Exhibit 10.20
Dated November 1, 2000
SHELL CHEMICAL COMPANY
For itself and as agent for Shell Oil Company
and
SHELL EPOXY RESINS LLC
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FIRST AMENDED AND RESTATED
NORCO SITE SERVICES, UTILITIES,
MATERIALS AND FACILITIES
AGREEMENT
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TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS....................................................................................... 2
ARTICLE 2 INTERPRETATIONS................................................................................... 8
ARTICLE 3 OBJECT AND SCOPE.................................................................................. 10
ARTICLE 4 CATEGORIES OF SUMF................................................................................ 12
ARTICLE 5 SUMF CHARGES...................................................................................... 12
ARTICLE 6 SUMF CHARGES WITH REFERENCE TO COST............................................................... 12
ARTICLE 7 PAYMENT TERMS..................................................................................... 16
ARTICLE 8 ANNUAL FORECAST, ANNUAL PLAN & BUDGET AND CURTAILMENT............................................. 17
ARTICLE 9 LIABILITY......................................................................................... 19
ARTICLE 10 TERM AND TERMINATION............................................................................. 23
ARTICLE 11 INTELLECTUAL PROPERTY RIGHTS..................................................................... 27
ARTICLE 12 CONFIDENTIALITY.................................................................................. 27
ARTICLE 13 ADDITIONAL SUMF AND CAPITAL IMPROVEMENTS TO SUMF ASSETS.......................................... 28
ARTICLE 14 DAMAGE TO SUMF ASSETS............................................................................ 29
ARTICLE 15 METERING OR ALLOCATION OF SUPPLY, CONSUMPTION AND DELIVERY....................................... 30
ARTICLE 16 MONITORING COMMITTEE............................................................................. 31
ARTICLE 17 MISCELLANEOUS.................................................................................... 32
ARTICLE 18 FORCE MAJEURE.................................................................................... 33
ARTICLE 19 DISPUTE RESOLUTION............................................................................... 34
ARTICLE 20 FURTHER ASSURANCE................................................................................ 35
ARTICLE 21 COSTS AND EXPENSES............................................................................... 35
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ARTICLE 22 ASSIGNMENT AND DELEGATION........................................................................ 35
ARTICLE 23 ASSIGNMENT AND DELEGATION........................................................................ 36
ARTICLE 24 NO AGENCY OR PARTNERSHIP......................................................................... 37
ARTICLE 25 REMEDIES AND WAIVER.............................................................................. 37
ARTICLE 26 ENTIRE AGREEMENT AND VARIATION................................................................... 37
ARTICLE 27 NOTICES.......................................................................................... 38
ARTICLE 28 GOVERNING LAW.................................................................................... 38
ARTICLE 29 LANGUAGE......................................................................................... 38
ARTICLE 30 COUNTERPARTS..................................................................................... 39
EXHIBIT A: INFORMATION
SCHEDULE 3.1: SUMF ITEMS FROM SHELL TO COMPANY
SCHEDULE 3.2: SUMF ITEMS FROM COMPANY TO SHELL
SCHEDULE 3.4: SUMF ITEM CAPACITY AND CAPACITY RIGHTS
SCHEDULE. 7.2: PAYMENT TERMS
SCHEDULE 8.4: 2000 ANNUAL PLAN & BUDGET FORECAST
SCHEDULE 8.6: CURTAILMENT
SCHEDULE 15.1: METER TABLE
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Exhibit 10.20
FIRST AMENDED AND RESTATED NORCO SITE
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SERVICES, UTILITIES, MATERIALS & FACILITIES AGREEMENT
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THIS FIRST AMENDED AND RESTATED NORCO SITE SERVICES, UTILITIES, MATERIALS &
FACILITIES AGREEMENT is entered into and will be effective as of the _____ day
of ___________, 2000 by and between:
1. Shell Chemical Company, a Delaware corporation, on its own behalf and
as authorized agent of Shell Oil Company pursuant to the Shell Chemical
Authorization Agreement dated March 1, 1995 (collectively either
referred to as "Supplier" or "Purchaser" of specific SUMF, as the case
may be, or as "Shell"), with its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇; and
2. Shell Epoxy Resins LLC (either referred to as "Purchaser" or "Supplier"
of specific SUMF, as the case may be, or as the "Company"), a Limited
Liability Company organized under the laws of Delaware, with its
principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇.
WHEREAS:
(A) Shell or Affiliates of Shell own and operate a chemical/integrated oil
and chemical manufacturing Site at Norco, Louisiana;
(B) The Company owns and operates certain manufacturing facilities at the
Site at Norco, Louisiana (the "Company Facilities");
(C) The Parties own and/or have leased assets which are integrated with or
are integral to both their own and the other Party's manufacturing
operations at the Site;
(D) The Parties have entered into that certain Norco Site Services,
Utilities, Materials and Facilities Agreement (the "SUMF Agreement")
dated August 1, 1999, related to their respective operations at the
Site and the supply and purchase of certain SUMF Items in connection
with such operations and assets;
(E) Shell Oil Company has entered into the Transaction Documents with,
among other parties, Resin Acquisition LLC as the purchaser ("Epoxy
Resins Purchaser"), for the sale of the Company and its resins business
to such purchaser; and
(F) In connection with the closing of such sale transaction, Shell and the
Company want to amend and restate the SUMF Agreement as set forth
below.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
In this Agreement and the Schedules hereto:
"AFFILIATE" means in relation to Shell, N.V. Koninklijke Nederlandsche
Petroleum Maatschappij, The "Shell" Transport and Trading Company,
p.l.c. (together the "Parent Companies") or any entity other than the
Parties which is directly or indirectly affiliated with either or both
of the Parent Companies.
In relation to the Company, "Affiliate" means Shell Epoxy Resins
Holding BV and any entity other than the Parties which is directly or
indirectly affiliated with Shell Epoxy Resins Holding BV.
In relation to any Third Party successors of the Parties, "Affiliate"
means any entity which is directly or indirectly affiliated with that
Third Party successor.
For the purposes of this definition, a particular entity is:
(i) directly affiliated with another entity or entities if the
latter hold(s) or otherwise control(s) by proxy or agreement
shares or other ownership interests carrying more than fifty
percent (50%) of the votes exercisable at a general
shareholders meeting (or its equivalent) of the entity in
question; and
(ii) indirectly affiliated with an entity or entities (the "parent
or parents") if a series of entities can be specified,
beginning with their parent or parents and ending with the
particular entity, so related that each entity or entities in
the series, except the parent or parents, is directly
affiliated with one or more of the entities earlier in the
series;
Notwithstanding the foregoing, none of the portfolio companies
of Apollo Management IV, L.P. or its affiliates other than Shell Epoxy
Resins, Inc. and its subsidiaries, shall be deemed to be an Affiliate
of Shell Epoxy Resins, Inc. or any of its subsidiaries.
"AGREEMENT" means this Norco Site Services, Utilities, Materials and
Facilities Agreement, including its Schedules and attachments, and any
amendments hereto to which the Parties may consent from time to time;
"ANNUAL PLAN & BUDGET" has the meaning given to this term in Article 8;
"BANKRUPTCY EVENT" means, in relation to any Party, (i) the making of a
general assignment for the benefit of creditors by such Party; or (ii)
the entering into of any
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arrangement or composition with creditors as a result of insolvency
(other than for the purposes of a solvent reconstruction or
amalgamation); or (iii) the institution by such Party of proceedings
(a) seeking to adjudicate such Party as bankrupt or insolvent or
seeking protection or relief from creditors, or (b) seeking
liquidation, winding up, or rearrangement, reorganization or adjustment
of such Party or its debts (other than for purposes of a solvent
reconstruction or amalgamation), or (c) seeking the entry of an order
for the appointment of a receiver, trustee or other similar official
for such Party or for all or a substantial part of such Party's assets;
or (iv) the institution of any proceeding of the type described in
(iii) above against such Party, which proceeding shall not have been
dismissed within 90 days following its institution;
"BUSINESS DAY" means any day of the week other than Saturday, Sunday or
a public holiday at the location of the Site;
"COMMERCIALLY REASONABLE" when used in the context of efforts to be
taken means efforts which would ordinarily be taken by a business
person in the applicable industry but which shall only be taken at the
sole cost, and request of the Party entitled to request or require
"commercially reasonable" efforts, provided however, that the Party who
undertakes such efforts shall not be (i) obligated to interfere with
its own business activities or plans, (ii) required to employ new
employees in order to accomplish such matters, nor (iii) required to
expend any of its own funds to accomplish such request;
"COMPANY FACILITIES" means the HPRU, AC/ECH plants situated at the West
Site and the associated assets, facilities and rights;
"CONFIDENTIAL RECORD" means, without limitation, any publications,
printed matter, manuals, reports, letters, telexes, drawings, computer
programs, photographs, films, video, tape, diskette, CD-ROM and other
information carriers or media conveying information and any other
material containing confidential information;
"DEER PARK SUMF" means that certain First Amended and Restated Deer
Park Site Services, Utilities, Materials, and Facilities Agreement
dated as of the Effective Date, by and between the Company and Shell;
"DELIVERY POINT(S)" means the location(s) specified in the SCHEDULES to
which each SUMF Item will be delivered and at which title to, and risk
of loss of, a SUMF Item passes from the Supplier to the Purchaser;
"DIRECT SITE COSTS" means the fully burdened and overheaded fixed costs
(without other ▇▇▇▇-up or profit factor, incurred at the Site by
Supplier in providing SUMF but which do not vary primarily based on
consumption, usage or production. Direct Site Costs include personnel
costs for the personnel involved in the provision of SUMF and costs of
any SUMF Items procured by Supplier for Purchaser from a Third Party
pursuant to this Agreement. (Personnel costs includes all costs related
to workers compensation programs.) If costs, including personnel costs,
are incurred at the Site partly in
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connection with providing SUMF and partly in connection with other
activities, an allocation of such costs shall be included in Direct
Site Costs for the avoidance of doubt, wherever and to the extent the
Supplier enjoys a pension fund contribution holiday the Purchaser will
share in the benefit of such holiday only until the date when the
Supplier resumes contributions to the pension fund at which point the
contributions for the relevant employees will be included in the Direct
Site Costs. Further, for the avoidance of doubt, Direct Site Costs do
not include charges for the depreciation or amortization of SUMF
Assets, and fines resulting from the violation by Supplier of Legal
Requirements. In addition, Direct Site Costs do not include any costs
which the Supplier or any of its Affiliates is required to bear under
any Transaction Document (other than this Agreement or the Norco
Lease). Costs which the Supplier or any of its Affiliates is required
to bear under this Agreement or the Norco Ground Lease shall be borne
in accordance with the terms hereof and thereof. The foregoing shall
not be deemed to modify any Transaction Document other than this
Agreement including any express payment or reimbursement obligation of
the Purchaser to the Supplier under any Transaction Document other than
this Agreement;
"Dispute" means any dispute or difference which arises between the
Parties in connection with or arising out of this Agreement (including,
without limitation, any dispute as to the termination or invalidity of
this Agreement or any provision of it);
"EFFECTIVE DATE" means November 1, 2000;
"ENVIRONMENTAL AGREEMENT" means the Environmental Agreement dated as of
the Effective Date by and between Shell and Shell Epoxy Resins LLC;
"ENVIRONMENTAL LAW" means any applicable law relating to Environmental
Matters;
"ENVIRONMENTAL LOSS OR DAMAGE" means any Loss or Damage relating to the
infringement of an Environmental Law and/or any other Environmental
Matter being the basis for any claim or possible claim (a) by
governmental authorities for enforcement, fines, cleanup, removal,
response, remediation, or other actions or damages pursuant to any
applicable Environmental Law or (b) by any third person, including the
Parties, seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief or otherwise giving rise to Loss or
Damage;
"ENVIRONMENTAL MATTERS" means (i) the protection of the environment,
worker health and safety and/or the public welfare from actual or
potential exposure (or the effects of exposure) to any actual or
potential release, discharge, disposal or emission (whether past or
present) of any hazardous substance or waste, (ii) the manufacture,
processing, distribution, use, treatment, labeling, storage, disposal,
transport or handling of any hazardous substance or waste, or (iii)
soil or groundwater contamination, air pollution or surface water
pollution or other actual or threatened impact on the environment,
worker health and safety or public welfare;
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"ENVIRONMENTAL PROTECTION SYSTEM" means any environmental protection
system used by Supplier in connection with the provision of the SUMF
Items, including , without limitation, biotreater, waste water
treatment plant, and all pipes, drains, channels conduits, sumps and
other items, plant or machinery connected with or associated with such
system;
"FINANCIAL REPORTING ACCOUNTS" means those books and records maintained
by the Supplier for financial reporting to the Supplier's parent
company(ies) or corporate headquarters, which shall be maintained in
accordance with generally accepted accounting principles;
"FIRM CAPACITY RESERVATION" means the maximum volume of a SUMF Item to
be supplied under this Agreement as specified in Schedule 3.4;
"FIXED OPERATING COSTS" means Direct Site Costs and Overheads;
"FORCE MAJEURE" has the meaning given to this term in Article 18.4;
"GROSS NEGLIGENCE" means a failure to perform a duty of care in
reckless disregard of the reasonably foreseeable consequences (as
distinguished from a mere failure to exercise ordinary care) which
affect the life or property of another;
"HSE" means health, safety and/or environment;
"INFRASTRUCTURE CHARGE" means the charge related to infrastructure used
to provide SUMF Items which is a charge in lieu of depreciation and
maintenance capital on existing SUMF Assets;
"INFLATION RATE" shall for a given yearly period equal the following
fraction (rounded to the fourth decimal place): (x) the numerator shall
equal the average Published Inflation Index for the calendar year
preceding the commencement of such yearly period, and (y) the
denominator which shall equal the average Published Inflation Index of
the calendar year preceding that for the numerator described above
(i.e. for a yearly period commencing April 1, 1999, the numerator would
have equaled 389.5 (the average Published Inflation Index for 1998);
"INTELLECTUAL PROPERTY TRANSFER AND LICENSE AGREEMENT" means the
Agreement to be entered into between Shell Oil Company and the Company
relating to intellectual property transfer and licensing;
"INTER-BANK OFFERED RATE" means a percentage equal to the rate
specified in Exhibit A;
"INTEREST RATE" means a percentage equal to the Inter-Bank Offered Rate
specified in Exhibit A plus one point five percent (1.5%) p.a.;
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"LEGAL REQUIREMENTS" means all applicable federal, state and local
laws, regulations, rules, ordinances, codes, standards and rules of
common law;
"LONG TERM SUMF" has the meaning given to this term in Article 4;
"LOSS OR DAMAGE" means any loss, damage or injury of whatever nature,
including without limitation, personal injury, disease and death;
"METER" has the meaning given to this term in Article 15;
"MONITORING COMMITTEE" means the committee to be formed of the
Company's Representative and Shell's Representative which shall have
the functions set out in Article 16;
"MSA" means that certain Master Sales Agreement dated as of the July
10, 2000 among Shell, Resin Acquisition LLC and Shell Epoxy Resin Inc.
"NORCO GROUND LEASE" means lease entered into between Shell and the
Company dated as of the Effective Date related to the Site.
"OVERHEADS" means, without duplication of any Direct Site Cost, in
relation to each SUMF Item, an allocation of the indirect fully
burdened and overheaded fixed costs incurred at the Site related to
management and operation of the Site that are not specifically
attributable to a certain plant at the Site (without other ▇▇▇▇-up or
profit factor), including, but not limited to, the following (where
they are not provided as separate SUMF Items): Site management and
general services; office services, accommodation and catering; and
taxes. Overheads shall not include any allocated costs of corporate
services, unless incurred for specific services in the same manner as
Third Party services, such as tax, legal or other services, and shall
not include the fees paid to the Supplier's parent company(ies) or any
other Affiliate, division, business unit or headquarters as a share of
corporate overhead. Further, for the avoidance of doubt, Overheads do
not include charges for the depreciation or amortization of SUMF Assets
or other assets, and fines resulting from the violation by Supplier of
Legal Requirements. In addition, Overheads do not include any costs
which the Supplier or any of its Affiliates is required to bear under
any Transaction Document (other than this Agreement or the Norco Ground
Lease). Costs which the Supplier or any of its Affiliates is required
to bear under this Agreement or the Norco Park Ground Lease shall be
borne in accordance with the terms hereof and thereof. The foregoing
shall not be deemed to modify any Transaction Document other than this
Agreement including any express payment or reimbursement obligation of
the Purchaser to the Supplier under any Transaction Document other than
this Agreement;
"PARTY" or "PARTIES" means Shell and the Company;
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"PRE-CONTRACTUAL STATEMENT" means any draft, agreement, undertaking,
representation, warranty, promise, assurance or arrangement of any
nature whatsoever, whether or not in writing, relating to the subject
matter of this Agreement made or given by any person at any time prior
to the date of this Agreement other than the Transaction Documents;
"PROPERTY" means, in relation to each Party, the plants, buildings and
other improvements, land and/or other real property interests,
fixtures, equipment, inventory, finished product, vehicles and other
tangible personal property interests owned or leased by a Party that
are now or in the future located within the Site or, in relation to the
Supplier, elsewhere if used to provide SUMF;
"PUBLISHED INFLATION INDEX" for a given calendar year shall equal the
index in the "Chemical Engineering Plant Cost Index" for that calendar
year as published in the Chemical Engineering Magazine. If the
Published Inflation Index is discontinued, the Parties shall adopt by
mutual agreement a replacement index that most closely measures the
price changes measured by the original Published Inflation Index that
is discontinued. If the basis of reporting of the Published Inflation
Index is changed from the basis in effect on the date hereof, then the
Published Inflation Index shall be correspondingly changed.
"PURCHASER" means the party who purchases a particular SUMF Item from
the Supplier;
"SHARED FACILITIES AGREEMENT" means that certain Shared Facilities
Agreement by and between Motiva Enterprises LLC and Shell Chemical
Company on its behalf and as authorized agent of Shell Oil Company
pursuant to the Chemical Authorization Agreement, and Shell Oil Company
as represented by Shell Chemical Company dated July 1, 1998;
"SHELL FACILITIES" means the MEK plant, Utilities and Biotreater Units
situated at the West Site and the associated assets, facilities and
rights;
"SHELL'S HSE AND TECHNICAL STANDARDS" means those standards as defined
and applied by Shell for services and operations hereunder at the
location of the Site, including EGGS, SFME and site wide procedures;
"SHORT TERM SUMF" has the meaning given to this term in Article 4;
"SITE" means the commercial or industrial complex or facilities
described in Exhibit A;
"SOLE SUPPLIER SUMF" has the meaning given to this term in Article 4;
"STEERING COMMITTEE" means a steering committee consisting of senior
representatives of the Company and Shell which has responsibilities
beyond the daily operation of the SUMF Assets and Company Facilities;
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"SUMF" means the site services, utilities, materials and facilities to
be supplied under this Agreement;
"SUMF ASSETS" means those assets of the Supplier used in the provision
of SUMF;
"SUMF CHARGE(S)" or "CHARGE(S)" means the charge(s) to be paid by the
Purchaser to the Supplier for each SUMF Item in accordance with Article
5 and Article 6;
"SUMF ITEM" or "ITEM OF SUMF" means any part of SUMF;
"SUPPLIER" means the party who supplies or operates a particular SUMF
Item;
"THIRD PARTY" means any person or company other than the Supplier, the
Purchaser or their respective Affiliates;
"TRANSACTION DOCUMENTS" means (i) the MSA, and (ii) all documents
executed in connection therewith or relating thereto, including,
without limitation, the following which are defined in the MSA: this
Agreement, the Intellectual Property Transfer and License Agreement,
the Environmental Agreement, the Norco Ground Lease, the Norco Space
Lease (Administration Building) and Norco Space Lease (Laboratory,
Office Control Room, Warehouse and C-Unit Space Lease);
"USER" means any company, entity, division, or business unit (including
divisions and business units of the Supplier and its Affiliates) to
which SUMF or its equivalent is furnished by the Supplier at the Site;
"VARIABLE COSTS" means those operating costs, without duplication of
any Direct Site Cost, incurred at the Site by Supplier in providing
SUMF which vary primarily based on consumption, usage or production,
and which charges are reconcilable with the cost accounting system of
the Supplier existing as of the Effective Date and as from time to time
modified by Supplier (if applied to the entire Site), including the
costs of air, cooling water, fuel, nitrogen, process materials, steam
and applicable taxes, but not depreciation;
"WEST SITE" means the facilities described in Exhibit A; and
"Willful Misconduct" means an intentional act or omission which is in
disregard of (a) a known risk or a risk so obvious that it cannot be
said one was truly unaware of it and (b) a risk so great that it is
highly probable that harm will follow.
ARTICLE 2
INTERPRETATIONS
2.1 In this Agreement, unless otherwise specified:
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(a) references to Articles, Exhibits and Schedules are to Articles
of, and Exhibits and Schedules to, this Agreement;
(b) use of any gender includes the other genders;
(c) references to a "company" shall be construed so as to include
any company, corporation or other body corporate, wherever and
however incorporated or established;
(d) references to a "person" shall be construed so as to include any
individual, firm, company, any federal, state, local or
municipal governments, or any agency of a federal, state, local
or municipal authority or government body, or any joint venture,
association or partnership (whether or not having separate legal
personality);
(e) references to "USD" are to United States dollars;
(f) any reference to a "day" (including within the phrase "Business
Day") shall mean a period of 24 hours running from midnight to
midnight;
(g) a reference to any other document referred to in this Agreement
is a reference to that other document as amended, varied,
novated or supplemented at any time;
(h) where a word or phrase is given a particular meaning, other
parts of speech and grammatical forms of that word or phrase
have corresponding meanings;
(i) references to the Purchaser shall be deemed to include its
successors and assigns and references to the Supplier shall be
deemed to include its successors and assigns; and
(j) a reference to this "Agreement" or any other agreement or
document or statute or statutory provisions shall be construed
as a reference to it as amended, modified or novated from time
to time.
2.2 The table of contents and headings in this Agreement are inserted for
convenience only and shall not be taken into consideration in the
interpretation or construction of this Agreement.
2.3 In the event of a conflict between the terms and conditions set out in
the main body of this Agreement and any of the Exhibits or SCHEDULES or
attachments hereto, the relevant Exhibit, SCHEDULE or attachment shall
prevail unless expressly stated otherwise in this Agreement.
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2.4 In the event of any inconsistency between the provisions of this
Agreement and the Intellectual Property Transfer and Licensing
Agreement, the provisions of the Intellectual Property Transfer and
Licensing Agreement shall prevail.
2.5 Purchaser and Supplier acknowledge that notwithstanding any provision
to the contrary in this Agreement, the provisions of Clause 10.3 of the
Environmental Agreement shall apply as between any Seller Indemnified
Party (as defined in the Environmental Agreement) and SER Indemnified
Party (as defined in the Environmental Agreement) and any Person (as
such term is defined in the MSA) to whom a transfer or assignment is
made in accordance with Clause 11.1 of the Environmental Agreement. Any
obligation or liability of any SER Indemnified Party (as defined in the
Environmental Agreement) or Seller Indemnified Party (as defined in the
Environmental Agreement) under this Agreement shall be without
prejudice to the rights, if any, of the relevant party to claim
Environmental Damages (as defined under the Environmental Agreement)
under the Environmental Agreement
ARTICLE 3
OBJECT AND SCOPE
3.1 Subject to Section 8.5 and Article 18, Shell as the Supplier agrees to
supply the Company and the Company as Purchaser agrees to purchase the
SUMF Items described herein under the terms and conditions set out in
this Agreement. Except as otherwise provided in Section 3.5 and
SCHEDULE 3.1, the Company may purchase the amounts of each SUMF Item
set forth in SCHEDULE 3.1 up to its Firm Capacity Reservation from
Shell until termination of such SUMF Item in accordance with the
provisions of this Agreement. Upon the termination of a Short Term SUMF
Item, Shell shall physically disconnect from that SUMF Item's delivery
system in the time and manner instructed by Shell and Shell shall pay
all costs associated with the physical disconnection, except such costs
in connection with the relocation of the assets of the Company from the
Norco warehouse when the lease of such warehouse terminates. Upon the
termination in advance of the end of the initial or any extension term
of a Long Term SUMF Item, the Party terminating the SUMF Item shall
physically disconnect from that SUMF Item's delivery system in the time
and manner instructed by Shell and the terminating party shall pay the
costs associated with the physical disconnection. At the end of the
initial or any extension term of a Long Term SUMF Item or a Sole
Supplier Item, all costs associated with the physical disconnection
shall be paid 50% by Purchaser and 50% by Supplier. Each Party agrees
to cooperate with the other Party in order to facilitate disconnection
and minimize disconnection costs. In no event shall the Supplier be
obligated to pay any start up costs of either Party to replace the
discontinued SUMF Item.
3.2 Subject to Section 8.5 and Article 18, the Company as the Supplier
agrees to supply Shell and Shell as Purchaser agrees to purchase the
SUMF Items described herein under the terms and conditions set out in
this Agreement. Except as otherwise provided in Section 3.5 and
SCHEDULE 3.2, Shell may purchase the amounts of each SUMF Item set
forth in
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SCHEDULE 3.2 up to its Firm Capacity Reservation from the Company until
termination of such SUMF Item in accordance with the provisions of this
Agreement.
3.3 A description and, where appropriate, the technical specifications of
the SUMF Items which the Parties have agreed to provide hereunder, the
price, delivery terms, specific exclusions and limitations, if any, on
consumption and supply, and such other details as this Agreement may
require or as the Parties may agree, of each SUMF Item are set out in
this Agreement.
3.4 Any Firm Capacity Reservation amounts for each SUMF Item as agreed by
the Parties are set out in SCHEDULE 3.4(A) and (B).
3.5 If the Purchaser or the Supplier subsequently wishes to change the
nature, quantity or type of any SUMF Item provided hereunder, the other
party shall use reasonable efforts to accommodate such request but,
except as set forth in the next sentence, with no obligation to make
such change. The Purchaser shall have the right upon ninety (90) days
advance written notice in the case of a Short Term SUMF Item and three
(3) years advance written notice in the case of a Long Term SUMF Item
(or such shorter period of time as may be required to terminate such
SUMF Item under the applicable schedule) to reduce its Firm Capacity
Reservation for such SUMF Item provided hereunder and when reduced
receive a pro rata reduction in the Fixed Operating Costs and
Infrastructure Fees for such SUMF Item. There shall be no minimum or
maximum limit on the extent of the reduction except as the Supplier may
require for the protection of health, safety or the environment.
3.6 Title to and risk of loss of a SUMF Item shall pass from the Supplier
to the Purchaser at the Delivery Point(s) specified in the applicable
SCHEDULE.
3.7 SUPPLIER MAKES NO REPRESENTATIONS OR WARRANTIES EXPRESS OR IMPLIED WITH
RESPECT TO THE SUMF ITEMS EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT. NO REPRESENTATION OR WARRANTY SHALL BE IMPLIED UNDER THIS
AGREEMENT OR AT LAW, INCLUDING BUT NOT LIMITED TO, WARRANTY OF
MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR
ADEQUACY AS TO THE SUMF ITEMS. SUPPLIER PROVIDES NO WARRANTY FOR THE
PERFORMANCE OF ANY COMPUTER SYSTEMS, DIGITAL DEVICES AND COMPONENTS
THEREOF. PURCHASER ACKNOWLEDGES THAT EXCEPT AS EXPRESSLY SET FORTH
HEREIN, NO REPRESENTATIONS OR WARRANTIES ARE BEING MADE HEREIN AND
PURCHASER RELEASES AND RELIEVES SUPPLIER FROM AND HEREBY WAIVES ANY
SUCH OTHER REPRESENTATIONS OR WARRANTIES.
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ARTICLE 4
CATEGORIES OF SUMF
4.1 SUMF Items specified in SCHEDULES 3.1 and 3.2 as "Short Term SUMF
Items" shall be supplied to the Purchaser by the Supplier on an initial
short term basis upon the terms and for the period stated therein,
provided that such term shall be automatically extended unless either
Party elects to terminate the supply of a particular Short Term SUMF
Item. A Short Term SUMF Item may be terminated as provided in Article
10.
4.2 SUMF Items specified in SCHEDULES 3.1 and 3.2 as "Sole Supplier SUMF
Items" may not be terminated by the Purchaser or the Supplier except by
way of a termination of this Agreement as a whole.
4.3 SUMF Items specified in SCHEDULES 3.1 and 3.2 as "Long Term SUMF Items"
shall be supplied to the Purchaser by the Supplier on a long term
basis. Article 10 provides specific termination clauses for Long Term
SUMF Items.
ARTICLE 5
SUMF CHARGES
5.1 In consideration of the supply of the SUMF Items by the Supplier to the
Purchaser, as provided herein, the Purchaser shall pay the Supplier the
SUMF Charges as specified in the relevant SCHEDULES. In no event shall
SUMF Charges include any costs charged to Purchaser under any other
agreement with the Supplier or any of its Affiliates.
5.2 In addition to the SUMF Charges set forth in Section 5.1 and the
Schedules, the Purchaser shall be responsible for any existing or
future sales tax, use tax, value added tax, environmental tax or other
governmental charge or tax (other than taxes measured by income) levied
or imposed on the Supplier with respect to any SUMF Items consumed by
the Purchaser. The Purchaser shall also bear any increase in the cost
of providing a SUMF Item resulting from a change in local, state, or
federal tax law. The charges to be paid by Purchaser under this Section
5.2 shall be without duplication to the charges set forth in the
Schedules and Section 5.1.
ARTICLE 6
SUMF CHARGES WITH REFERENCE TO COST
Where Charges for SUMF Items are to be determined wholly or partly by reference
to cost the following shall apply:
6.1 (a) Except as otherwise provided in this Article 6 or in the
SCHEDULES, the Purchaser shall pay:
(i) its share of Variable Costs for each SUMF Item based on
the Purchaser's consumption of such SUMF Item;
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(ii) its share of Fixed Operating Costs for each SUMF Item
based on the fraction equal to the Purchaser's Firm
Capacity Reservation of such SUMF Item compared to the
Total Firm Capacity of such SUMF Item as set forth in
Schedule 3.4; and
(iii) the Infrastructure Charge specified in SCHEDULES 3.1 and
3.2.
(b) Notwithstanding the provisions of Section 6.1(a)(ii) to the
contrary:
(i) the amount of the Purchaser's share of Fixed Operating
Costs for all Long Term and Sole Supplier SUMF Items for
calendar year 2001 shall not be increased or decreased
from the amount of Purchaser's share of such Fixed
Operating Costs for calendar year 2000 (determined on an
annualized basis) by an amount exceeding the product of
(x) the total amount of such Fixed Operating Costs
payable by the Purchaser under this Agreement for
calendar year 2000 and (y) 3% plus the percentage
increase, if any, in the Cost Index for 2000 over the
Cost Index for 1999; and
(ii) the amount of the Purchaser's share of Fixed Operating
Costs for all Long Term and Sole Supplier SUMF Items for
each of the next four calendar years (2002 through 2005)
shall not be increased or decreased from the amount of
Purchaser's share of such Fixed Operating Costs in the
immediately preceding calendar year (as limited by the
provisions of this Section 6.1 (b)) by an amount
exceeding the product of (x) the total amount of such
Fixed Operating Costs payable by the Purchaser under
this Agreement for the immediately preceding calendar
year and (y) 3% plus the percentage increase, if any, in
the Cost Index for such immediately preceding calendar
year over the Cost Index for the calendar year
immediately preceding such immediately preceding
calendar year.
(c) For purposes of the foregoing computation, (A) Fixed Operating
Costs shall exclude costs incurred in connection with
turnarounds on SUMF Assets, planned and unplanned major special
maintenance on SUMF Assets, costs for usage in excess of Firm
Capacity Reservations (i.e., Exceedance Costs) and fines and
remediation costs permitted to be charged to the Purchaser as
part of Fixed Operating Costs pursuant to this Agreement (B) the
amount comprising the Purchaser's share of Fixed Operating Costs
for any SUMF Item in a prior year shall be normalized to the
extent the Purchaser's Firm Capacity Reservation for such SUMF
Item in such year (i) differs from its Firm Capacity Reservation
for such SUMF Item in the current year and (ii) differs as a
result of additional SUMF Item or type of SUMF being supplied.
The term "Cost Index" means, as to 50% of such index, the
average of the wages in the chemical process industry for a
calendar year and, as to the remaining 50% of such index, the
average of the materials costs in the chemical process industry
for a calendar year, in each case as reported by the Chemical
Engineering Magazine under its Chemical
13
Engineering Plant Cost Index for Construction Labor or its
Chemical Engineering Plant Cost Index for pipe valves and
fittings, whichever index is applicable or, if that publication
is no longer issued, by another publication agreed upon by the
parties.
6.2 Costs will be ascertained and charged pursuant to the Supplier's cost
accounting practices which the Supplier represents are used for, or are
directly reconcilable with, its Financial Reporting Accounts. The
Supplier may modify its cost accounting practices for its Financial
Reporting Accounts from time to time in the normal course of business
in conformity with generally accepted accounting principles but in all
events, after the Supplier has permitted the Purchaser to review, and
has consulted with the Purchaser, as to such modification.
Notwithstanding the foregoing, the Seller shall not make any such
modification unless (i) it is for a legitimate business purpose not
designed solely to increase SUMF Charges to the Purchaser or to Users
generally and (ii) it does not have a discriminatory economic effect on
the Purchaser relative to other Users except as may be permitted in
this Agreement or as may be implemented to correct errors. The cost of
any component of SUMF Items procured by Supplier through a Third Party
shall be passed through to Purchaser at Supplier's cost plus an
allocation and charge for any applicable Overheads. The Parties
expressly acknowledge that any Dispute pursuant to this Section 6.2 is
subject to the provisions of Article 19.
6.3 The Purchaser shall not be responsible for any termination costs
resulting from the Supplier's fixed cost reduction efforts in response
to a reduction or termination of demand by any User other than the
Purchaser except to the extent that the Purchaser benefits from the
reduction efforts, in which case the Purchaser shall bear its
proportionate share of the cost (calculated using the proportion of
financial participation in the benefit) up to but not in excess of the
benefit derived.
The Purchaser shall pay the reasonable costs, including personnel
termination costs (including those actuarially determined), resulting
from the Supplier's fixed cost reduction efforts in response to a
permanent or long-term reduction or termination of demand by the
Purchaser of a long term SUMF Item pursuant to this Agreement.
6.4 The Purchaser shall bear the costs, of any redundancy program required
as a result of manpower productivity improvements to a particular SUMF
Item in proportion to the reduction of the relevant SUMF Charges to the
Purchaser before and after the productivity improvement as compared to
such reduction of SUMF Charges to all other Users up to, but not in
excess of such reduction in SUMF Charges. Notwithstanding anything
contained in this Agreement to the contrary, (i) the Purchaser shall
not be responsible for any costs of termination by the Supplier of an
employee unless such termination occurs within 180 days from the date
of reduction or termination by the Purchaser of a Long Term SUMF Item,
(ii) the Purchaser shall only be responsible for (A) termination costs
paid to such a terminated employee in accordance with the Supplier's
policies in effect on the date of such reduction or termination and (B)
salaries and benefits which are provided to such a terminated employee
pursuant to the Supplier's policies in effect on the date of
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such reduction or termination for up to sixty (60) days following such
date and (iii) an employee who is transferred by the Supplier to an
Affiliate as a result of any such termination or reduction shall not be
considered a terminated employee for purposes of Section 6.3 or this
Section 6.4 unless such transfer results in severance costs.
6.5 Unless the Parties agree otherwise in EXHIBIT A, the Parties shall keep
accurate books and records of their activities relevant to this
Agreement, for at least three (3) years after the calendar year in
question or such longer period as may be required by law.
6.6 To verify the correctness of any invoices issued and payments made
hereunder for the current calendar year and for any of the three (3)
preceding years, to verify the implementation of the Supplier's
curtailment and other procedures, and to verify initial Firm Capacity
Reservation, a Party, upon at least sixty (60) days prior written
notice and at reasonable times and intervals but not more than once in
any calendar year, may require that, at that Party's cost, an
independent auditor (or an internal auditor as to a Party's auditing
its own books), perform an audit for such purposes.
The Parties shall provide such auditors with the necessary data and
explanations reasonably necessary for the calculation of the SUMF
Charges and the basis therefor.
The requesting Party undertakes to procure that such auditors are bound
by obligations of confidentiality at least as strict as those set out
in Article 12.
Any report produced by such auditors shall be provided to both the
Purchaser and the Supplier and shall state the results of the
aforementioned verifications. If such report reveals that errors have
been made and that Purchaser was overcharged or undercharged by an
amount equal to or greater than USD 50,000 or its equivalent in local
currency, the report shall state the nature, amount and consequences of
such error(s) together with such additional information as is
reasonably necessary to explain the genesis of said errors and to
enable the Parties to avoid recurrence thereof.
Notwithstanding the first paragraph of this Section 6.6, the costs of
the audit shall be borne by the Supplier if the report reveals an
overcharge in an amount equal to or greater than USD 50,000 or its
equivalent in local currency. Interest on any overpayment or
underpayment shall accrue at the Interest Rate from the date the
overpayment was made or the underpayment amount would otherwise have
been due until the date of refund or payment, as applicable.
Any audit shall be pursued diligently and completed no later than
ninety (90) days after its commencement and any claims must be made in
writing within ninety (90) days following completion of the audit. If
either Party submits a claim following audit, and the Parties are
unable to resolve the claim within sixty (60) days, the matter will be
submitted for Dispute Resolution, in accordance with the provisions of
Article 19.
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ARTICLE 7
PAYMENT TERMS
7.1 The Purchaser shall pay the SUMF Charges in the currency specified in
EXHIBIT A.
In no event shall either Party be entitled to set off or reduce any
payments due and owing to the other Party under this Agreement by any
amount which the first Party claims are owed to it by the other Party
pursuant to any other agreement between the Parties.
7.2 Unless otherwise set out in the relevant SCHEDULES, the provisions set
out below apply:
(a) Payment shall be made for the SUMF Item by the Purchaser in the
manner set forth in Schedule 7.2.
(b) The final reconciliation for a year shall be made within the
first sixty (60) days of the end of such preceding year or such
other period as may be agreed in writing. Overcharges or
undercharges, plus Interest at the Interest Rate, shall be
credited or debited in the first billing cycle of the next
accounting period.
(c) The invoices shall be broken down in sufficient detail to
indicate the SUMF Charges for each particular SUMF Item supplied
during the period in question. The SUMF Charge for each SUMF
Item shall in turn be broken down in sufficient detail as the
Purchaser may reasonably request and as the Supplier can
reasonably provide.
(d) Subject to Section 7.2(e) and 7.2(f), the Purchaser shall pay
each invoice on or before the due date to which such invoice
relates. From the due date until actual payment, interest will
accrue on the amount owing at the Interest Rate.
(e) If the Purchaser disagrees with an amount invoiced, the
Purchaser shall advise the Supplier in writing of the amount
disputed within thirty (30) days of the date of the invoice and
the reason why the Purchaser considers the SUMF Charges not to
be properly made. Subject to Section 7.2(f), the Supplier
permits the Purchaser to defer payment of the disputed invoice
amount, and only that amount, if the disagreement cannot be
resolved before the normal due date. Payment of the undisputed
portion of an invoice shall not constitute approval of the
entire invoice. Any such deferred payment shall bear interest at
the Interest Rate from the original due date until the date on
which actual payment is made.
(f) The Parties shall meet to resolve any dispute with respect to an
invoice as expeditiously as possible. The Supplier shall provide
to the Purchaser within thirty (30) days after receipt of such
payment a response answering the question in reasonable detail
sufficient to permit the Purchaser to verify the accuracy of
such invoice. The Purchaser shall either accept the Supplier's
response or give written notice to the Supplier that the
Purchaser continues to question such invoice.
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Promptly after receipt of such notice, the Supplier and the
Purchaser shall negotiate in good faith with respect to
resolving such question. If the Supplier and the Purchaser
cannot resolve such question in a mutually satisfactory manner
within twenty (20) days after such notice shall have been given,
the question shall promptly be submitted to a firm of
independent public auditors, of international repute, as
determined by mutual agreement between the Supplier and the
Purchaser within another twenty (20) days or, in default of
agreement, as chosen by lot from among four independent public
auditors, two of which shall be selected by the Supplier and two
of which shall be selected by the Purchaser. Such firm will
review the applicable books and records of the Supplier and the
Purchaser and make such other investigations as such firm shall
deem necessary to make a recommendation to the Parties for a
resolution of such question. The costs of retaining such firm
shall be borne by the Purchaser unless the firm determines that
the Purchaser was overcharged by an amount equal to or greater
than USD 35,000 or its equivalent in local currency, in which
case the costs of retaining such firm shall be borne by the
Supplier. The recommendation of the auditors shall be final and
binding on the parties and not subject to challenge and
resolution under Article 19 and judgment thereon may be entered
in any court of competent jurisdiction.
(g) Any refund of a disputed amount, or payment of any additional
sums, shall be promptly made following the final determination
as aforesaid and shall include interest at the Interest Rate
based on the actual number of days elapsed from the due date of
the original invoice to the date such refund or additional
payment is made.
(h) Unless agreed otherwise between the Parties in Exhibit A, the
Supplier shall provide the Purchaser with a quarterly report on
variations from the Annual Plan & Budget no later than thirty
(30) days from the end of the relevant quarter. In the event of
a difference between the Annual Plan & Budget and actual results
exceeding 3% or the equivalent of at least USD 50,000, whichever
is greater, the Supplier shall consult with the Purchaser and
provide relevant explanations for such differences. The Parties
will discuss which actions, if any, are to be taken with respect
to such differences.
ARTICLE 8
ANNUAL FORECAST, ANNUAL PLAN & BUDGET AND CURTAILMENT
8.1 For operational forecast purposes only, unless the Purchaser otherwise
submits to Supplier on or before 1st June in each calendar year a
non-binding annual forecast of its quarterly volume requirements for
each SUMF Item for the forthcoming calendar year and estimates of its
volume requirements for each SUMF Item for the following four (4)
years, the Supplier shall use the prior year's volume forecast for SUMF
Items and estimates of volume requirements for the forthcoming year and
four subsequent years.
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The Purchaser shall update any such forecast on or before September 1st
of each year to provide its actual forecast.
8.2 Not later than 1st December in each calendar year or such other date as
the Parties may agree, the Supplier shall prepare and submit to the
Purchaser an operational forecast of the SUMF Charges for the
forthcoming calendar year.
8.3 The Purchaser shall review the forecast referred to in Section 8.2. The
Purchaser shall raise any objections it may have no later than thirty
(30) days after submission of such forecast, or by such other time as
the Parties may agree. Disputes over the forecast shall be communicated
to the Monitoring Committee for resolution.
8.4 Upon the approval of both Parties, the forecast referred to in Section
8.2 shall become the "Annual Plan & Budget." Under no circumstance
shall the Annual Plan & Budget (or lack thereof) relieve the Purchaser
from its payment obligations under Articles 5, 6 and 7 for SUMF Items
provided to it under this Agreement.
For each SUMF Item, the Annual Plan & Budget(s) for the calendar year
2000 is set forth in SCHEDULE 8.4.
8.5 In the event that any SUMF Items are not available at the planned
volumes for any reason whatsoever, the Supplier shall implement the
then current curtailment procedures followed by the Supplier and as
specified in the applicable SCHEDULES. Unless otherwise provided in any
SCHEDULE hereto, such curtailment procedures will be based upon the
following priorities: (i) safety; (ii) minimizing adverse environmental
impact; and (iii) sustaining the operations of both Shell and the
Company and the Site as a whole.
8.6 The Supplier shall have the right to selectively impose curtailment
based upon the foregoing considerations regardless of the cause of the
curtailment and without liability for any Loss or Damage. Additional
general curtailment provisions are set forth in Schedule 8.6. This
Section 8.6 does not permit a Supplier to curtail based on business
considerations that prefer one Party. Shell hereby represents and
warrants to the Company that it has made available to the Company a
complete set of the curtailment guidelines in effect as of the date
hereof at the Site.
8.7 If reasonably possible, the Supplier shall advise the Purchaser of any
impending curtailment and the Parties shall cooperate to avoid or
mitigate the effects of such curtailment in an economically efficient
manner.
ARTICLE 9
LIABILITY
9.1 Damage to Assets and Employees.
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(a) Each Party shall, except as provided in Section 9.6, 9.1(b),
9.2(a)(iii), 9.2(b)(iii) and as set forth in Section 9.2(c), be responsible for
any Loss or Damage to such Party's property (including any SUMF Asset of such
Party), and with respect to any SUMF Assets shall be responsible for restoring
such SUMF Asset.
(b) If any Damage or Loss to a SUMF Asset shall occur by reason of the
Gross Negligence or Willful Misconduct of a Party, such Party shall be
responsible for the cost of restoration of such SUMF Asset.
(c) Each Party shall, except as provided in Section 9.2, be responsible
for any Loss or Damage of such Party to any employee of such Party.
9.2 (a) Purchaser Indemnity. Subject to the limitations set forth in this
-------------------
Article 9, the Purchaser shall be responsible for and shall indemnify, defend
and hold harmless the Supplier Indemnitees from and against the following:
(i) any Loss or Damage of Supplier Indemnitees to any of the Purchaser's
Employees attributable to (a) the Purchaser's negligence (excluding
any Loss or Damage attributable to Supplier's negligence and
excluding any Loss or Damage attributable to performance of Employee
Services by Purchaser's Employees), or (b) the Purchaser's Gross
Negligence or Willful Misconduct;
(ii) any Loss or Damage of Supplier Indemnitees to any of the Supplier's
Employees not arising from their performance of Employee Services
attributable to the Purchaser's Gross Negligence or Willful
Misconduct;
(iii) any Loss or Damage to any of the Supplier's property (excluding any
SUMF Asset) attributable to the Purchaser's Gross Negligence or
Willful Misconduct;
(iv) any Loss or Damage of Supplier Indemnitees resulting from Third Party
Claims attributable to (a) the Purchaser's negligence or (b) the
Purchaser's Gross Negligence or Willful Misconduct; and
(v) any Loss or Damage of Supplier Indemnitees to any of Supplier's
Employees arising from their performance of Employee Services
attributable to
(a) the Purchaser's Gross Negligence or Willful Misconduct,
(b) the Purchaser's negligence, or
(c) the Supplier's negligence (but not the Supplier's Gross
Negligence or Willful Misconduct);
provided, however, that, except as provided in Article 14 and Section 9.6, the
-----------------
Purchaser's aggregate liability for any Loss or Damage arising under Section
9.2(a)(ii) or 9.2(a)(iii) shall not (i) in any calendar year, exceed 33 1/3% of
the SUMF Charges in the preceding calendar year (in
19
the first calendar year, 33 1/3% of the SUMF Charges for that calendar year); or
(ii) for loss resulting from any single event, exceed 33 1/3% of the SUMF
Charges in the calendar year in which the Loss or Damage first occurs.
(b) Supplier Indemnity. Subject to the limitations set forth in this
------------------
Article 9, the Supplier shall be responsible for and shall indemnify, defend and
hold harmless the Purchaser Indemnitees from and against the following:
(i) any Loss or Damage of Purchaser Indemnitees to any of the Supplier's
Employees attributable to either (a) the Supplier's negligence
(excluding any Loss or Damage attributable to Purchaser's negligence
and excluding any Loss or Damage attributable to performance of
Employee Services by Supplier's Employees) or (b) the Supplier's
Gross Negligence or Willful Misconduct;
(ii) any Loss or Damage of Purchaser Indemnitees to any of the Purchaser's
Employees not arising from their performance of Employee Services
attributable to the Supplier's Gross Negligence or Willful
Misconduct;
(iii) any Loss or Damage to any of the Purchaser's property (excluding any
SUMF Asset) attributable to the Supplier's Gross Negligence or
Willful Misconduct;
(iv) any Loss or Damage of Purchaser Indemnitees resulting from Third
Party Claims attributable to (a) the Supplier's negligence or (b) the
Supplier's Gross Negligence or Willful Misconduct; and
(v) any Loss or Damage of Purchaser Indemnitees to any of Purchaser's
Employees arising from their performance of Employee Services
attributable to
(a) the Supplier's Gross Negligence or Willful Misconduct,
(b) the Supplier's negligence or
(c) the Purchaser's negligence (but not the Purchaser's Gross
Negligence or Willful Misconduct);
provided, however, that, except as provided in Article 14 and Section 9.6, the
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Supplier's aggregate liability for any Loss or Damage arising under Section
9.2(b)(ii) or 9.2(b) (iii) shall not (i) in any calendar year, exceed 33 1/3% of
the SUMF Charges in the preceding calendar year (in the first calendar year, 33
1/3% of the SUMF Charges for that calendar year); or (ii) for loss resulting
from any single event, exceed 33 1/3% of the SUMF Charges in the calendar year
in which the Loss or Damage first occurs.
(c) If Supplier shall suffer Loss or Damage to SUMF Assets as a result of
the negligence (but not Gross Negligence or Willful Misconduct) of Purchaser or
Supplier, Supplier shall be responsible to timely restore such SUMF Asset as
soon as practical following the damage or destruction and Purchaser shall
reimburse Supplier for an amount equal to (i) the cost to restore such SUMF
Asset multiplied by (ii) the Purchaser's Capacity Reservation for such SUMF
Asset. To cover the risk of the Purchaser being required to bear a proportion of
the cost of restoring a SUMF Asset in respect of which the Supplier has
sustained Loss or Damage, the Purchaser shall insure or, with Supplier's
consent, self-insure.
20
For purposes of avoiding disputes over deminimus Loss or Damages to SUMF
Assets, any Loss or Damage to a SUMF Asset which would result in a claim for
reimbursement against Purchaser under this Section 9.2(c) of less than $75,000
shall not be considered to have resulted from the negligence of Supplier or
Purchaser, except to the extent the Loss or Damage was caused by the Gross
Negligence or Willful Misconduct of such Parties; provided, however, that if, in
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any year, the Supplier shall be precluded from reimbursement from Purchaser by
operation of this sentence in an aggregate amount exceeding $250,000 during any
twelve-month period, then this sentence shall not be effective to limit
reimbursement as to any Loss or Damage during such period.
(d) Each party waives and releases the other Party from and against any
and all liability for Loss or Damage to such Party's assets, excluding any SUMF
Asset, resulting from the simple negligence of the other Party and each Party
shall cause its insurance carrier to waive all rights of subrogation against the
other Party as to such Loss or Damage.
(e) For purposes of this Article 9, the following terms shall be defined
as set forth below:
"Capacity Reservation" means a percentage equal to the result of the
division of (x) the Firm Capacity Reservation of the Company or of Shell as
initially set forth on Schedules 3.4(a) and (b) as modified by funded
expansion of capacity, if any, by (y) the Firm Capacity Reservation of both
the Company and Shell as so set forth or modified.
"Employee" means any employee of the applicable Party.
"Employee Services" shall mean emergency response, medical services,
borrowing of employees of either of the Parties and the site security
services.
"Third Party Claim" means any claim initiated by a person (other than
either Party, their Affiliates or their employees) against an indemnified
party, any of their respective Affiliates or any of their respective
Employees.
"Supplier Indemnitees" means the Supplier, its Affiliates, officers,
directors, employees, agents, servants, and other representatives of each
of them.
"Purchaser Indemnitees" means the Purchaser, its Affiliates, officers,
directors, employees, agents, servants, and other representatives of each
of them.
9.3 A Party shall promptly notify the other Party of any claim made against it
arising out of matters covered in this Article 9. Once the indemnifying
Party accepts its indemnity obligation, it may, at its own cost, conduct
negotiations for the settlement of any claim made against the indemnified
Party, and any litigation that may arise therefrom in such reasonable
manner as the other Party shall from time to time approve, such approval
not
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to be unreasonably withheld. The indemnified Party shall not make any
admission which is prejudicial to the indemnifying Party unless the
indemnifying Party has failed to accept its indemnity obligations within 20
days after having been requested to do so.
9.4 Notwithstanding anything to the contrary contained in this Agreement, under
no circumstance shall a Party or any of its Affiliates be held liable to
the other Party or any of the other Party's Affiliates for any loss of
profit, loss of use, loss of production, loss of contracts or for any other
indirect or consequential damage that may be suffered by the other, or for
any special, exemplary or punitive damages.
9.5 Any SUMF Items procured from a Third Party as indicated in the relevant
Schedules will be provided by the Supplier to the Purchaser under the same
terms and conditions applicable between the Supplier and the Third Party,
and the Supplier shall have no liability with respect to the supply or
performance of such SUMF Items to the extent so supplied.
9.6 Notwithstanding any other provision of this Agreement, each Party shall, to
the fullest extent permitted by law, indemnify, defend and hold harmless
the other Party and its Affiliates from and against any and all
Environmental Loss or Damage and Loss or Damage to an Environmental
Protection System (after giving effect to any recoveries from Third
Parties) in any way resulting from or attributable to a product, material,
feedstock or off-take owned by such Party or its Affiliates, provided
however, that neither Party shall be required to indemnify the other Party
for any Environmental Damage (as defined in the Environmental Agreement)
for which it is entitled to indemnification under the Environmental
Agreement. In addition, each Party shall comply with all environmental
reporting requirements relating to its product, material, feedstock or off-
take.
9.7 Any liability of each Party to the other under this Article 9 shall expire
two years after the date on which the act giving rise to such Party's
liability first occurred, and no claim, demand, action or proceeding shall
be brought or initiated by the claiming Party thereafter, provided that the
liability of a party under Section 9.6 shall not be so limited.
9.8 THE FOREGOING INDEMNITIES SET FORTH IN THIS ARTICLE 9 ARE INTENDED TO BE
ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND
SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE RULE OR ANY SIMILAR
DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITEES BECAUSE OF THE
SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR
OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES. EXCEPT
AS HEREIN SET FORTH NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR
ANY LOSS OR DAMAGE ARISING UNDER THIS AGREEMENT, EACH PARTY HEREBY WAIVING
ALL CLAIMS OR CAUSES OF ACTION OTHER THAN AS SPECIFIED IN ARTICLE 9,
PROVIDED,
22
HOWEVER, THAT NEITHER PARTY WAIVES ANY CLAIMS, CAUSES OF ACTION OR RIGHTS
UNDER THE ENVIRONMENTAL AGREEMENT.
9.9 The provision of this Article 9 are for the benefit of the Purchaser
Indemnitees and the Supplier Indemnitees and no other party shall be
entitled to any benefit of the provisions of this Article 9.
ARTICLE 10
TERM AND TERMINATION
10.1 This Agreement shall be of full force and effect on and from the date
hereof and shall continue for an initial term of twenty (20) years from the
Effective Date and shall be automatically renewed thereafter for extension
terms of five (5) years each, unless terminated earlier as provided for in
this Agreement.
10.2 The Company may, in addition to its other remedies, terminate this
Agreement in its entirety in any of the following circumstances:
(a) if a Bankruptcy Event occurs and is continuing in relation to Shell
and Shell does not provide adequate assurances to the Company within
thirty (30) days of the occurrence of the Bankruptcy Event that Shell
will continue to provide all SUMF Items to the Company on the terms
and conditions of this Agreement;
(b) with no less than twelve (12) months' prior written notice, following
the decision by the Company to discontinue all its operations at the
Site to which SUMF is rendered or alter such operations to such an
extent that no SUMF Item from Shell is required; or
(c) with no less than three (3) years' prior written notice, effective (i)
at the end of the initial twenty (20) year term or (ii) at the end of
any five (5) year extension term, as the case may be.
10.3 The Purchaser may, in addition to other remedies, terminate this Agreement
as to an individual SUMF Item in any of the following circumstances,
provided always that no item of Sole Supplier SUMF may be terminated by the
Purchaser without terminating this Agreement as a whole:
(a) if a Bankruptcy Event occurs and is continuing in relation to the
Supplier and the Supplier does not provide adequate assurances to the
Purchaser within thirty (30) days of the occurrence of the Bankruptcy
Event that the Supplier will continue to provide the particular SUMF
Item to the Purchaser on the terms and conditions of this Agreement;
(b) if, for reasons other than Force Majeure, a SUMF Item is not properly
supplied by the Supplier within specifications and such failure
continues for more than ten
23
(10) business days after thirty (30) days prior written notice from
the Purchaser to the Supplier;
(c) with at least ninety (90) days' prior written notice, or such other
notice period as is provided in the SCHEDULES, for any Short Term SUMF
Item;
(d) with at least three (3) years' prior written notice, or such other
notice period as is provided in the SCHEDULES, for any Long Term SUMF
Item; and
(e) with at least thirty (30) days' prior written notice, upon the
occurrence during any twelve (12) month period of three (3) Force
Majeure events other than Force Majeure events caused by Acts of God
including Acts of God affecting any supplier or Vendor to Supplier
with respect to such SUMF Item.
10.4 Shell may terminate this Agreement in its entirety in any of the following
circumstances:
(a) if a Bankruptcy Event occurs and is continuing in relation to the
Company and the Company does not provide Shell with adequate assurance
(such as a priority lien, advance payment or letter of credit) of
continued payment of the SUMF Charges for all SUMF Items within thirty
(30) days of the occurrence of the Bankruptcy Event;
(b) if for reason other than Force Majeure, the Company conducts its
operations in a manner reasonably believed to be unsafe to either
life, health, property or the environment so as to disrupt Shell's
business conducted at the Site or subject Shell to material HSE risks
or material risks of violation of governmental requirements, fines,
penalties, Third Party claims or claims by its employees, and such
conduct continues for more than ten (10) business days after ninety
(90) days prior written notice by Shell to the Company; provided,
however that if the Company is conducting its operations in compliance
in all material respects with HSE laws, its operations will be
presumed to be safe;
(c) with at least twenty-four (24) months prior written notice, or if that
is impossible, with as much notice as possible under the
circumstances, and in any event promptly after Shell has made such
decision, if Shell decides to cease operations of all or substantially
all of its SUMF Assets at the Site;
(d) with at least three (3) years prior written notice, effective at the
end of the initial twenty (20) year term or at the end of any five (5)
year extension term, as the case may be. Notwithstanding any such
election by Shell to terminate this Agreement under this Article 10,
and except if Shell ceases to operate all or substantially all of the
Site, the Company shall have the right to continue to receive from
Shell any essential Long Term or Sole Supplier SUMF Items for which
the Company cannot obtain a reasonable alternative source elsewhere;
and
24
(e) if the Purchaser without proper justification fails to pay any
undisputed SUMF Charge within three (3) months of the date when such
payment became due, and such failure continues thereafter for a period
of sixty (60) days after written notice from the Supplier.
10.5 Upon termination of this Agreement hereunder, the Parties, acting
reasonably and in good faith, shall negotiate for the continued provision
of any essential SUMF Items on commercially competitive terms and
conditions, including price which shall in any event be sufficient to
provide Supplier with full recovery of its cash costs plus a return on
capital and capital reimbursement consistent with the other SUMF
infrastructure charges contained in this Agreement. In addition, if such
termination occurs at any time after the tenth anniversary of the Effective
Date, Shell shall consider, without obligation, the same remedies which it
may consider upon termination of the provision of SUMF Items during the
ten-year period commencing with the Effective Date pursuant to Section
10.7.
10.6 The Supplier may, in addition to other remedies, terminate this Agreement
as to an individual SUMF Item in any of the following circumstances,
provided that no Item of Sole Supplier SUMF may be terminated by the
Supplier without terminating this Agreement as a whole:
(a) if a Bankruptcy Event occurs and is continuing in relation to the
Purchaser and the Purchaser does not provide adequate assurance (such
as a priority lien, advance payment or letter of credit) of continued
payment to the Supplier of the SUMF Charges relating to such SUMF Item
within thirty (30) days of the occurrence of the Bankruptcy Event;
(b) if the Purchaser fails to pay any undisputed SUMF Charge for an
individual SUMF Item within three (3) months of the date when such
payment fell due, and such failure continues for an initial period of
at least sixty (60) days after written notice from the Supplier;
(c) with at least 12 months prior written notice, or if that is
impossible, with as much notice as possible under the circumstances,
and in any event promptly after the Supplier has made such decision,
if the Supplier decides to cease the supply to the entire Site of a
SUMF Item that is not Sole Supplier SUMF;
(d) with at least ninety (90) days prior written notice for any Short Term
SUMF Item, but such termination by the Supplier may occur only on or
after the initial term of the Short Term SUMF; and
(e) with three (3) years' prior written notice effective (i) at the end of
the initial period of twenty (20) years or (ii) at the end of any
extension period of five (5) years, as the case may be, for any Long
Term SUMF Item.
25
10.7 Each Party shall exercise its reasonable efforts to minimize any adverse
effect to the other Party resulting from the termination of the rendering,
in whole or in part, of any SUMF Items under this Agreement. In the event
Shell ceases to provide any Long Term or Sole Supplier SUMF Item during
the ten-year period following the Effective Date as a result of its
cessation of operations of all or substantially all of its SUMF Assets at
the Site or its cessation of supply to the entire Site of such SUMF Item,
Shell shall continue to provide the Company with such SUMF Items for the
balance of the ten-year period on a basis which is the economic equivalent
of Shell's supply to the Company of such SUMF Items prior to Shell's
cessation of operations or supply. The manner in which Shell continues to
provide such SUMF Items on an economically equivalent basis shall be
within Shell's sole discretion and may include the transfer by Shell of
SUMF Assets, the assignment of all or part of this Agreement to Third
Parties, the building of alternative assets and the procurement of
comparable items from Third Parties. In the event such termination occurs
following the tenth anniversary of the Effective Date, the provisions of
Section 10.5 shall apply.
10.8 Any termination of this Agreement, in whole or in part, including the
termination of an individual SUMF Item, shall be final, and neither Party
shall have the right to resumption of the terminated SUMF Item under this
Agreement or another agreement.
10.9 Termination of this Agreement under this Article 10 shall not affect the
rights and obligations of the Parties accrued to the date of termination
and provisions of Articles 6 and 7 (as to audit and dispute rights), 9,
10.5, 10.7, 10.8, 10.10, 10.11, 11, 12, 19, 23, 25, 26, 27 and 28 and this
Article 10.9 which shall continue in full force and effect.
10.10 Within 60 days after termination of this Agreement, the Supplier shall
provide a final reconciliation. Any overcharges or undercharges shall be
paid by the Party owing the same within twenty (20) days following the
final reconciliation (after any required adjustments have been made). The
final recalculation shall be broken down in sufficient detail as the
Purchaser may reasonably request and as the Supplier can reasonably
provide. From the due date of the reconciliation payment, interest will
accrue at the Interest Rate. The Parties shall meet to resolve any dispute
relating to the final reconciliation as expeditiously as possible.
10.11 Any termination of this Agreement, either in whole or in part, and
termination of any individual SUMF Item shall be without prejudice to the
accrued rights and liabilities of the Parties at the time of such
termination and all provisions of this Agreement necessary for the full
enjoyment thereof shall survive termination for the period so necessary.
10.12 If there is a dispute regarding the termination of this Agreement or a
SUMF item under Sections 10.2, 10.3, 10.4 or 10.6, no termination shall
occur until sixty (60) days following resolution of the dispute (i) under
Article 19 or Section 7.2 (f), as applicable or (ii) by written agreement
of the Parties.
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ARTICLE 11
INTELLECTUAL PROPERTY RIGHTS
11.1 Neither this Agreement nor the performance by any of the Parties of its
duties hereunder shall operate to convey, license or otherwise transfer
from one Party to another any patent, know-how, trade secrets or other
intellectual property rights.
11.2 The copyright, property and any other industrial property rights in any
Confidential Record or other material supplied under this Agreement shall,
in the absence of any express provision to the contrary thereon, remain
with the disclosing Party.
ARTICLE 12
CONFIDENTIALITY
12.1 Subject to Section 12.2, each Party shall treat as strictly confidential
(and shall not disclose) all information received or obtained as a result
of entering into or performing this Agreement which relates to:
(a) the provisions of this Agreement;
(b) the negotiations relating to this Agreement;
(c) the performance of this Agreement;
(d) the other Party or any aspect of its business or operations; or
(e) the subject matter of this Agreement.
12.2 Either Party may disclose information which would otherwise be confidential
if and to the extent:
(a) required by the law of any jurisdiction to which the disclosure is
subject;
(b) required by any securities exchange or agency to which either Party is
subject, wherever situated, whether or not the requirement has the
force of law;
(c) disclosed on a strictly confidential basis to the professional advisers
or auditors of the Party or to any actual or potential bankers or
financiers of that Party;
(d) disclosed on a strictly confidential basis to an Affiliate or
Affiliates;
(e) disclosed on a strictly confidential basis to bona fide potential
purchasers of a proprietary interest or bona fide potential or actual
operator of any of the Company Facilities or the Shell facilities;
27
(f) disclosed to the corporate shareholders or other equity owner of the
Parties;
(g) that the information is already known to the Party at the time of
disclosure by the disclosing Party through no fault of that Party;
(h) that the information has come into the public domain through no fault
of that Party;
(i) disclosed in order to seek enforcement of, or to defend, the
contractual rights or obligations of a Party under this Agreement, any
Transaction Document or other related agreement or to satisfy an
obligation or duty under this Agreement; or
(j) that the other Party has given prior written approval to such
disclosure.
12.3 The restrictions contained in Article 12.1 shall continue to apply for one
(1) year after (i) the termination of this Agreement, or (ii) the
termination of an individual SUMF Item, but only as to information relating
to such SUMF Item.
ARTICLE 13
ADDITIONAL SUMF AND CAPITAL IMPROVEMENTS TO SUMF ASSETS
13.1 Purchaser may submit from time to time to Supplier written requests for
Supplier to undertake capital improvement projects relating to the supply
of SUMF Items. Any such requests shall specify in reasonable detail the
capital improvements to be made, any permits that may be required, the
estimated cost of such capital improvements, any proposed changes to this
Agreement, and any other relevant information relating to such capital
improvement project. Supplier agrees that it will consider in good faith
any such request, but Supplier shall have no obligation to agree to
undertake any such capital improvement project and may reject any request
by Purchaser. Supplier shall provide Purchaser a written explanation for
the rejection. If Supplier agrees to undertake any such capital improvement
project, Purchaser shall be responsible for all costs associated with such
project, without duplication of other amounts paid or payable by Purchaser
under this Agreement, including (a) the cost of completing the capital
improvements, (b) Supplier's costs and expenses incurred in connection with
such project, and (c) any increased costs of operation suffered by Supplier
as a result of such project, provided, however, that if other persons
receive any of the benefits of such capital improvement project, such other
persons shall bear their respective pro rata shares of all costs associated
with such project (based upon and only to the extent of the relative
benefits received by them), and the Purchaser's costs with respect thereto
shall be reimbursed by the Supplier as, when, if and to the extent savings
are received or as, when , if and to the extent the other person utilizes
such benefits.
Notwithstanding anything contained herein to the contrary, the Purchaser
shall not be required to seek increased capacity from the Supplier and
shall have the right to satisfy its
28
needs, if any, for increased capacity from other persons, consistent with
Legal Requirements and the rights of the Parties under this Agreement.
13.2 If a capital improvement to a SUMF Asset would not be otherwise required
by applicable law or regulation but for the presence of Purchaser's process
or products or by-products, the Purchaser shall be required to pay one
hundred percent of the costs for the mandated improvement to any SUMF
Asset, provided, however, that if any other person receives any of the
benefits of the capital improvement, then such other persons shall bear
their respective pro rata shares of all costs associated with such capital
improvement (based upon and only to the extent of the relative benefits
received by them), and the costs which the Purchaser would otherwise be
required to pay shall be reimbursed by the Supplier as, when, if and to the
extent savings are received or as when, if, and to the extent the other
persons utilize such benefits accordingly.
13.3 If either Party determines that a service has historically been supplied by
the other Party but such service is not included in this Agreement, then
the Party that historically provided such service shall make the service
available to the other Party (but only if such service is not readily
available elsewhere) at a price and on terms mutually agreeable, but
following the same concepts as to Direct Site Costs, Variable Costs and
Infrastructure Charges as set forth herein.
13.4 In connection with the operations by the Supplier, the Supplier may
utilize, with the consent of the Purchaser, personnel of Purchaser to
render services for the Supplier, and correspondingly, Purchaser may
utilize, with the consent of Supplier, personnel of Supplier to render
services for the Purchaser. In either such event, the services shall be
deemed rendered pursuant to the terms of this Agreement following the same
pricing concepts.
ARTICLE 14
DAMAGE TO SUMF ASSETS
14.1 If the owner does not timely fulfill its obligation to restore the SUMF
Asset, the other Party may at its discretion take such other reasonable
measures as are necessary or useful to find an alternative source for any
relevant SUMF Item or its equivalent for the benefit of all Users on a
temporary basis until such restoration is complete.
14.2 A Party who causes damage to a SUMF Asset as a result of its own Gross
Negligence or Wilful Misconduct shall be responsible for any incremental
costs of such alternative SUMF Items so that the Users of such SUMF Items
other than such responsible Party or its Affiliates pay the same amount for
such SUMF Items during such temporary period as such Users paid prior to
the damage or destruction of the relevant SUMF Assets.
29
ARTICLE 15
METERING OR ALLOCATION OF SUPPLY, CONSUMPTION AND DELIVERY
15.1 The quantities of certain SUMF Items supplied hereunder shall be measured
by allocation or by a meter or other appropriate device (the "METER")
located at or near the Delivery Point(s) specified in SCHEDULES 3.1 and
3.2. The Meter shall be installed, owned and operated at the expense of the
Party indicated in the applicable schedules as the Meter owner. The Meter
owner shall read the Meter on a regular basis as described in SCHEDULES 3.1
and 3.2 and shall promptly advise the other Party in writing of the
reading. Such readings shall form the basis for preparing the Supplier's
invoices pursuant to Articles 5, 6 and 7.
15.2 The Parties acknowledge that the Meters are not normal custody transfer
meters. The Meter owner shall, at its expense, perform normal maintenance
procedures to maintain the accuracy of its Meters. Each Meter shall be
tested for accuracy and calibrated regularly per industry standards as
specified in the applicable Schedule by the Meter owner at its expense. The
Meter owner shall give the other Party a written schedule of calibration
test times, and the other Party shall have the right to have its
representative present to observe each calibration test. If the other Party
desires to conduct more frequent calibration tests, such Party may request
that more frequent tests be conducted, in which case the Meter owner will
perform or cause to be performed such tests at the other Party's expense.
15.3 Following any calibration test made pursuant to this Article 15, the Meter
owner at its expense shall restore an inaccurate component to a condition
of accuracy or replace such component as soon as reasonably practical. If
the level of inaccuracy exceeds that specified in the applicable Schedule,
the readings affected by said component shall be corrected by the amount of
the inaccuracy for the period which is definitely known to be affected by
such inaccuracy. If the period is not definitely known and is not mutually
agreed upon, the correction shall be made for a period one-half of the time
elapsed between the last prior calibration test and the date the inaccuracy
is corrected. Adjustments to a previously issued incorrect invoice shall
be made promptly by the Supplier.
15.4 The Parties acknowledge that special metering problems may arise which can
be resolved by procedures other than those described in this Article 15.
The Parties may, by mutual consent, establish special procedures for a
specific problem or accept delivery quantities in a manner not described
herein. Mutual consent for acceptance of one special procedure or delivery
quantity will not set aside the provisions of this Article 15, nor imply
acceptance by either Party of any special provision at a future time.
15.5 Should the Supplier or the Purchaser fail to obtain suitable measurement
results from the Meter pursuant to Section 15.2, the quantities of that
SUMF Item provided during the period in question shall be calculated by the
other Party in the event that the other Party has installed its own check
meter and it has been calibrated according to this Article 15
30
within ninety (90) days of the period in question. In the event that
neither Party has obtained suitable measurement results, the amount of the
relevant SUMF Item supplied in the period in question shall be estimated,
using the average of delivered quantities for a period of time agreed upon
by both Parties, or by any other means mutually agreed upon by both
Parties. If a Party installs a check meter, the other Party shall have the
right to have its representative at any calibration test of the check
meter. A Party installing a check meter shall perform all maintenance and
calibration tests of the check meter at its own expense, and shall furnish
the other Party with all readings obtained from the check meter.
15.6 The Parties shall complete promptly the identification of all receipt and
Delivery Points for the various SUMF Items described in SCHEDULES 3.1 and
3.2 and all drawings related thereto.
15.7 For Delivery Points where no Meter exists, allocation methods are set forth
in the applicable Schedule. The Monitoring Committee shall have the
authority to update and/or correct any allocation method, with any
corrections to be adjusted prospectively. Either Party may, at its own
expense, install a Meter in lieu of allocation unless a specific schedule
states to the contrary.
15.8 Line losses shall be determined by engineering calculations. Line losses
for each billing period will be assigned to all Users in proportion to
their consumption during such period, whether metered or
allocated/estimated. Any remaining differences (imbalances) between SUMF
production and the amount consumed, as so adjusted for line losses, will
also be assigned to all Users in proportion to their consumption during
such period, whether metered or allocated/estimated, provided, that the
amount of such imbalance assigned to metered use shall not exceed the
product of (x) the mutually agreed tolerance percentage of each such meter
and (y) the amount consumed during such period as measured by such meter
and any excess of such imbalance over the amount so assigned to metered use
will be assigned to non-metered use in proportion to allocated/estimated
consumption of such non-metered use during such period.
ARTICLE 16
MONITORING COMMITTEE
16.1 Shell and the Company shall jointly establish a committee (the "Monitoring
Committee") to review the operation of this Agreement and the supply of
SUMF hereunder in an effort to ensure the smooth and efficient operation of
this Agreement. The Monitoring Committee shall comprise one representative
from the Company and one representative from Shell. In addition, other
representatives that the Parties may reasonably require shall attend at and
report to meetings of the Monitoring Committee.
16.2 The Monitoring Committee shall meet within three (3) months of the
Effective Date and thereafter no less than once every six (6) months
throughout the duration of this
31
Agreement (other than where the Parties agree that such a periodic meeting
is not necessary) and as otherwise reasonably requested by a Party.
16.3 The Monitoring Committee shall use all reasonable endeavors to resolve
issues raised by any of the Parties in respect of the operation of this
Agreement and the supply of SUMF hereunder. The Monitoring Committee shall
review the performance of the Parties in the supply and receipt of SUMF
Items under this Agreement and shall consider any agreed improvement plans.
16.4 The Monitoring Committee shall have the authority to develop modifications
or amendments to the Exhibits and Schedules to this Agreement on behalf of
the Parties, however, to become effective any such modifications or
amendments must be put in writing and be duly signed by the Parties. The
Monitoring Committee shall, as needed to implement this Agreement, develop
mutually agreed protocols and administrative procedures.
ARTICLE 17
MISCELLANEOUS
17.1 Both Parties shall perform their respective duties under this Agreement (i)
following standards applied by the industry in similar operations and in
keeping with good industry practice and in compliance with Legal
Requirements in all material respects, and (ii) in a manner each party
reasonably believes to be fair to the other and with such care as an
ordinarily sound business person in a like position would use under similar
circumstances.
17.2 The services under this Agreement and all operations by the Company that
may affect such services shall be provided in accordance with standards set
forth in Section 17.1.
17.3 The Parties shall keep each other timely informed about planned
turnarounds, shutdowns, major technical projects, capital expenditures and
any other major events which in each case are relevant to the supply or
cost of any SUMF Item and/or the operation of the Purchaser's Property.
The Parties shall keep each other timely informed of any adjustments or
changes to these plans. The Parties shall take reasonable efforts within
such Party's control so as to minimize the impact to the other Party of any
planned turnaround, shutdown, major technical project, capital expenditure
and any other event which may adversely impact the supply of SUMF Items,
without prejudice to the needs of the other users or to health, safety and
environmental standards.
17.4 Every two (2) years, or as often as either Party may reasonably require,
the Monitoring Committee will review the overall effectiveness of this
Agreement and will discuss possible opportunities for improvement.
17.5 Shell stipulates to the Company that some or part of the SUMF Items are
being supplied to Shell by Third Parties and pursuant to the Shared
Facilities Agreement. Shell's ability
32
to supply a particular SUMF Item is conditioned on the receipt of all or
part of such SUMF Item from the Third Party or pursuant to the Shared
Facilities Agreement. Shell agrees to enforce any Third Party supply
contract and the Shared Facilities Agreement in order to provide the SUMF
Items hereunder and all costs incurred in such enforcement shall be
Variable Costs.
17.6 The Supplier agrees to make available all procedures, policies, rules and
regulations utilized in connection with the providing of any SUMF Item.
ARTICLE 18
FORCE MAJEURE
18.1 A Party will not be in breach of this Agreement (except for obligations to
pay money which would otherwise be due and payable under this Agreement) to
the extent:
(a) performance by the Party is delayed or prevented by Force Majeure;
(b) the Party claiming relief under this Article promptly notifies the
other Party of the circumstances giving rise to Force Majeure and
their anticipated duration; and
(c) the Party so claiming relief undertakes to use its reasonable efforts
to remedy and overcome the cause of such Force Majeure as promptly as
possible.
18.2 Upon remedying or overcoming the circumstances giving rise to Force
Majeure, the Party claiming relief under this Article shall promptly notify
the other Party of the termination of such Force Majeure condition.
18.3 If the Force Majeure in question prevails for a continuous period in excess
of thirty (30) days after the date on which the Force Majeure begins, the
Parties shall consult together with a view to determining mutually
acceptable measures to overcome the difficulties arising therefrom.
18.4 "Force Majeure" means, in relation to either Party, an event, condition or
circumstance which causes a delay or disruption in the performance by such
Party of any of its obligations under this Agreement which is beyond the
reasonable control of that Party, including:
(a) fire, explosion or other disruption, mechanical breakdown, electrical
shortage or blackout, decline or shortages of supply, and
circumstances arising out of failure or malfunction of computer
systems, failure of malfunction of digital devices or components
thereof, or information technology not being millennium compliant;
(b) lock-outs, strikes and other industrial disputes; or
(c) Legal Requirements.
33
For the avoidance of doubt, the settlement of a labor strike, lockout or
any other kind of labor dispute is not within the reasonable control of the
Party affected, and the requirements of this Article shall not oblige that
Party to settle a strike, lockout or other labor dispute on terms contrary
to its wishes.
ARTICLE 19
DISPUTE RESOLUTION
19.1 Any Dispute arising out of or in connection with this Agreement, excluding
invoice Disputes subject to Section 7.2(f) but including any question
regarding the existence, validity or termination of this Agreement, shall
be exclusively processed in accordance with this Article.
19.2 In the event of a Dispute between the Parties, the Parties shall, within
ten (10) days of a written request by either Party to the other Party, meet
in good faith to resolve such dispute or differences.
19.3 Any Dispute which cannot be resolved by the Parties shall be submitted to
the Monitoring Committee which shall endeavor to amicably resolve the
Dispute. The Parties shall provide the Monitoring Committee with such
information as it reasonably requires to enable it to determine the issues
relevant to the Dispute.
19.4 Any Dispute which cannot be resolved by the Monitoring Committee shall be
submitted to the Steering Committee which shall endeavor to amicably
resolve the Dispute. The Parties shall provide the Steering Committee with
such information as it reasonably requires to enable it to determine the
issues relevant to the Dispute.
19.5 Any Dispute which cannot be resolved by the Steering Committee shall be
submitted to mediation before a mediator selected by the Steering
Committee. The Parties shall bear their own costs for mediation and the
cost of the mediator shall be borne equally.
19.6 If the Parties are unable to select a mediator within fifteen (15) days or
if the Dispute is not resolved as a result of the mediation within sixty
(60) days (or such other period as may be agreed by the Parties), either
Party may submit the matter to arbitration for final, binding and exclusive
settlement by three arbitrators in accordance with the UNCITRAL Arbitration
Rules, with the President of the ICC Court of International Arbitration to
act as the appointing authority, or any other arbitration provided for in
EXHIBIT A, such arbitration to be held in the country where the Site is
located at the place specified in EXHIBIT A. Any arbitration decision
pursuant to this Article 19 shall be final and binding upon the parties and
judgment thereon may be entered in any court of competent jurisdiction.
Costs incurred by the Parties in carrying on any arbitration proceeding
hereunder (including reasonable attorneys' fees and arbitration fees) shall
be borne by the nonprevailing Party or apportioned by the arbitrator based
on fault.
34
19.7 Pending resolution of any dispute between the Parties, the Parties shall
continue to perform in good faith their respective obligations under this
Agreement based upon the last agreed performance demonstrated prior to the
dispute, but in all events to protect HS&E.
19.8 Resolution of any dispute between the Parties involving payment of money by
one Party to the other shall include payment of interest at the Interest
Rate from the original due date of such amount.
19.9 Each Party shall, in addition to all rights provided herein or provided by
law, be entitled to the remedies of specific performance and injunction to
enforce its rights hereunder.
ARTICLE 20
FURTHER ASSURANCE
20.1 Each Party shall at its own cost, from time to time on request, execute or
procure the execution of all documents in a form satisfactory to the other
Party which the other Party may reasonably consider necessary for:
(a) giving full effect to this Agreement; and
(b) securing to the other Party the full benefit of the rights, powers and
remedies conferred upon the other Party in this Agreement.
ARTICLE 21
COSTS AND EXPENSES
Save as otherwise stated in this Agreement, each Party shall pay its own
costs and expenses in relation to the negotiation, execution and carrying
into effect of this Agreement.
ARTICLE 22
ASSIGNMENT AND DELEGATION
22.1 The Company shall be entitled to assign this Agreement to any Affiliate or
to a lender or lenders for security purposes so long as such lender is a
bona fide financial institution with a business which includes lending
money and with a net worth in excess of One Hundred Million Dollars,
without the prior written consent thereto of Shell (and such lender or
lenders shall have the right (without such prior written consent) to
further assign this Agreement in connection with the exercise of their
rights and remedies pursuant to such security agreements). Any assignment
of the Agreement by the Company to a Third Party shall require the consent
of Shell, such consent not to be unreasonably withheld or delayed.
22.2 Shell shall be entitled to assign this Agreement to any Affiliate or Third
Party without the prior written consent thereto of the Company.
35
22.3 Any assignment of this Agreement shall not relieve a Party of its
obligations or liability hereunder absent consent by the other Party.
22.4 Each Party agrees to execute and deliver to the other Party and, if
applicable its lenders, recognition and estoppel agreements which will
state the status of this Agreement as to whether a default exists and will
recognize any third party rights.
22.5 A Supplier of a SUMF Item may at its discretion procure from its Affiliates
or any Third Party certain information, advice, services and SUMF Items
which it is obliged to render or perform under this Agreement, or may
delegate to any Affiliate or Third Party the performance of its rights and
obligations under this Agreement, in order to assist the Supplier in the
efficient execution of this Agreement provided that the person or company
to whom delegation is made shall be capable of rendering the services.
ARTICLE 23
SEVERABILITY
23.1 If any of the provisions of this Agreement is or becomes illegal, void or
unenforceable under the law of any jurisdiction, such provision shall be
deemed to be deleted from this Agreement and the remaining provisions of
this Agreement shall remain and continue in full force and effect. In such
event, this Agreement shall be modified to provide the same benefits and
burdens (including economic) that would have been provided had this
provision been deleted. In the event that the Parties cannot agree on
modifications, the dispute shall be resolved pursuant to Article 19.
23.2 The invalidity of one or more provisions of this Agreement shall not
affect:
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(b) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
ARTICLE 24
NO AGENCY OR PARTNERSHIP
Nothing contained in this Agreement and no actions taken by the Parties
under this Agreement shall constitute a partnership, joint venture,
association or other co-operative entity between the Parties or to
authorize either Party to represent the other or to contract on behalf of
the other Party. The Supplier is acting solely as an independent contractor
and is not an agent of the Purchaser. The Supplier's provision of services
and performance of its duties hereunder shall be under the sole
supervision, control and direction of the Supplier and not the Purchaser.
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ARTICLE 25
REMEDIES AND WAIVER
25.1 The delay or failure of either Party at any time in exercising any right,
power or remedy provided by law or under this Agreement shall in no way:
(a) affect that right, power or remedy; or
(b) operate as a waiver of it.
25.2 The single or partial exercise of any right, power or remedy provided by
law or under this Agreement shall not preclude any other or further
exercise of it or the exercise of any other right, power or remedy.
25.3 The rights, powers and remedies provided in this Agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law.
25.4 Shell and the Company each acknowledges that it has had adequate
opportunity and bargaining strength to review, negotiate and revise this
Agreement. They each expressly agree that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting
Party shall not be employed in the interpretation of this Agreement.
ARTICLE 26
ENTIRE AGREEMENT AND VARIATION
26.1 Except as herein set forth, this Agreement constitutes the entire and only
agreement between the Parties relating to the furnishing of SUMF Items by
the Parties at the Site and supersedes any Pre-contractual Statement.
26.2 Each of the Parties acknowledges on its own behalf and on behalf of each of
its Affiliates that, in agreeing to enter into this Agreement, it has not
relied on any Pre-contractual Statement (except those set out in this
Agreement).
26.3 Each Party waives all rights and remedies which, but for this Article,
might otherwise be available to it in respect of any such Pre-contractual
Statement, provided that nothing in this Article shall limit or exclude any
liability for fraud.
26.4 Any amendment or modification of this Agreement shall be ineffective unless
reduced to writing and signed by or on behalf of a duly authorized
representative of both Parties.
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ARTICLE 27
NOTICES
27.1 All notices, requests, waivers, demands, directions and other
communications required or permitted to be given under this Agreement shall
be in writing and in English and shall be delivered personally, sent by
facsimile transmission, or e-mail, sent by nationally recognized overnight
courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the Parties at their addresses set forth in
the introductory paragraphs of this Agreement and Exhibit A attached
hereto (or such other address for a Party as shall be specified by like
notice form such Party to the other Party). All such notices and other
communications shall be deemed to have been given and received, (i) in the
case of personal delivery, delivery by facsimile transmission or e-mail, on
the date of delivery, if delivered during business hours on a business day
or, if not so delivered, the next succeeding business day (ii) in the case
of delivery by nationally recognized overnight courier, on the second
business day following dispatch and (iii) in the case of mailing, on the
fifth business day following such mailing.
27.2 A Party may change its notice details on giving notice to the other Party
of the change in accordance with this Article 27. That notice shall only
be effective on the date falling three (3) clear Business Days after the
notification has been received or such later date as may be specified in
the notice. Any such notice so delivered will comply with the terms of this
Article 27.
ARTICLE 28
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Louisiana, without regard to the conflict of law
provisions.
ARTICLE 29
LANGUAGE
If this Agreement is translated in a language other than the English
language, it shall also be written in that other language. In construing
the rights and obligations of the Parties, the terms of the Agreement
written in the English language shall prevail over the terms of the
Agreement written in any another language.
ARTICLE 30
COUNTERPARTS
30.1 This Agreement may be executed in any number of counterparts, and by the
Parties on separate counterparts, but shall not be effective until each
Party has executed at least one counterpart.
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30.2 Each counterpart shall constitute an original of this Agreement, but all
the counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
Signed by: SHELL CHEMICAL COMPANY
By: /s/ ▇.▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇
-------------------------------
Title: Attorney-In-Fact
------------------------------
Signed by: SHELL EPOXY RESINS LLC
By: /s/ ▇.▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇.▇. ▇▇▇▇▇▇
-------------------------------
Title: Attorney-In-Fact
------------------------------
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