbitrator shall apply the laws of the State of Ohio. The institution of any
arbitration proceeding hereunder shall not relieve the Parties of their
obligations hereunder during the continuance of such proceeding. The decision by
the arbitrator shall be binding and conclusive upon the Parties, their
successors, and assigns and they shall comply with such decision in good faith.
The award of the arbitrator may include compensatory damages as set forth in
this Agreement (generally, Article IV) against either Party, but under no
circumstances shall the arbitrator award punitive or multiple damages against
either Party. Each Party hereby submits itself to the jurisdiction of the courts
of the place where the arbitration is held, but only for the entry of judgment
with respect to the decision of the arbitrator hereunder. Notwithstanding the
foregoing, judgment upon the award may be entered in any court having
jurisdiction.
The Parties will choose an arbitrator who is knowledgeable in the
subject matter of the dispute. For example, if the dispute involves a pricing
issue, arbitrators with financial
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or accounting expertise will be chosen. If the dispute involves compliance with
environmental Laws, legal and/or technical experts knowledgeable about
environmental compliance will be chosen. The Parties will attempt to choose an
arbitrator by mutual agreement. If agreement cannot be reached within thirty
(30) days after written notice demanding arbitration is given, then each Party
within five (5) days will choose one arbitrator, and these two arbitrators
within five (5) days will choose a third arbitrator, who will be the sole
arbitrator to hear and decide the matter. If the two arbitrators cannot agree
upon the third arbitrator within five (5) days, then the Parties shall ask the
AAA to submit a listing of ten (10) potential arbitrators who the AAA shall have
preliminarily cleared of potential conflicts of interest as to either of the
parties. The parties shall flip a coin, winner proceeding first, and
alternatively strike potential arbitrators until only three remain, who shall
then hear the arbitration in Greater Cleveland, Ohio, unless the Parties shall
mutually agree upon an alternate site. The Parties will share the costs and
expenses of the arbitrators equally.
6.11. MATERIAL OMISSION. The Parties acknowledge that a possibility exists that
the Parties have neglected to address an aspect of the providing of Services, or
the possible need for a particular Service not enumerated or subject to an
Exhibit herein. Should such an eventuality come to pass, the Parties will, upon
request of either Party, meet and negotiate in good faith to arrive at an
arrangement which would substantially correct the omission on an equitable and
economically fair basis. No Party shall have an obligation to agree to provide
or receive any particular Service however, nor shall a Party have an obligation
to agree at all on a mechanism for addressing an omission.
6.11.1. NEGATION OF PARTNERSHIP. Nothing contained herein
shall operate as creating an agency, partnership, co-partnership or joint
venture relationship between the Parties to this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their behalf by their duly authorized officers as of the date and year first
written above.
THE GEON COMPANY
By: /S/ Gregory L. Rutman
--------------------------
Name: Gregory L. Rutman
Title: Vice President and General Counsel
THE B.F. GOODRICH COMPANY
By: /S/ Jon V. Heider
---------------------
Name: Jon V. Heider
Title: Senior Vice President and
General Counsel
28 April 93
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EXHIBIT 1.1.
Exhibit 1.1., which generally describes the real property boundaries of
the BFG Assets and the Geon Assets, will be attached at a later date.
54
March 15, 1993
FINAL VERSION
GVD/SP&C SERVICE CONTRACT FINANCIAL TERMS
-----------------------------------------
LONG TERM CONTRACTS: (GENERALLY UTILITY & INFRASTRUCTURE)
SHORT TERM & TRANSITIONAL:
Provider charges recipient their portion of "1993 Full plant Cost
Less: any Early 1993 Separation Program Headcount Reductions"
FULL PLANT COST DEFINED:
o All traditional costs captured in the operating Department statements
of GVD & SP&C including Base Cost categories of Labor, Benefits,
Maintenance, Overheads, Insurance (both premium & self insurance
reserves), Taxes, Rent, & Depreciation. (Excludes any variable inputs
that are noted in the specific service contract to be billed
separately)
o A reasonable proportion of Plant Administration, HR, Accounting, MIS
etc. which legitimately support the area of service being provided but
have been direct charged to the manufacturing departments in the
plant. (It is intended that neither Division will be negatively
impacted by this re-allocation.)
o Excludes any allocations from Cleveland for costs such as Benefit
Administration, MRO Purchasing Support, Lights Out Computer Support,
etc. that have not been allocated to the Plant in the past.
o Asbestos removal expenses at Utility/Service facilities will be shared
in the same proportion as cost is shared. Will be billed as incurred.
o Calvert City - Calvert will include a 10% return on net capital
employed. Calvert's depreciation will be adjusted annually to actual
with generally no price level adjustment applied to Calvert Costs.
GENERAL FINANCIAL GUIDELINES EXHIBIT 1.1.18 Pp 1 of 6
55
COST INDEXING OVER TIME:
All costs, except those specifically excluded below, will be adjusted
annually in February based on the change in agreed upon indices for the
prior December 31 to December 31 period. (Data is available in mid-January
and will be calculated by Provider home office, reviewed by recipient home
office, then communicated to the Plants - all Plants will use the same
index)
Indices to be used:
- 33% Employment Cost Index - Private Industry
- 67% Producer Price Index -Total Finished Goods Excluding Consumer
Foods.
Historical Impact:
Emp Cost PPI Weighted Average
1983 5.7 1.8 3.1
1984 4.9 1.4 2.6
1985 3.9 1.4 2.2
1986 3.2 (2.6) ( .7)
1987 3.3 2.1 2.5
1988 4.8 2.4 3.2
1989 4.8 5.0 4.9
1990 4.6 5.0 4.9
1991 4.4 3.0 3.5
1992 3.1 1.7 2.1
Costs Excluded From Indexing:
- Transitional Contracts with terms of 2 years or less.
- Variable Costs - based on actual such as electric,
coal, gas, purchased steam, etc. (Detail provided with billings)
- Henry - Boiler Depreciation
- Waste Treating - All Costs Based on Actual
- Calvert City - Most costs will be based on actual.
VARIABLE COSTS - Utility & Certain Other Variable Inputs
The variable portion of utility charges will be based on the
estimated/actual metered consumption for each unit summed up and
proportioned to the overall consumption at the site multiplied by the total
actual costs of the energy source provided to the site by the service
provider. (The intent is to fairly allocate any line losses, internally
consumed steam, transformer step down losses, etc.) This adjustment factor
that rolls up from metered to billed consumption will be established at the
beginning of the contract period and then will be adjusted as better
information becomes available and to the extent the recipient chooses to
GENERAL FINANCIAL GUIDELINES EXHIBIT 1.1.18 Pp 2 of 6
56
participate in efficiency capital projects.
BUSINESS DISCONTINUANCE:
"Full Plant Cost" - to be incurred by either party over the contract term
will continue to be incurred by that party even if its operational
activity declines or ceases. The declining or closed business is entitled
to cost relief to the extent that the service can be operated at less
cost by the supplier because of the reducing parties reduced activity or
closure. Should the continuing party increase its utilization of the
assets in question, the ongoing cost to the reduced or closure party will
be reduced by the amount absorbed by the increased activity.
Variable Cost Penalties - The party that causes increases in the per unit
variable cost of an energy source due to the discontinuance of an
operation at the site will bear the cost of this increased unit amount
for the balance of the applicable contract period. (Remaining parties
should not see cost increases due to reduced energy source take.) If the
continuing party or parties increase their utility consumption at the
site the ongoing cost being absorbed by the discontinued party will be
reduced by the amount absorbed by the increased activity.
Required Investment - Should a reduction or closure of activity at a site
create investment requirements on the part of the continuing party to
maintain compliance with regulatory requirements, the cost of that
investment will be borne by the reducing party.
CAPITAL EXPENDITURES:
Maintenance Capital will be borne by the provider.
Expansion of Activities - Provider is not required to supply capacity
beyond existing system capability. Generally capital required due to
expansion of activities will be borne by the expanding party subject to
certain rules on the sharing of excess capacity prior to required
expansion. Capacity expansion will require negotiation at the time the
need is identified.
Regulatory Requirements - For capital investments required due to
Regulatory, legal, or other mandatory obligations the capital investment
will be made by the provider but will be funded (cash provided) based on
the party to which the regulation is directed, shared based on relative
contribution, or shared consistent with their utilization of the asset
depending on circumstances.
GENERAL FINANCIAL GUIDELINES EXHIBIT 1.1.18 Pp 3 of 6
57
Productivity & Cost Reduction Capital - The provider of the services
will propose the investment opportunities to the recipient and will make
the capital investment. The provider will, in appropriation request form,
clearly and in detail identify the source (base cost or variable cost
efficiency) of the expected savings from the project.
The recipient will have two choices:
o Provide cash up front on a shared basis and receive its pro-rata
share of the benefits.
o Don't elect to provide cash on its pro-rata share and don't
receive any of the benefits.
The recipient will respond to any productivity or cost savings
proposals in a timely manner. (3 weeks)
HARDSHIP - Defined as Unforeseen Economic Conditions not addressed under
previous terms listed above in the Financial Terms and not covered
elsewhere in the agreement (such as force majeure, law changes, etc.).
Hardship can be invoked by provider or recipient of the services.
Materiality Triggers:
1) A significant event occurs which causes the hardship question to
be raised.
2) A 20% increase or decrease in the "Full Plant Cost" of the
specific service contract under discussion. (This 20% threshold
is tested against the original service contract Full Plant Cost
+- cumulative cost index adjustments up to the period when the
event occurs)
When the triggers are satisfied "Full Plant Cost" will be recalculated
and used beginning at the first day of the month following the significant
event month.
The audit provision, discussed later, could be invoked here. In the
event of disagreements that cannot be resolved internally a third party
arbitrator may be used.
GENERAL FINANCIAL GUIDELINES EXHIBIT 1.1.18 Pp 4 of 6
58
RELIEF FOR POOR QUALITY SERVICE - The service recipient is generally entitled to
a quality of service equal to that which was being enjoyed prior to the
separation unless specified differently in the specific service contract
language. In the event of service quality deterioration the service
supplier must make good faith efforts to resolve the issue. If the problem
is not corrected within a reasonable time, the recipient is entitled to
cost relief. (The scope of cost relief is covered in the omnibus but
generally limits relief to out of pocket costs with no punitive damages.)
If the recipient feels they have a quality issue they should follow
the following procedure:
o Try to resolve it with the manager offering the service. If this
fails -
o Raise the issue between the Plant Managers at the site. If this
fails -
o Raise the issue to Home Office level manufacturing management
(Higby, LaCosse, Fletcher, etc)
o Home Office Level Management will raise the issue
jointly to the President level if required.
o Arbitration
Both GVD & SP&C management desire good working relationships between
GVD & SP&C employees at the plants. We expect the plant personnel to work
out most of these issues without raising them to Home Office.
PAYMENT TERMS:
VARIABLE COSTS - 12 calendar days following the end of the month.
FIXED PLANT COSTS - 12th calendar day of the month being billed.
The recipient of service will turn in all required meter readings on
the first working day of the new month.
The recipient will receive on the first or second work day a single
billing for all variable costs for the prior month and fixed costs for the
current month.
Variable Cost billings will be based on the prior month volume units
consumed priced at the actual cost from the month previous to the
consumption month.
Fixed Cost billings (Inflation for the prior calendar year will be
applied to billings from February through January)
GENERAL FINANCIAL GUIDELINES EXHIBIT 1.1.18 Pp 5 of 6
59
AUDIT -
Supplier will provide all variable cost pricing detail (utility bills)
with each months bill. This should prevent any need to audit on the
variable cost areas.
For Fixed Costs the recipient of service has the right upon request to
have a third party audit of cost for any particular contract. (Generally to
be invoked as part of the hardship clause)
GENERAL FINANCIAL GUIDELINES EXHIBIT 1.1.18 Pp 6 of 6
60
FOLLOWING ARE THE
CALVERT CITY PLANT EXHIBITS
TO THE
PLANT SERVICES AGREEMENT
BETWEEN
THE GEON COMPANY
AND
THE B.F.GOODRICH COMPANY
EXHIBIT 3.3
61
ENVIRONMENTAL SERVICES AGREEMENT
--------------------------------
CALVERT CITY
------------
I. WASTEWATER TREATMENT SERVICES
-----------------------------
A. BACKGROUND
The Wastewater discharge to the Tennessee River is covered by
The BFGoodrich Company Permit KY0003848 issued by Kentucky on
October 1, 1992 (hereafter the "Permit"). The Permit contains
numerous prohibitions and specific discharge limitations.
B. PERMITTEE
BFG shall be the permittee.
C. DELIVERY POINT
The Delivery Point for the "C" stripper shall be the internal
discharge point 002.
D. SPECIFIC SERVICES
1. The following Services shall be provided to Geon by
BFG:
a. Wastewater collection and conveyance from
the Delivery Point, including:
i. Sampling of the 002 discharge and
the final discharge
ii. Discharge to the Tennessee River
b. Analytical data as required by the Permit
c. Administration of the Permit
2. Geon shall provide technical input and information
relative to Geon activities and Wastewaters as may be
necessary for BFG to provide the above-specified
Services or for BFG to conform to any provisions,
conditions or limitations of the Permit or any other
regulatory requirement.
3. BFG shall provide Geon technical information relative
to the Treatment System's performance and operation
in order to allow Geon to meet its obligations
hereunder.
CALVERT CITY
EXHIBIT 3.3(A) Page 1 of 4
62
E. WASTEWATER SPECIFICATIONS
Geon shall cause the aquifer stripper to be operated in a
manner that will assure compliance with the discharge limits
at internal outfall 002.111 order to achieve this result, the
effluent from the "C" stripper to outfall 002 shall meet the
OCPSF (Organic Chemicals, Plastics, Synthetic Fibers) effluent
guidelines.
F. COST
TO BE DETERMINED BY THE FINANCIAL PEOPLE. MAY BE NO COST - OR
AN EVEN TRADE.
G. DURATION OF SERVICE
BFG shall provide the above-specified Services to Geon for an
initial term ending February 29, 2000. If either party intends
to terminate this Service at the end of the initial term, it
shall provide 36 months notice to the other Party. Otherwise,
this agreement shall continue from year to year until either
Party provides written notice to the other of its intent to
terminate in which case the agreement will terminate 36 months
from such notice.
II. RCRA, SUPERFUND AND OTHER REMEDIAL ACTIVITIES
---------------------------------------------
A. Geon shall be the permittee of the RCRA and HSWA ("Hazardous
and Solid Waste Amendments") permits.
B. Geon shall have a person assigned to the facility who is
responsible for the direction and control of all activities
conducted in connection with Geon's ownership and operation of
environmental equipment and other activities for which Geon is
responsible at Calvert City, including but not limited to:
1. The RCRA and HSWA post-closure permits, including but
not limited to the closed disposal area across
Highway 1523, the closed wastewater ponds, and the
aquifer stripper (including all groundwater
withdrawal wells and header systems)
2. The Superfund site
3. Any other environmental issues arising on Geon's
property or under the amended and restated Assumption
of Liabilities and Indemnification Agreement relating
to the Goodrich PVC business.
C. To the extent that BFG has utilities and properly-trained
manpower available at the Plant Site, BFG will make available
to Geon at Geon's expense the following services:
1. Utilities necessary to maintain and operate the
equipment and activities described in II B. above,
to the extent there is capacity to provide same.
2. Manpower as requested by Geon to maintain and operate
the equipment and activities described in II B.
above. Geon shall be responsible for
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CALVERT CITY
EXHIBIT 3.3(A) Page 2 of 4
63
determining what kind of training is appropriate to
be given to "properly-trained" workers, and Geon
shall reimburse BFG for the cost of delivering such
training.
D. DURATION
With the exception of the operation of the aquifer stripper,
the parties shall provide the above-specified Services to Geon
for an initial term ending February 29, 2000. If either party
intends to terminate this Service at the end of the initial
term, it shall provide 36 months notice to the other Party.
Otherwise, this agreement shall continue from year to year
until either Party provides written notice to the other of its
intent to terminate in which case the agreement will terminate
36 months from such notice. Geon shall not terminate the
operation of the aquifer stripper without first obtaining
consent from BFG, which consent will be given when BFG
determines that the RCRA and HSWA permits or other applicable
laws do not require further groundwater remediation. Provided,
however, that if there is a subsequent legal requirement to
recommence operation of the aquifer stripper to remediate the
current contaminants, Geon will restart the aquifer stripper
and continue to operate the aquifer stripper at Geon's cost as
if a cessation had not occurred.
E. COST - TO BE DETERMINED BY THE FINANCIAL PEOPLE. HOW WILL
MANPOWER AND UTILITY COSTS BE REIMBURSED?
III. STORMWATER MANAGEMENT SERVICES
------------------------------
A. BACKGROUND
Stormwater, non contact cooling water and other non
contaminated waters are discharged to the Tennessee River
through outfalls 004, 005 and 006 in accordance with KYPDES
permit KY003848. The permit establishes discharge quality
limits and requires periodic sampling, analysis and reporting.
The following provisions were drafted based on the assumption
that there would be a facility-wide permit and that each Party
would not need an individual stormwater permit.
B. FACILITY-WIDE PERMIT
1. Permitee. BFG shall be the permittee for all
stormwater discharges.
2. Delivery Point. The Delivery Point for Geon's
stormwater shall be its property boundary.
3. Specific Services. BFG shall administer the permit
and any modifications including but not limited to
preparation of applications for modification and
renewal, sampling, analysis, reporting and agency
interface.
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CALVERT CITY
EXHBIT 3.3(A) Page 3 of 4
64
4. Cost Mechanism.
5. Duration of Service. BFG shall continue to provide
this Service to Geon for an Initial term ending
February 29, 2000. if either party intends to
terminate this Service at the end of the initial
term, it shall provide 36 months notice to the other
Party. Otherwise, this agreement shall continue from
year to year until either Party provides written
notice to the other of its intent to terminate in
which case the agreement will terminate 36 months
from such notice.
C. FACILITY-WIDE OR INDIVIDUAL PERMIT
1. Geon shall provide BFG technical input and
information relative to the Geon's stormwater as may
be necessary for BFG to maintain its permit for
stormwater or for BFG to conform to any provisions,
conditions or limitations of its stormwater permit or
any other regulatory requirement. if each Party
requires a permit, BFG shall have the same obligation
to Geon.
2. At the request of BFG, Geon shall each develop and
implement a written stormwater protection plan based
on best management practices.
IV. OTHER ENVIRONMENTAL SERVICES
----------------------------
A. To the extent combined reports are required for calendar year
1992 and 1993, BFG shall prepare and submit the following
reports at no charge to Geon.
1. SARA Title III annual reports
2. Annual RCRA hazardous waste generator report
3. CMA annual solid waste survey
4. Kentucky air emission inventory
B. Geon shall provide technical input and information as
necessary for BFG to prepare the above-specified reports.
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CALVERT CITY
EXHIBIT 3.3(A) Page 4 of 4