ANHYDROUS AMMONIA SALES AGREEMENT Exhibit 10.1
****INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN
OMITTED FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE
COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE
COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY
WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR
PURPOSES OF SUCH REQUEST.
THIS AGREEMENT is entered into as of the 28th day of May,
1997, to be effective January 1, 1997, between ▇▇▇▇ NITROGEN
COMPANY, a Nebraska corporation, with principal offices at ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (herein called
"▇▇▇▇") and EL DORADO CHEMICAL COMPANY, an Oklahoma corporation,
with principal offices at ▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (herein called"Buyer");
WITNESSETH:
WHEREAS, as specified in this Agreement, Buyer and ▇▇▇▇
desire to enter into an anhydrous ammonia sales agreement under
which ▇▇▇▇ agrees to supply to Buyer and Buyer agrees to take and
pay for, or to pay for if not taken, a Required Yearly Quantity
of anhydrous ammonia; and
WHEREAS, as specified in this Agreement, Buyer will take
delivery of such Required Yearly Quantity in approximately equal
monthly quantities throughout the term of this Agreement; and
WHEREAS, as specified in this Agreement, ▇▇▇▇ shall charge
Buyer a price for each Ton to be taken or paid for hereunder
based upon the pricing formula set out in this Agreement; and
WHEREAS, as specified in this Agreement, Buyer shall be
responsible for all taxes related to such quantities of anhydrous
ammonia and for all transportation charges beyond the Delivery
Point hereunder; and
WHEREAS, the parties desire to state their agreements in
writing:
NOW THEREFORE, in consideration of the mutual promises
herein contained, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
I. DEFINITIONS
Whenever used in this Agreement, the following terms shall
have the following respective meanings:
A. "Agreement" shall mean this Anhydrous Ammonia Sales
Agreement between ▇▇▇▇ and Buyer.
B. "Ammonia Pipeline Transportation Charge" shall mean
▇▇▇▇'▇ actual Product pipeline transportation cost from
▇▇▇▇'▇ Sterlington, Louisiana ammonia production
facility to the pipeline Delivery Point.
C. "Contract Price" shall mean the price stated in Article
VI, Section A.
D. "Contract Year" shall mean: (i) each of the three (3)
twelve (12) Month periods during the term hereof, the
first of which shall begin on the Effective Date and
shall end on December 31, 1997 and the following two
(2) twelve ( 12) month periods until December 31, 1999
and (ii) the four (4) month period from January 1, 2000
to April 30, 2000.
E. "Conversion Factor" shall mean ****
F. "Deficiency Volumes" shall mean the definition stated
in Article III, Section B.
G. "Delivery Point" shall mean (i) for pipeline
deliveries, the discharge side of the Product meter
owned by ▇▇▇▇ Pipeline Company, L.P. at Buyer's El
Dorado, Arkansas chemical production facility, or (ii)
for rail or trucking deliveries, the point at Buyer's
facility where the truck or rail cars come to rest, or
(iii) another delivery point along ▇▇▇▇ Pipeline
Company, L.P.'s ammonia pipeline, provided Buyer gives
▇▇▇▇ at least forty-five (45) days written notice prior
to the date it wishes to begin delivery at such
alternate delivery point.
H. "Effective Date" shall mean January 1, 1997.
I. "Fixed Charge" shall mean ****
J. "Gas Price" shall mean (MMBTU Price + Transportation
Charge) multiplied by the Conversion Factor.
K. "▇▇▇▇ Facility" shall mean ▇▇▇▇'▇ anhydrous ammonia
production facility at Sterlington, Louisiana.
L. "Maximum Take Quantity" shall mean the definition
stated in Article VII, Section A.
M. "Minimum Take Quantity" shall mean the definition
stated in Article VII, Section A.
N. "MMBTU Price" shall mean the "▇▇▇▇▇ Hub" Index price in
MMBTU's reported under the table entitled "Market
Center Spot-Gas Prices" in the first issue of Inside
FERC's Gas Market Report for the Month of delivery. If
Inside FERC's Gas Market Report and/or the "▇▇▇▇▇ Hub"
Index price are no longer published, the parties shall
meet within 30 days of the date such publication ceases
to determine a new publication and/or index.
O. "Month" shall mean a calendar month.
P. "Monthly Quantity" for any given Month during the term
of this Agreement shall mean 10,000 Tons/Month.
Q. "Product" shall mean commercial anhydrous ammonia
having the following specifications:
Ammonia (NH3) Content: 99.5% by weight minimum
Oil: 5 ppm maximum by weight
Water: 0.2% by weight minimum; 0.5%
by weight maximum
Inerts: 0.5 cc per gram maximum
R. "PPI" shall mean the Producer Price Index for Chemicals
and Allied Products published by the United States
Department of Labor.
S. "Required Yearly Quantity" shall mean one hundred
twenty thousand (120,000) Tons per Contract Year,
except for the four (4) Month period from January 1,
2000 to April 30, 2000 where it shall be defined as
forty thousand (40,000) Tons per Contract Year.
T. "Taxes" shall mean the definition set forth in Article
VIII, Section A.
U. "Ton" shall mean a short ton of two thousand (2,000)
pounds avoirdupois.
V. "Transportation Charge" shall mean ▇▇▇▇'▇ actual
natural gas transportation charge, including fuel, from
▇▇▇▇▇ Hub to ▇▇▇▇'▇ Sterlington, Louisiana ammonia
facility, which as of the Effective Date of this
Agreement is ****, subject to adjustments under
Article Vl, Section B, below.
W. "Weighted Average Monthly Gas Price" shall mean (i) the
sum of the (Gas Price x Tons of Product actually taken
by Buyer) for each Month of the subject Contract Year
divided by (ii) the total Tons of Product actually
taken by Buyer during the subject Contract Year,
provided if Buyer fails to take any Product during a
Contract Year, the total amount taken during each Month
shall be deemed to be the Monthly Quantity and the
total amount take during the Contract Year shall be
deemed to be the Required Yearly Quantity.
X. "Yearly Contract Price" shall mean the price per Ton of
Product equal to the sum of (i) the Weighted Average
Monthly Gas Price, plus (ii) the Fixed Charge, for the
applicable Contract Year.
II. TERM
This Agreement shall continue and remain in full force and
effect for a term of forty (40) Months commencing on the
Effective Date and ending April 30, 2000.
III. QUANTITY TO BE SOLD AND PURCHASED
A. Purchase Obligation. Subject to Article III, Section B,
Article VII, Section A and Article IX below, during
each Contract Year, ▇▇▇▇ agrees to sell and deliver to
Buyer and Buyer agrees to take and pay for, or pay ▇▇▇▇
the Contract Price if not taken, the Required Yearly
Quantity of Product. If during any Month of a
particular Contract Year, ▇▇▇▇ fails to deliver the
volume of Product requested by Buyer for such Month, up
to the Maximum Take Quantity, and such failure to
deliver is not otherwise excused by another provision
of this Agreement, Buyer's Required Yearly Quantity for
the Contract Year shall be reduced by the quantity of
Product ▇▇▇▇ failed to deliver during such Contract
Year. In addition, if for two (2) consecutive Months
during the term of this Agreement, ▇▇▇▇ fails to
deliver a minimum of eighty percent (80%) of the
Product volumes requested by Buyer for the particular
Months (up to the Maximum Take Quantity), for any
reason other than a Force Majeure event or for an event
where ▇▇▇▇'▇ performance is excused hereunder, then
Buyer shall have the right to terminate this Agreement
by providing ▇▇▇▇ written notice within ten (10) days
of the end of the second Month where ▇▇▇▇ failed to
provide at least eighty percent (80%) of Buyer's
requested Product volumes.
B. Make-up Rights. Subject to Article VII, Section B
below, if during any Contract Year Buyer fails to take
the Required Yearly Quantity (the difference between
the Required Yearly Quantity and the quantity actually
taken shall be referred to hereafter as the "Deficiency
Volumes"), Buyer shall have the right to take delivery
of the Deficiency Volumes during the twenty-four (24)
months following the Contract Year it failed to take
such Deficiency Volumes, including after the term of
this Agreement expires. Buyer's take of any Deficiency
Volumes shall be in addition to its take obligations of
the Required Yearly Quantity for the subject Contract
Year. If Buyer elects to take delivery of Deficiency
Volumes during the twenty-four (24) Months following
the Contract Year it failed to take the Deficiency
Volumes, in addition to the Yearly Contract Price paid
in the Contract Year it failed to take the Deficiency
Volumes, Buyer shall pay ▇▇▇▇ the product of the (i)
difference between the Contract Price for the Month
Buyer actually takes delivery of Deficiency Volumes and
the Yearly Contract Price paid by Buyer in the Contract
Year it failed to take the Deficiency Volumes
multiplied by (ii) the Tons of Deficiency Volumes
actually taken in the subject Month of the following
Contract Year. If Buyer elects to take Deficiency
Volumes after this Agreement's term expires, Buyer
shall pay ▇▇▇▇, in addition to the Yearly Contract
Price paid in the Contract Year it failed to take the
Deficiency Volumes, the product of (i) the difference
between the Contract Price for the Month it actually
takes delivery of any Deficiency Volumes calculated as
if the term of this Agreement had been extended to such
Month and the Yearly Contract Price paid by Buyer in
the Contract Year it failed to take the Deficiency
Volumes multiplied by (ii) the Tons of Deficiency
Volumes actually taken during the subject Month after
this Agreement's term expires. If Buyer elects not to
take Deficiency Volumes as set forth in this Section B,
it waives any rights to take the Deficiency Volumes at
a later date.
C. No Duty to Mitigate. It is understood and agreed by
Buyer that its obligation to pay for Product it elects
not to take during any Contract Year is not in the
nature of damages. Rather, such a payment constitutes
an alternative measure of performance elected by Buyer.
This alternative measure is designed to compensate ▇▇▇▇
for the risk of producing, procuring and supplying the
Product, while it is expressly understood that Buyer
has accepted the market risk associated with such a
contract. Therefore, if Buyer fails to take or to pay
for the Required Yearly Quantity not taken in any
Contract Year, ▇▇▇▇ shall have no duty or obligation to
resell or otherwise mitigate its potential losses
arising from Buyer's failure to perform its contractual
obligations.
D. Measurement. The quantity of Product delivered
hereunder to Buyer by pipeline shall be governed by the
weights and measures taken by meters owned by ▇▇▇▇
Pipeline Company, L.P. at the Delivery Point pursuant
to ▇▇▇▇ Pipeline Company, L.P.'s tariff in effect on
the date of delivery. For trucking or rail deliveries,
the quantity of Product delivered to Buyer shall be
governed by the weights and measures taken as the
trucks or rail cars are loaded at the ▇▇▇▇ Facility.
The foregoing measurements of said quantities shall be
final and conclusive, unless proven to be in error.
E. Refund. If Buyer and ▇▇▇▇ execute this Agreement by
June 1, 1997, within five (5) business days of ▇▇▇▇
receiving payment from Buyer for Product purchased in
May 1997, ▇▇▇▇ shall refund to Buyer the difference
between (i) the total price paid by Buyer for Product
purchased from ▇▇▇▇ from the Effective Date until the
date the Contract Price becomes effective hereunder and
(ii) the total Tons of Product purchased by Buyer from
▇▇▇▇ from the Effective Date until the date the
Contract Price becomes effective hereunder multiplied
by the lower of (x) the Contract Price and (y) the
"Green Markets-Gulf Coast Low Average", less three
percent (3%). The "Green Markets Gulf Coast Low
Average" shall mean the average of the weekly lows of
the ranges of "Green Markets" Price Scan, Northern
American Domestic Spot Quotes, U.S. Gulf New Orleans,
FOB Barge for the Month of delivery.
IV. QUALITY
All Product delivered hereunder shall conform to the
specifications set forth in Section Q of Article I. All claims
by Buyer that any Product delivered hereunder does not conform to
the specifications set forth in said Section Q, shall be made in
writing and sent within thirty (30) days of ▇▇▇▇'▇ delivery of
such Product to the Delivery Point. Failure to give written
notice of such claim within the specified time shall constitute a
waiver and bar of and to such claim, and Buyer shall be precluded
from relying on defects which are not stated in such notice as a
basis for rejection or assertion of a breach.
V. WARRANTIES
▇. ▇▇▇▇ makes no warranty of any kind, express or implied,
except that Product sold hereunder shall conform to the
specifications set forth in Section Q of Article I and
that ▇▇▇▇ will convey good title thereto, free from any
lien or security interest. ▇▇▇▇ ASSUMES NO OTHER
LIABILITY WITH RESPECT TO PRODUCT AND MAKES NO OTHER
WARRANTY WHETHER OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR OTHERWISE, EXPRESSED OR IMPLIED,
WITH RESPECT THERETO.
B. Neither party shall be liable, under any circumstances,
for any special, indirect, incidental, consequential
(including but not limited to, loss of profits or any
similar damages) or punitive or exemplary damages
arising out of this Agreement, except for third party
personal injuries and property damage which are deemed
by applicable law to be consequential damages. In no
event shall the amount of any claim by Buyer, whether
for failure to meet the specifications, for non-
delivery, or for any other reason, be greater than the
actual replacement costs of the Product for the
particular shipment. In this regard, Buyer's sole and
exclusive remedy for any breach of this Agreement by
▇▇▇▇ shall be, at ▇▇▇▇'▇ option, replacement of any
nonconforming product at the Delivery Point or payment
not to exceed the replacement price of the Product.
Buyer shall use reasonable efforts to obtain reasonably
priced replacement Product.
Vl. PRICE AND PAYMENT
A. Contract Price. For each Ton of Required Yearly
Quantity to be sold to Buyer hereunder, ▇▇▇▇ shall
charge, and Buyer shall pay to ▇▇▇▇ the following
Contract Price:
****
B. Transportation Charge Adjustment. The Transportation
Charge component of the Gas Price shall be increased or
decreased whenever ▇▇▇▇ incurs a cost change to reflect
▇▇▇▇'▇ actual natural gas transportation costs
(including fuel) from ▇▇▇▇▇ Hub to ▇▇▇▇'▇ Facility.
C. Fixed Charge Adjustment. The Fixed Charge shall be
adjusted annually beginning January 1, 1998, and shall
be adjusted on January I of each calendar year
thereafter, by the difference in the PPI as it existed
on January 1, 1997, and each Contract Year thereafter.
To calculate each annual adjustment, the difference in
the PPI for the preceding Contract Year (expressed as a
percentage) and the PPI for the subject Contract Year
(expressed as a percentage) shall be multiplied by the
then effective Fixed Charge. For example, stated for
illustrative purposes only, to adjust the Fixed Charge
effective January 1, 1998, the difference in the PPI
for the year 1997 and the PPI for 1996 will be
calculated, and then multiplied by the Fixed Charge in
effect on January 1, 1997. If the PPI ceases to be
published, or the government changes the underlying
basis of how the index is calculated, the parties shall
meet within thirty (30) days of the date publication
ceases or the date the index is changed to determine a
replacement index.
D. Ammonia Pipeline Transportation Charge Adjustment. The
Ammonia Pipeline Transportation Charge shall be
increased or decreased whenever ▇▇▇▇ incurs a cost
change to reflect ▇▇▇▇'▇ actual Product transportation
costs from ▇▇▇▇'▇ Facility to the Delivery Point.
E. Rail or Truck Transportation Costs. Notwithstanding any
other provision of this Agreement, if ammonia pipeline
transportation service is interrupted or curtailed,
preventing ▇▇▇▇ from making all or a portion of the
required deliveries of Product hereunder, ▇▇▇▇ shall
use reasonable efforts to arrange rail or trucking
transportation service from ▇▇▇▇'▇ Facility to Buyer's
Facility. Buyer shall be responsible for and reimburse
▇▇▇▇ for all rail and/or trucking transportation costs
incurred by ▇▇▇▇ for deliveries of Product hereunder,
including without limitation, demurrage charges.
However, if Buyer is forced to pay a trucking and/or
rail transportation rate that is higher than the
Pipeline Transportation Charge and the increased
transportation rate makes it uneconomical for Buyer to
operate Buyer's Facility, forcing Buyer to shut down
such facility, then Buyer shall have the right to
suspend its performance hereunder by providing ▇▇▇▇
with thirty (30) days written notice. However, Buyer
shall not be allowed to suspend its performance
hereunder if ▇▇▇▇, within its sole discretion, elects
to pay the difference between the Ammonia Pipeline
Transportation Charge and the trucking and/or rail
transportation charges to the Delivery Point. If it
remains uneconomical for Buyer to operate Buyer's
Facility for sixty (60) consecutive days from the date
Buyer gives Company notice solely because of the
interruption or curtailment of pipeline Product
deliveries hereunder and ▇▇▇▇ elects not to pay the
transportation differential, then Buyer shall have the
right to terminate this Agreement by providing ▇▇▇▇
with written notice within five (5) days of the end of
the sixty (60) day period.
F. Payment Terms. ****
G. Deficiency Payment. If during a Contract Year Buyer
fails to take the Required Yearly Quantity, ▇▇▇▇ shall
invoice Buyer within thirty (30) days of the end of the
Contract Year for an amount equal to the Deficiency
Volumes multiplied by the Yearly Contract Price for
such Contract Year. Buyer shall pay ▇▇▇▇ the foregoing
amount within two (2) days of the invoice date by ▇▇▇▇
debiting Buyer's bank account using EFT.
H. Letter of Credit. As assurance to ▇▇▇▇ for Buyer's
performance hereunder, Buyer agrees at least one
business day prior to the execution of this Agreement
to deliver to ▇▇▇▇ an irrevocable standby letter of
credit in the amount of $3.5 million dollars
($3,500,000) (the "LC") issued by a bank or other
financial institution acceptable to the Credit
Department of ▇▇▇▇ Industries, Inc. Such LC shall be in
the form of Addendum A attached hereto and made a part
hereof. Buyer shall annually renew or cause the renewal
of the LC at least thirty (30) days prior to the LC's
expiration date. The LC shall remain effective until 30
days after the term of this Agreement expires. If the
bank or financial institution issuing the LC shall at
any time cease to be acceptable to the Credit
Department of ▇▇▇▇ Industries, Inc., as determined in
its sole discretion, then within fifteen (15) calendar
days after written notice from ▇▇▇▇, Buyer agrees it
shall deliver to ▇▇▇▇ a substitute irrevocable standby
LC issued by a bank or other financial institution
satisfactory to ▇▇▇▇, without terminating the original
or then outstanding LC until such substitute LC has
been delivered to ▇▇▇▇. If Buyer fails or refuses to
cause the renewal of an existing LC or the delivery of
a substitute LC within the required time period, such
failure or refusal shall constitute a material breach
of this Agreement entitling ▇▇▇▇ to collect damages and
to draw on the original or then outstanding letter of
credit for such damages, in addition to any other
remedies ▇▇▇▇ may be entitled to under this Agreement
or at law or in equity. ▇▇▇▇ shall give Buyer five (5)
days notice prior to drawing on the LC.
I. Additional Credit. ▇▇▇▇ may from time to time demand
different terms of payment, or additional assurance of
payment, or other credit terms whenever ▇▇▇▇ within its
good faith discretion deems itself insecure because the
prospect for payment or performance reasonably appears
impaired. In any such event, and upon written notice
specifying the event warranting the change in terms of
payment, additional assurance of payment, or credit,
▇▇▇▇ may suspend further deliveries pending agreement
to the revised terms, including, but not limited to,
pending agreement of Buyer to the posting of an
appropriate bond, an additional letter of credit or
other security acceptable to ▇▇▇▇ to further secure
Buyer's obligations hereunder. If Buyer fails or
refuses to give adequate assurance of performance or
payment upon demand therefor, ▇▇▇▇ may treat such
failure or refusal as a repudiation and breach of this
Agreement, thereby entitling ▇▇▇▇ to exercise all
remedies provided for under this Agreement and any
other remedy it may have at law or in equity.
Vll. DELIVERY
A. Required Yearly Quantity. Subject to variations as may
be necessitated due to a Force Majeure event as set out
in Article IX, ▇▇▇▇ shall deliver the Required Yearly
Quantity, and Buyer shall take delivery of the Required
Yearly Quantity in approximately equal quantities of
10,000 Tons per Month. However, in no event (except as
provided in the preceding sentence) shall Buyer take
delivery of less than eight thousand (8,000) Tons per
Month (the "Minimum Take Quantity"), nor shall Seller
be obligated to deliver more than twelve thousand
(12,000) Tons per Month (the "Maximum Take Quantity").
Buyer shall notify ▇▇▇▇ no later than the I st calendar
day of the Month immediately prior to the Month of
delivery of the number of Product Tons it wishes to
receive for such Month of delivery. Buyer shall
promptly notify ▇▇▇▇ in writing of any known or
anticipated changes that will not permit Buyer to
receive the Monthly Quantity.
B. Deficiency Volumes. If Buyer elects to take delivery of
Deficiency Volumes in a subsequent Contract Year or
after the term of this Agreement expires as set forth
in Article III, Section B above, it shall give ▇▇▇▇
forty-five (45) days written notice prior to the first
day of the requested Month of delivery. Unless
otherwise agreed to by ▇▇▇▇, Buyer shall take delivery
of such Deficiency Volumes in approximately equal
quantities during each Month of the subsequent Contract
Year or the twelve (12) month period after the term of
this Agreement expires, unless otherwise agreed to by
▇▇▇▇ in writing. However, in no event shall ▇▇▇▇ be
required to deliver more than twelve thousand ( 12,000)
Tons of Deficiency Volumes in any given Month.
C. Title and Risk of Loss. ▇▇▇▇ shall deliver the Product
hereunder to Buyer at the Delivery Point, and upon the
passing of said title to Buyer, Buyer shall be deemed
to have exclusive ownership and control of said Product
and shall be responsible for any injuries or damages
caused thereby.
VIII. TAXES
A. All present and future taxes, including, but not
limited to, the Superfund Tax, (referred to herein as
"Taxes") relating to the Product delivered hereunder,
including all new taxes or increases in existing taxes
including excise taxes (but excluding ▇▇▇▇'▇ net
income, excess profits, or corporate franchise taxes)
imposed by any governmental authority upon the
manufacture, use, sale, or delivery of the Product,
shall be for Buyer's account, unless Buyer delivers to
▇▇▇▇ current exemption certificates evidencing Buyer's
exemption from paying such Taxes.
B. Buyer agrees to indemnify and hold harmless ▇▇▇▇ and
its successors and assigns from and against any and all
excise taxes (but not including net income, excess
profits, or corporate franchise taxes), inclusive of
any penalty and interest, assessed at a future date
against ▇▇▇▇ by any governmental authority upon the
manufacture, use, sale, or delivery of the Required
Yearly Quantity and/or Additional Volumes, whether
taken or not.
IX. FORCE MAJEURE
A. Neither ▇▇▇▇, nor Buyer, shall be liable for any
failure or delay in performance under this Agreement,
except for the obligation to make money payments due
hereunder for Product already purchased, due to a Force
Majeure event. "Force Majeure," as used herein shall
mean any event which may be due in whole or in part to
any contingency, delay, failure, cause or other
occurrence of any nature beyond a party's reasonable
control, whether it is presently occurring or occurs in
the future, which (i) prevents ▇▇▇▇ from producing,
selling, purchasing or transporting the Product or (ii)
which prevents Product from being used at Buyer's
chemical facility in El Dorado, Arkansas (referred to
hereinafter as Buyer's Facility).
B. The term "Force Majeure" shall not include (i) an event
caused by a party's sole or contributory negligence;
(ii) ▇▇▇▇'▇ ability to sell or Buyer's ability to
purchase Product at a price more advantageous than the
Contract Price; (iii) Buyer's loss of markets for
products produced at Buyer's Facility; (iv) shutdown of
Seller's Facility or Buyer's Facility for reasons other
than a Force Majeure event and (v) routine or scheduled
maintenance at Seller's Facility or Buyer's Facility.
C. If a Force Majeure event occurs, the declaring party
may exercise its right under this Article by giving
timely notice thereof to the other party setting forth
with reasonable particularity the nature of the Force
Majeure event. The declaring party shall use reasonable
efforts to remedy the situation as quickly as possible
and shall only be excused from performance hereunder
during the duration of the Force Majeure event. The
declaring party shall give the other party prompt
notice of when the Force Majeure event ends. If ▇▇▇▇'▇
deliveries of Product to Buyer are impeded due to a
Force Majeure event, ▇▇▇▇ shall have the right to
apportion deliveries among its present and future
customers (including regular customers not then under
contract) and ▇▇▇▇'▇ own requirements on such basis as
may appear to ▇▇▇▇ to be appropriate and equitable.
▇▇▇▇ shall not be obligated to take any action which
would result in increasing its performance costs under
this Agreement beyond the costs which it would have
incurred in the absence of such occurrence, delay or
cause. In this regard, should ▇▇▇▇ be required to
operate the ▇▇▇▇ Facility in a manner that results in
▇▇▇▇ violating an operational flow order or similar gas
pipeline order in order to meet its obligations under
this Agreement, and the violation triggers a penalty or
other charge to be incurred by ▇▇▇▇, ▇▇▇▇ shall have
the right to invoice Buyer for such charge on a per Ton
basis as follows: ([the dollar amount per MMBTU of such
a charge x Conversion Factor] x the number of Tons of
Product produced using natural gas to which such charge
applies). Buyer agrees to pay such charge in addition
to the Contract Price per Ton and all other charges to
be paid by Buyer to ▇▇▇▇ for Product under this
Agreement until such penalty or charge is curtailed as
against ▇▇▇▇, provided, that in any such event, Buyer
will have the option of declining to take Product that
is subject to such penalty or charge. The Required
Yearly Quantity for the subject Contract Year shall be
reduced by the Tons of Product Buyer declines to take
under the preceding sentence.
D. If a Force Majeure event occurs, ▇▇▇▇ shall have the
option, but not the obligation, to reduce the number of
Tons of Product that it is required to deliver and
Buyer is required to take or pay for hereunder;
provided, that such reduction shall not affect the
obligation of ▇▇▇▇ to deliver, nor the obligation of
Buyer (except as provided for herein) to take or pay
for, the remaining Tons to be taken or paid for
hereunder. If ▇▇▇▇ elects to reduce the number of Tons
Buyer is obligated to take or pay for in a particular
Contract Year due to a Force Majeure event, or if the
Force Majeure event continues into a subsequent
Contract Year, Buyer's Required Yearly Quantity shall
be reduced by number of Tons canceled by ▇▇▇▇ due to
the Force Majeure event. ▇▇▇▇'▇ exercise of its option
to cancel such affected Tons must be made by notice in
writing by ▇▇▇▇ to Buyer no later than thirty (30) days
after the Force Majeure event no longer exists. If ▇▇▇▇
does not exercise such option, the quantity of Product
which was not delivered and received during the
occurrence shall be delivered by ▇▇▇▇ and received by
Buyer after the Force Majeure event no longer exists
during the term of this Agreement or within a
reasonable period immediately following the expiration
of this Agreement depending upon when ▇▇▇▇ has Product
available. If ▇▇▇▇ delivers the Product after the Force
Majeure event no longer exists during the term hereof,
the Contract Price per Ton for such Product shall be as
set forth in Article VI, Section A calculated for the
Month ▇▇▇▇ actually delivers the Product. If, however,
▇▇▇▇ delivers the Product after the end of this
Agreement's term, the price for such Product shall be
the price per Ton according to the formula contained in
Article Vl, Section A and the definitions contained in
Article I that would have been charged during the Month
the Product is actually delivered if the term of this
Agreement had continued in effect. If a Force Majeure
event exists for a period of sixty (60) days or longer,
or the declaring party gives notice that such event
will last more than sixty (60) days, the non-declaring
party shall have the option to terminate this Agreement
by written notice to the other. Upon such termination,
all obligations of the parties hereunder shall
terminate without liability to the other party, except
for obligations which accrued prior to the effective
date of the termination.
E. If, at any time during this Agreement's term, any
regulatory or governmental body adopts, issues, or
publishes any action, rule, or order which directly or
indirectly materially and adversely affects the rights
or obligations of ▇▇▇▇ under this Agreement or (each of
the events described in hereafter referred to as
"Adverse Action"), ▇▇▇▇ shall notify Buyer in writing
of the Adverse Action and the parties shall enter into
negotiations to modify this Agreement. If negotiations
regarding the Adverse Action do not result in ▇▇▇▇ and
Buyer agreeing on the terms of a modification to this
Agreement within sixty (60) days of ▇▇▇▇'▇ notice to
Buyer, ▇▇▇▇ shall have the right, but not the
obligation, to suspend its performance hereunder until
such time, if any, as the parties reach agreement on
such a modification to this Agreement. In the event
such Adverse Action continues for a period of one
hundred twenty (120) days after ▇▇▇▇ notifies Buyer of
the same and the parties have not resolved the handling
of the Adverse Action, either party may, but is not
required to, terminate this Agreement upon thirty (30)
days written notice to the other party within one
hundred eighty (180) days of when ▇▇▇▇ first notified
buyer of the Adverse Action. Upon termination, all
obligations by either party shall cease, except
obligations to remit money due and payable. In the
event of Adverse Action, upon written request, ▇▇▇▇
shall provide Buyer with data or information reasonably
necessary for Buyer to determine that such Adverse
Action exists, subject to the confidentiality
obligations of Article XV of this Agreement.
X. REMEDIES FOR PAYMENT BREACH
A. If Buyer is late in making any payment due to ▇▇▇▇
under Article VI hereof, or otherwise, ▇▇▇▇ may at its
sole discretion by notice to Buyer elect one or more of
the following courses of action:
1. Cease to make any further deliveries hereunder
until Buyer has made the late payment and has
taken steps to assure ▇▇▇▇ that there shall be no
such delinquencies in the future;
2. Refuse to make any further deliveries hereunder
except upon cash payments before delivery;
3. Stop delivery of goods in the possession of a
carrier or other bailee as provided by law;
4. Resell any Product concerned without further
notice to Buyer and without affecting or abating
Buyer's other obligations under this Agreement;
5. Set off any obligations ▇▇▇▇ may have to Buyer
against the payments due ▇▇▇▇ hereunder; or
6. Draw upon any letter of credit and/or other
security provided by Buyer hereunder, provided any
draw by ▇▇▇▇ shall not exceed the amounts due and
payable.
If Buyer has not remedied late payments to the
reasonable satisfaction of ▇▇▇▇ within ten (10) days of
such notice, ▇▇▇▇ may at its option by notice to Buyer
terminate this Agreement (without discharging any claim
for breach), provided ▇▇▇▇ shall not be allowed to
terminate this Agreement if the amount of Buyer's
liability to ▇▇▇▇ does not exceed the outstanding LC
amount and Buyer makes-up the amount drawn by ▇▇▇▇
under the LC within five (5) days of the date ▇▇▇▇
draws on the LC; however, ▇▇▇▇ shall have the right to
suspend performance until Buyer replenishes the LC. The
election by ▇▇▇▇ of any of the courses of action hereto
shall in no way limit any other remedies available to
▇▇▇▇ under this Agreement or otherwise at law or in
equity.
B. If either party:
1. Voluntarily petitions under or otherwise seeks the
benefit of any bankruptcy, reorganization,
arrangement or insolvency law; or
2. Makes a general assignment for the benefit of
creditors; or
3. Is adjudicated bankrupt or becomes insolvent; or
4. Allows a receiver or trustee of the business to be
appointed; or
5. Fails to perform any part of this Agreement (other
than provided for in Section A. of this Article)
and upon written notice of such failure by the
other party fails to remedy the same within thirty
(30) days of such notice, or in the event such
failure cannot reasonably be cured within thirty
(30) days, does not initiate and pursue reasonable
corrective action within said period of time,
then, in any of said events, this Agreement may be
terminated forthwith by written notice at the
option of the other party with such other party
retaining all its other rights and remedies at law
or in equity.
XI. RIGHTS NOT WAIVED
The waiver by either party hereto of any breach of this
Agreement by the other party hereto shall not be deemed to be a
waiver of any successive or other breach of this Agreement. Each
and every right, power and remedy may be excused from time to
time and so often and in such order as may be deemed expedient by
the party, and the exercise of any such right, power or remedy
shall not be deemed a waiver of the right to exercise at the same
time or thereafter, any other right, power or remedy.
XII. NOTICES
Any notices, requests or other communications required or
permitted by any provision of this Agreement shall be in writing
and shall be deemed delivered if delivered by hand, facsimile or
mailed by U.S. Postal Service, postage prepaid, by registered or
certified mail, and if to ▇▇▇▇, addressed to:
▇▇▇▇ Nitrogen Company Secretary
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Nitrogen Company
▇.▇. ▇▇▇ ▇▇▇▇ ▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: President ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or, if to Buyer, addressed to:
El Dorado Chemical Company El Dorado Chemical Company
16 S. Pennsylvania ▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President Attention: General Counsel
Any party may change the address to which notices are to be given
by mailing written notice thereof to the other party as provided
above.
XIII. ASSIGNMENT
Neither party shall assign or delegate, or permit by
assignment or delegation, by operation of law or otherwise any of
its rights and obligations under this Agreement to any third
party without first obtaining the prior written consent of the
other party, which shall not be unreasonably withheld.
Notwithstanding the foregoing, either party shall be allowed to
assign this Agreement to an Affiliate upon providing written
notice to the other party, provided no such transfer shall
operate to relieve the transferor party of its obligations
hereunder. For purposes of this Agreement, "Affiliate" shall mean
any corporation or other business enterprise which directly or
indirectly controls, is controlled by, or is under common control
with a party hereunder; and for the purpose of this definition
"control" shall mean the ability to directly or indirectly vote
fifty percent (50%) or more of the shares or other securities at
the time entitled to vote for the election of directors. Any
assignment or delegation, or attempted assignment or delegation,
in violation of this Article XIII shall be null and void, shall
be considered a material breach of this Agreement and shall
permit the other party in addition to any other rights which it
may hereunder or at law or in equity to terminate this Agreement
and exercise any remedies available to the non-breaching party
hereunder or at law or in equity.
XIV. ENTIRE AGREEMENT; AMENDMENT
This Agreement constitutes the final and complete Agreement
between the parties relative to the transactions contemplated
hereby and supersedes any and all prior or contemporaneous
agreements, understandings, correspondence or other agreements
relating to the subject matter hereof. This Agreement may be
amended only by a written document signed by duly authorized
representatives or employees of each of the parties hereto. Any
printed terms or conditions contained in any printed forms used
in placing or acknowledging orders hereunder, or otherwise used
in any way in connection with the sale and purchase provided for
in this Agreement, shall not have the effect of modifying or
amending this Agreement in any respect unless specifically
identified and accepted in writing by a duly authorized
representative of both parties.
XV. CONFIDENTIALITY
If an Adverse Action, as defined in Section E of Article IX,
results in ▇▇▇▇'▇ suspension of its performance hereunder, ▇▇▇▇
may, as provided for in said Section, provide Buyer with certain
information ("Adverse Action Information"). ▇▇▇▇ and Buyer may
also, in connection with their respective performance of this
Agreement, communicate information, give notices and exchange
documents ("Contract Related Information"). Buyer shall maintain
in confidence the Adverse Action Information and the Contract
Related Information, and ▇▇▇▇ shall maintain in confidence the
Contract Related Information, and such information shall be
disclosed to no one other than (i) the receiving party's
officers, directors, agents and other personnel who need to know
the same in connection with this Agreement, and such of officers,
directors, agents and other personnel shall be advised of and
bound by the confidential nature of such information or (ii) when
disclosure is required by law or pursuant to a court or
administrative order. For disclosures required under sub-item
(ii), the disclosing party shall immediately notify the other
party of the required disclosure so that the other party may seek
an appropriate protective order or other remedy and use
reasonable efforts to limit the scope of the disclosure so
required. If a protective order or other remedy is not obtained,
the disclosing party shall only furnish such portion or portions
of the Confidential Information as it is legally required to
furnish. ▇▇▇▇ and Buyer shall take all proper precautions to
prevent such information from being acquired by any unauthorized
person, firm, company or other entity. In this regard, ▇▇▇▇ and
Buyer acknowledge specifically, but without limitation, that both
injunctive relief and monetary damages, alone or in combination,
are appropriate remedies for any breach of this Article XV by
▇▇▇▇ or Buyer or any person, firm, company or other entity
obtaining such information through the recipient thereof. The
confidentiality obligations hereunder shall continue for a period
of seven (7) years after the termination of this Agreement. ▇▇▇▇
shall have no obligation to provide, and Buyer shall have no
right to obtain, information regarding ▇▇▇▇'▇ Product supply
costs.
XVI. ARTICLE HEADINGS
Article headings are for the convenience of the parties and
are not considered parts of the Agreement, it being stipulated
that any headings in conflict with the substantive provisions of
the Agreement shall have no force and effect.
XVII. GOVERNING LAW
This Agreement shall be governed exclusively by the laws of
the State of Kansas both with respect to interpretation and
performance without giving effect to any provision which would
direct application of the laws of another jurisdiction. ▇▇▇▇ and
Buyer agree that venue and jurisdiction of any action or cause of
action arising hereunder shall be exclusively in the United
States District Court for the District of Kansas.
XVIII. SEVERABILITY
The provisions of this Agreement are severable and, if any
provisions are determined to be void or unenforceable in whole or
in part, the remaining provisions shall remain unaffected and
shall be binding and enforceable in accordance with the terms
hereof.
XIX. AUTHORITY
A. Buyer warrants and represents that it is a corporation
duly organized and validly existing and in good
standing under the laws of the State of Oklahoma and
has all requisite power and authority to lawfully carry
on its business as now being conducted and
specifically, that it has all requisite power and
authority to make, execute, deliver and perform this
Agreement.
▇. ▇▇▇▇ warrants and represents that it is a corporation
duly organized and validly existing and in good
standing under the laws of the State of Nebraska and
has all requisite power and authority to lawfully carry
on its business as now being conducted and
specifically, that it has all requisite power and
authority to make, execute, deliver and perform this
Agreement.
XX. LEGAL COMPLIANCE
Each party shall be subject to all applicable laws, rules,
regulations and ordinances issued by any national, state, or
local regulatory or governing body and may act in accordance
therewith until such time as the same may be held invalid by
final judgment in a court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement
to be effective on the Effective Date by their respective
officers thereunto duly authorized.
("▇▇▇▇") ▇▇▇▇ NITROGEN COMPANY
By: __________________________
Title: _______________________
Attest:
Secretary/Assistant Secretary
("Buyer") EL DORADO CHEMICAL COMPANY
By: __________________________
Title: _______________________
Attest:
Secretary/Assistant Secretary
STATE OF KANSAS )
COUNTY OF SEDGWICK )
BEFORE ME, the undersigned, a Notary Public in and for said
County and State, on this ___ day of _____________, 1997,
personally came and appeared _______________________, who in the
presence of me, said authority, declared and acknowledged that he
is the identical person who executed the foregoing instrument in
writing; that his signature thereto is his own true and genuine
signature; and that he executed said instrument in his capacity
as President of ▇▇▇▇ Nitrogen Company, a Nebraska corporation, of
his own free will and accord and as the free act and deed of said
▇▇▇▇ Nitrogen Company for the purposes and considerations therein
set forth and expressed.
Notary Public
My Commission Expires: ______________________________
STATE OF OKLAHOMA )
COUNTY OF CLEVELAND )
BEFORE ME, the undersigned, a Notary Public in and for said
County and State, on this ___ day of _________, 1997, personally
came and appeared _______________, who in the presence of me,
said authority, declared and acknowledged that he is the
identical person who executed the foregoing instrument in
writing; that his signature thereto is his own true and genuine
signature; and that he executed said instrument in his capacity
as __________________ of El Dorado Chemical Company, an Oklahoma
corporation, of his own free will and accord and as the free act
and deed of said El Dorado Chemical Company, for the purposes and
considerations therein set forth and expressed.
Notary Public
My Commission Expires: ___________________________
ADDENDUM A
(Bank Letterhead) Date:
Letter of Credit No.:______________
Expire Date:
▇▇▇▇ NITROGEN COMPANY
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: CREDIT DEPARTMENT
▇▇▇▇▇ ▇▇▇▇▇▇▇ / ▇▇▇▇▇▇ ▇▇▇▇
GENTLEMEN:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR FOR
THE ACCOUNT OF EL DORADO CHEMICAL COMPANY. AVAILABLE BY YOUR DRAFTS
DRAWN AT SIGHT ON BANK NAME, CITY, STATE, FOR ANY SUM OR SUMS NOT EXCEEDING
A TOTAL OF ABOUT U.S. 3,500,000 (THREE MILLION FIVE HUNDRED THOUSAND AND
00/100 U.S. DOLLARS).
ACCOMPANIED BY STATEMENT SIGNED BY A PURPORTED OFFICER OF ▇▇▇▇ NITROGEN COMPANY
STATING THAT:
"EL DORADO CHEMICAL COMPANY ("EDC") HAS BEEN PROVIDED WITH AT LEAST TEN (10)
DAYS NOTICE OF A BREACH UNDER THE ANHYDROUS AMMONIA SALES AGREEMENT
DATED _________ ("AGREEMENT), AND, THEREFORE ▇▇▇▇ NITROGEN COMPANY IS DUE THE
AMOUNT OF $________ AND MAKES THIS DRAWING FOR SUCH AMOUNT UNDER LETTER OF
CREDIT NUMBER _________. BREACH OF THE AGREEMENT BY EDC RELATES TO EDC
FAILING TO RENEW THE UC AS PER THE AGREEMENT, EDC FAILING TO PAY AMOUNTS DUE
OR OWING UNDER THE AGREEMENT, EDC ASSIGNING THE AGREEMENT TO AN UNAFFILIATED
THIRD PARTY WITHOUT ▇▇▇▇ NITROGEN'S CONSENT, OR EDC FAILING TO PROVIDE A
SUBSTITUTE UC IN FORM AND SUBSTANCE ACCEPTABLE TO ▇▇▇▇ AND ON A BANK ACCEPTABLE
TO ▇▇▇▇ SHOULD THE BANK ISSUING THE ORIGINAL LC BECOME UNACCEPTABLE TO ▇▇▇▇."
EXCEPT AS OTHERWISE STATED HEREIN, THIS CREDIT IS SUBJECT TO THE UNIFORM
CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500.
ALSO EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, ANY CHARGES OR COMMISSION IN
RESPECT TO THE NEGOTIATION OF DRAFTS UNDER THIS CREDIT ARE FOR OPENER'S ACCOUNT.
THE AMOUNT OF EACH DRAFT NEGOTIATED, WITH THE DATE OF NEGOTIATION, MUST BE
ENDORSED HEREON BY THE NEGOTIATING BANK, AND ANY DRAFT PRESENTED TO US SHALL
CONSTITUTE A WARRANTY OF THE NEGOTIATING BANK THAT SUCH ENDORSEMENT WAS
EFFECTED.
ALL DRAFTS DRAWN UNDER THIS CREDIT SHOULD BEAR THE CLAUSE "DRAWN UNDER BANK NAME
LETTER OF CREDIT NO.___________ DATED _____________. CITY, STATE'
PARTIAL DRAWINGS ARE ACCEPTABLE AND DRAWING MAY BE MADE FOR SALES PRIOR TO AND
DURING THE TERM OF THIS CREDIT.
ANY AND/OR ALL DOCUMENTS REQUIRED BY THIS LETTER OF CREDIT MAY BE PRESENTED
REGARDLESS OF THEIR DATE OF ORIGINATION.
IN EXCEPTION TO ARTICLE 43, PUBLICATION NO. 500, STALE DOCUMENTS ARE
ACCEPTABLE, AND ALL DOCUMENTS REQUIRED BY THIS LETTER MAY BE SUBMITTED UNTIL
EXPIRY.
WE HEREBY AGREE WITH YOU AND WITH NEGOTIATING BANKS AND BANKERS THAT ALL DRAFTS
DRAWN BY VIRTUE OF THIS CREDIT, AND IN ACCORDANCE WITH ITS TERMS, SHALL MEET
WITH DUE HONOR UPON PRESENTATION AND DELIVERY OF DOCUMENTS AS SPECIFIED TO
BANK NAME, CITY, STATE, IF NEGOTIATED, OR IF PRESENTED AT THIS OFFICE TOGETHER
WITH LETTER OF CREDIT ON OR BEFORE (EXPIRE DATE).
YOURS VERY TRULY,
AUTHORIZED BANK REPRESENTATIVE SIGNATURE