CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 10.10
**Confidential portions of this Exhibit have been omitted pursuant to the Rules
and Regulations of the Securities and Exchange Commission. The symbol "[+++++]"
has been used to identify information which is the subject of a Confidential
Treatment Request.**
DATED 3/rd/ July 1997
IMPERIAL CHEMICAL INDUSTRIES PLC
- AND -
TIOXIDE GROUP LIMITED
SUPPLY AGREEMENT
DATED 3/rd/ July 1997
BETWEEN
1. IMPERIAL CHEMICAL INDUSTRIES PLC trading as ICI Paints whose Registered
Office is at ▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ("ICI"); and
2. TIOXIDE GROUP LIMITED whose Registered Office is at ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇/▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("Tioxide").
RECITAL
-------
The purpose of this agreement is to set out the terms on which the ICI Paints
Users in the specified Territories will purchase Titanium Dioxide from Tioxide
and Tioxide will supply Titanium Dioxide to the ICI Paints Users and is entered
into in recognition of ICI's status as Tioxide's largest customer.
1. Definitions
-----------
In this agreement the following words shall have the following meanings:
"ICI Paints User/s" means any ICI Company/Companies or
business/businesses involved in the manufacture of
surface coatings in each of the Territories who
purchase Titanium Dioxide from Tioxide.
"the Territory/ies" means those countries set out in Schedule I hereto
or any of them.
"Quarter" means a period of 3 calendar months, the first
Quarter commencing on [+++++].
"[+++++]" [+++++]
"[+++++]" [+++++]
"ICI Paints" means the ICI Paints Business.
"Contract Year" a period of 12 consecutive months, the first
commencing [+++++].
"On Time and in Full" means delivery within the agreed lead time
and in the full and accurate quantity
ordered.
"TiO\\2\\" means Rutile Titanium Dioxide in a dry form.
"Volume" means metric tonnes of TiO\\2\\.
"B/L date" means ▇▇▇▇ of Lading date.
"Region(s)" means the areas of the world set out below
containing the listed Territories.
North America
-------------
containing USA, Canada, Puerto Rico, Mexico.
Europe
------
containing UK, Eire, France, Germany, Spain,
Italy and Poland.
ANZ
---
containing Australia, New Zealand, Fiji,
Papua New Guinea.
Asia
----
containing India, Pakistan, Malaysia,
Singapore, Thailand, Indonesia, Taiwan,
Peoples Republic of China, Sri Lanka,
Vietnam, Philippines.
"[+++++]" [+++++].
"Confidential Information" means all information disclosed by one party
to the other in writing or otherwise provided
that each such item of information would
appear to a reasonable person to be
confidential or either contains or bears
thereon in either case a promi-
2
nent position, or is accompanied by a written
statement that the same is confidentia1 or
proprietary. Any information relating to
[+++++] and [+++++] will be Confidential
Information.
1. TERRITORIES
-----------
1.1 A list of the countries governed by this agreement at the date hereof is
attached as Schedule I.
Where a new company is established or acquired in a Territory by ICI with
an ICI shareholding of more than 50%.
1.1.1. If ICI is already a customer of Tioxide in that Territory as defined in
Schedule I hereto such company will, upon its acquisition or
establishment, be subject to this Agreement.
1.1.2. If ICI is not already a customer of Tioxide in that Territory as defined
in Schedule I hereto such company will be so subject only by agreement
between the parties hereto.
2. TERM
----
This agreement shall commence on [+++++] and shall continue for a period
of four years until [+++++], provided that 12 months notice of
termination has been served by either party to take effect on that date.
If not so terminated on that date then this agreement shall continue
until terminated by either party on 12 months notice in writing to be
given at any time.
3. SUPPLY COMMITMENT
-----------------
(a) Where Tioxide supplies [+++++] of an ICI Paints User's requirements
in an individual Territory in any Contact Year than in the
succeeding Contract Year Tioxide shall be obliged to supply [+++++]
of the normal requirements of such ICI Paints User if called upon
to do so. Notice shall be given by the ICI Paints User of such a
requirement in accordance with the forecast schedule set out in
Clause 4.
(b) Where Tioxide supplies less than [+++++] of an ICI Paints User's
total requirement in a Territory in any Contract Year then in the
succeeding Contract Year Tioxide agrees it shall be obliged to
supply
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up to [+++++] to the ICI Paints User if called upon to do so.
Notice shall be given of such requirement in accordance with Clause
4.
4. FORECAST AND COMMITMENT TO VOLUME
---------------------------------
4.1 (a) By 30th June and 31st December in each Contract Year, ICI Paints
Headquarters at Slough will supply to Tioxide at its London Head-
quarters a two year demand forecast (current year plus the
following year) detailing quantities and grade of Tioxide pigment
expected to be required by each Region for each Quarter in each of
those years.
(b) On receipt of this demand forecast Tioxide will assess it against
its planned availability. If any potential problem in meeting this
demand forecast is foreseen, Tioxide and ICI Paints will discuss
the problem and its resolution.
(c) The forecast for each year's offtake will not exceed a volume
[+++++].
(d) No Quarter's forecast in each year will exceed a volume [+++++].
4.2 ICI Paints will target to buy globally from Tioxide [+++++] metric tonnes
of TiO\\2\\ per Contract Year.
The division between Chloride and Sulphate grades will be as follows:
(a) Any ICI offtake over [+++++] metric tonnes will be taken as
Sulphate product.
(b) Offtake at or below [+++++] metric tonnes will be as set out below
[+++++].
4
Chloride (Kt) Sulphate (Kt) TOTAL
North America [+++++] [+++++] [+++++]
Canada and Mexico
ANZ, Fiji, Papua [+++++] [+++++] [+++++]
New Guinea & Asia
Europe [+++++] [+++++] [+++++]
[+++++]
Chloride offtake by ICI may be taken anywhere in the Territories subject
to grade and sourcing constraints.
4.3 On the basis of the forecasting arrangements set out in Clause 4.1
Tioxide undertakes to use all reasonable endeavours to supply in each
Contract Year the volume of TiO\\2\\ in accordance with ICI's forecast
for that year. ICI undertakes to use all reasonable endeavours to
purchase volume in accordance with its forecast.
4.4 If in any Region the actual demand from the ICI Paints User is in excess
of the forecast then Tioxide will use all reasonable endeavours to supply
the TiO\\2\\ required.
4.5 Both parties agree to work actively to develop and continually enhance a
methodology that gives both parties the maximum visibility of short and
medium term demand.
4.6 In the event that ICI shall acquire a new business in a Territory as
defined in Schedule I hereto during the course of this agreement which is
buying TiO\\2\\ from Tioxide at the date of such acquisition for the
purpose of forecasting the following shall apply. Such amount of TiO\\2\\
as is being purchased from Tioxide by such business shall be added to the
existing offtake by ICI to form a new base tonnage.
5. PRICE
-----
5.1 Price shall be [+++++] and, subject as hereinafter provided, [+++++].
Where [+++++].
5.2 [+++++] shall only be applicable to purchases of TiO\\2\\ by ICI from
Tioxide in any Contract Year if in that Year the following conditions are
satisfied:
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5.2.1 The total volume of TiO\\2\\ purchased by ICI is at least [+++++]; and
5.2.2 The volume of TiO\\2\\ purchased by ICI in
(a) North America
(b) ANZ, Fiji, Papua New Guinea and Asia; and
(c) Europe
is at least, respectively, [+++++] and [+++++].
In the event that in any Contract Year any condition specified in this
Clause is not satisfied then the price payable in that year shall be
[+++++] for the TiO\\2\\ supplied.
The [+++++] will however continue to apply to such purchases.
5.3 The parties hereto shall as soon as reasonably practicable after having
signed this agreement, appoint a person, firm or corporation ("The
Appointee") who shall be responsible for recommending to the parties
[+++++] in every Territory for the purposes of this agreement.
5.4 The parties hereto shall endeavour to ensure that the duration of the
contract under which the Appointee is engaged is consistent with the term
of this agreement. The costs associated with the Appointee's engagement
(including, without limitation, fees and expenses payable to the
Appointee) shall be borne equally between ICI and Tioxide.
5.5 Prior to each occasion on which, in accordance with the provisions
hereof, [+++++] falls to be determined, each of ICI and Tioxide shall
submit to the appointee in writing such information as its possesses and
which it considers may be relevant for the purpose of enabling the
Appointee to assess [+++++] in each territory. The Appointee shall be
entitled to interrogate each party hereto with respect to the information
which it has submitted and to request further information from each
party.
5.6 The parties hereto shall, in submitting information to the Appointee
pursuant to Clause 5.5 do so timeously and the Appointee shall make his
recommendation of [+++++] for each Territory within 10 business days of
the information from both such parties having been submitted.
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5.7 The Appointee shall keep confidential any information submitted to him by
either party in accordance with the foregoing provisions of this clause
and without prejudice to the generality, shall not reveal to either party
hereto or any other party, any information submitted to him by the other
party. The Parties may each appoint an independent auditor to verify the
submissions of the other party to the Appointee if they so wish.
5.8 The Appointee, in recommending [+++++] in a Territory, shall have regard
to the following principles:
5.8.1 [+++++] is based upon delivered duty paid in ICI Paints Users plant,
except where CIF (or some other term) is the agreed delivery term. A list
of Territories where CIF is the agreed delivery term is attached hereto
as Schedule IV. Schedule V hereto lists the Territory in which "C and F"
is the agreed delivery term.
5.8.2 If any of ICI Paints competitors in a territory do not pay on time to
standard terms, full account shall be taken of that fact in assessing
[+++++] for the Territory concerned.
5.9 Tioxide's usual small delivery surcharges applying to its other customers
in a Territory will also apply to ICI Paints deliveries in that
Territory.
5.10 During each quarter a reconciliation will be conducted (by the designated
local senior Manager responsible from Tioxide and ICI Paints,
respectively) in respect of the [+++++] to apply to the previous quarter
in each Territory. The difference between the newly agreed [+++++] and
that price at which TiO\\2\\ had previously been invoiced will be paid
not later than 8 weeks after the end of the quarter in question by ICI
Paints to Tioxide or by Tioxide to ICI Paints, as the case requires. At
the end of any Contract Year in which a condition specified in Clause 5.2
has not been satisfied, a further reconciliation will be conducted to
establish what (if any) payment is due from ICI to Tioxide in consequence
thereof and any payment due shall be made by ICI not later than the
expiration of the period of 8 weeks next following the end of that Year.
5.11 "[+++++]". For certain major Territory groups [+++++] may apply in which,
if [+++++].
Territory groups for which this principle is presently agreed are:-
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Group A [+++++]
Group B [+++++]
Group C [+++++]
Group D [+++++]
At the commencement of the contract the values of x and y will be as
shown in the following table:
x y
Group A [+++++] [+++++]
Group B [+++++] [+++++]
Group C [+++++] [+++++]
Group D [+++++] [+++++]
The value of x in the Territory Group will be reviewed from time to time.
6. PAYMENT
-------
A schedule of agreed payment terms is attached as Schedule III. These
terms can only be varied by written agreement between the parties.
ICI shall ensure that payment is received by Tioxide on or before the
relevant due date specified in Schedule III.
7. [+++++]
-------
7.1 [+++++]
7.2 [+++++]
7.2.1 The following [+++++] will be applied:
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[+++++] [+++++]
[+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
[+++++] [+++++]
7.2.2 [+++++] in the Territories or as requested by ICI Paints by Tioxide
[+++++]
7.2.3 The parties agree to keep the existence and [+++++] under this
agreement confidential to themselves.
8. CHANGE IN CIRCUMSTANCES
-----------------------
Both parties will consult with each other in the event of any significant
change in circumstances in their businesses affecting this Agreement.
9. SERVICE AND DELIVERY
--------------------
Tioxide will use its best endeavours to supply all orders "On Time and In
Full".
10. GRADE AVAILABILITY
------------------
Tioxide's products are made to globally consistent specifications, but
not all grades are made in all regions of the world.
Nevertheless Tioxide will use its best endeavours to meet ICI Paints
Users' technical requirements for TiO\\2\\.
11. TECHNICAL AND COST REDUCTION CO-OPERATION
-----------------------------------------
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11.1 In each Region, the Tioxide regional coatings technical service and
product development teams will maintain regular contact with ICI Paints
Users in that Region.
11.2 Tioxide's central Research and Technology surface coatings team will also
maintain regular contact with its designated opposite numbers in ICI
Paints.
11.3 Through these contracts, ICI Paints' technical requirements will be taken
into account by Tioxide in setting up its global and local Research
programmes.
11.4 A formal technical review of matters arising from these contracts, and
appropriate actions, will be arranged between the parties at least once a
year.
11.5 Tioxide will give ICI Paints the first customer appraisal prior to
disclosure to any other party of any relevant new developments it makes
relating to Tio\\2\\ in surface coatings provided that such development
has not been initiated by another of Tioxide's customers. Upon Tioxide
presenting ICI with a new development, ICI will report back to Tioxide
within 120 days of receiving adequate information from Tioxide on its
views on such developments and pending such report Tioxide will not
disclose such development to any other party. The parties may extend such
period by agreement.
11.6 When a new product is developed by Tioxide for the surface coatings
market, with ICI's technical co-operation, then ICI shall enjoy an
exclusive lead time from the date when its surface coating containing the
new product is brought to market - the length of lead time to be agreed on
a case by case basis. During that lead time Tioxide will not supply or
sample such new product to any other party. Such new product shall be
available for purchase by any ICI Paints User.
11.7 Specifications for all grades supplied by Tioxide to ICI Paints will be
agreed between the parties, and will be consistent worldwide.
11.8 There may occasionally be a need for local funding by Tioxide of technical
costs incurred by ICI Paints Users e.g. in reformulation to a Tioxide
grade. Such funding will be a matter of local negotiation between the ICI
Paints User and Tioxide.
11.9 SERVICE
-------
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It is agreed that ICI will implement a supplier assessment programme based
on the Dulux Australia "Supplier of the Year" programme. This will provide
a basis for review of specific relationship and service issues.
11.10 COST REVIEW
-----------
It is expected that effective management of the supply chain between
Tioxide and ICI Paints will result in operational cost savings which the
parties agree will be shared by both businesses. Tioxide agrees with ICI
to fully address possible cost, product evaluation and development
efficiencies and any other possible sources of cost savings throughout the
term of this contract and to implement identified savings by mutual
agreement.
12. CONFIDENTIALITY
---------------
Each party will take all proper steps to keep confidential all
Confidential Information of the other which is disclosed to or obtained by
it pursuant to or as a result of this Agreement, and will not divulge the
same to any third party and will allow access to the same to only such
staff as may be involved in carrying out this agreement and then on the
basis that they will respect such Confidential Information except to the
extent that any such Confidential Information becomes public through no
fault of that party. Upon termination of this Agreement each party will
return to the other any equipment and written data (without retaining
copies thereof) provided for the purposes of this Agreement.
Notwithstanding the termination or expiry of this Agreement for whatever
reason the obligations and restriction in this clause shall be valid for a
period of five years from the date of signature hereof.
13. FORCE MAJEURE
-------------
If either party is prevented from carrying out any of its obligations
under this Agreement by circumstances beyond its control (such
circumstances hereinafter being referred to as "Force Majeure") then for
so long as such Force Majeure circumstances continue neither shall be
liable to the other for a failure to perform such obligations as a result
of Force Majeure PROVIDED THAT each party shall as soon as reasonably
practicable on becoming aware of circumstances constituting Force Majeure
notify the other of the nature of the Force Majeure and its likely
duration. The force majeure affecting Tioxide having been so notified ICI
may, if it so elects, employ another company business or person to perform
any obligations so affected by Force Majeure.
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14. DISPUTES
--------
In the event of a dispute between the parties the senior managers of
either party responsible for purchasing and selling TiO\\2\\ shall attempt
to resolve the dispute. Failing that the CEOs of ICI Paints and Tioxide
for the time being shall attempt to resolve the dispute. If that process
fails to resolve the dispute then parties may have recourse to law in
accordance with the Agreement.
15. LIABILITY
---------
Tioxide will indemnify ICI and its subsidiaries for any losses, actions,
costs, demands, expenses or liabilities of any kind which ICI may incur
which shall arise:
(a) From Tioxide's default under this contract or
(b) By the supply of TiO\\2\\ by Tioxide which is not of a satisfactory
quality or not fit for the purpose for which ICI will use the TiO\\2\\.
(c) Fails to be delivered on time to any ICI Paints User.
Tioxide's liability under this clause or as a result of any legal action
taken by ICI or its subsidiaries shall be limited to the sum of [+++++]
for each individual incident and to an aggregate sum in each contract year
for multiple incidents of [+++++].
Subject to the foregoing provisions of this clause, Tioxide gives no
warranty as to the merchantable quality or fitness for purpose of any
TiO\\2\\ which is sold to ICI under this agreement and any condition or
warranty as to its merchantable quality or fitness for purpose, whether
express or implied by law under the Sale and Supply of Goods Act or
otherwise, is excluded.
16. OTHER TERMS AND CONDITIONS
--------------------------
(i) Any detailed supply arrangements not covered in this agreement will be
covered by local agreements in each Territory as necessary. Should there
be any conflict in the terms and conditions of this agreement and any such
local agreements then the terms and conditions of this agreement shall
prevail. This agreement supersedes all previous agreements in force
between the parties relating to the subject matter hereof.
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(ii) In the event that a change of control of the ownership of either party
occurs in such a way so as to raise issues of compliance with Anti-Trust
Competition Legislation in any country of the world then this contract
shall be reviewed and such amendments made to bring its provisions into
compliance with such laws whilst maintaining the terms of this agreement
to the greatest extent legally possible.
17. NOTICES
-------
Notices, reports or communication shall be deemed to have been given only
if given in writing and delivered by hand or by courier service or sent by
telex or facsimile transmission and confirmed by first class airmail to
the other party at the following address:
In the case of ICI Paints: The Secretary
ICI Paints
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
In the case of Tioxide: The Secretary
Tioxide group Ltd.
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇/▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
18. The law of England and the jurisdiction of the English courts shall apply
to this agreement.
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SCHEDULE I
LIST OF TERRITORIES
-------------------
UK/Eire
Germany
France
Spain
Italy
USA
Canada
Mexico
Australia
New Zealand
Fiji
Papua New Guinea
India
Pakistan
Malaysia
Singapore
Thailand
Indonesia
Taiwan
Peoples Republic of China
Vietnam
Philippines
Puerto Rico
Poland
Sri Lanka
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SCHEDULE II
LIST OF MAJOR TiO\\2\\ PRODUCERS
--------------------------------
[+++++]
15
SCHEDULE III
AGREED PAYMENT TERMS
--------------------
--------------------------------------------------------------------------------
TERRITORY TERMS
--------------------------------------------------------------------------------
UK/EIRE 20/th/ of the month following invoice
--------------------------------------------------------------------------------
FRANCE 30 days from end of month of invoice 1% discount
for payment on 10/th/ of following month
--------------------------------------------------------------------------------
GERMANY 30 days net
2% discount for payment within 14 days
--------------------------------------------------------------------------------
ITALY 90 days net
--------------------------------------------------------------------------------
SPAIN 90 days net
--------------------------------------------------------------------------------
USA 60 days net
1% discount for payment within 30 days
--------------------------------------------------------------------------------
CANADA 60 days net
1% discount for payment with in 30 days
--------------------------------------------------------------------------------
MEXICO 60 days net
--------------------------------------------------------------------------------
NEW ZEALAND 30 days from month end
--------------------------------------------------------------------------------
AUSTRALIA 45 days from month end
--------------------------------------------------------------------------------
FIJI 30 days from month end
--------------------------------------------------------------------------------
PAPUA NEW GUINEA 60 days after B/L date
--------------------------------------------------------------------------------
INDONESIA 90 days after B/L date
--------------------------------------------------------------------------------
SINGAPORE 60 days from month end
--------------------------------------------------------------------------------
MALAYSIA 30 days from month end
--------------------------------------------------------------------------------
THAILAND 90 days from B/L date
--------------------------------------------------------------------------------
TAIWAN 90 days from month end
--------------------------------------------------------------------------------
PEOPLE REPUBLIC OF CHINA 60 days from month end
--------------------------------------------------------------------------------
INDIA 90 days after B/L date
--------------------------------------------------------------------------------
PAKISTAN 150 days from B/L date
--------------------------------------------------------------------------------
VIETNAM 90 days after B/L date
--------------------------------------------------------------------------------
PHILIPPINES 90 days after B/L date
--------------------------------------------------------------------------------
Sri Lanka 90 days after B/L date
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
Puerto Rico 60 days net
--------------------------------------------------------------------------------
SCHEDULE IV
TERRITORIES WHERE CIF IS THE AGREED DELIVERY TERM
-------------------------------------------------
India
Pakistan
Thailand
Indonesia
Peoples Republic of China
Poland
Papua New Guinea
Philippines
Singapore
Sri Lanka
Vietnam
17
SCHEDULE V
TERRITORY WHERE C AND F IS THE AGREED DELIVERY TERM
---------------------------------------------------
Pakistan
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SIGNED FOR AND ON BEHALF OF
IMPERIAL CHEMICAL INDUSTRIES PLC:
SIGNED /s/ [Authorized Officer]
TITLE Chief Financial Officer, ICI Paints
WITNESS /s/ [Authorized Person]
TITLE Senior Legal Counsel, ICI Paints
SIGNED FOR AN ON BEHALF OF
TIOXIDE GROUP LIMITED
SIGNED /s/ [Authorized Officer]
TITLE Chairman & CEO
WITNESS /s/ [Authorized Person]
TITLE Finance Director
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