EXHIBIT 10.10
Charleston
SERVICES AGREEMENT
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This Agreement is entered into as of the 8th day of February, 1999, by and
between Arch Chemicals, Inc., a Virginia corporation (hereinafter "ARCH"), and
▇▇▇▇ Corporation, a Virginia corporation (hereinafter "OLIN").
WITNESSETH:
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WHEREAS, OLIN and ARCH have entered into a Distribution Agreement (as
defined below);
WHEREAS, pursuant to the Distribution Agreement, OLIN has agreed to
transfer certain assets and businesses constituting the Arch Assets and the
Arch Business, respectively (each as defined in the Distribution Agreement) to
ARCH;
WHEREAS, included in the Arch Assets and the Arch Business are certain
assets and operations located at the Charleston, Tennessee chlor-alkali and pool
chemicals facility owned and operated by OLIN prior to the Distribution Date (as
defined in the Distribution Agreement); and
WHEREAS, following the Distribution Date, OLIN and ARCH have both requested
from each other, and each has agreed, that ARCH receive certain services to be
provided by OLIN, and that OLIN receive certain services to be provided by ARCH,
for their respective operations at the Charleston, Tennessee facilities, on the
terms and conditions as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, OLIN and ARCH agree as follows:
ARTICLE I
DEFINITIONS
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As used in this Agreement, the following terms have the following
meanings:
"Authorized Representative" means the plant manager of each Party at
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the Charleston Site, who shall be responsible for implementing this Agreement at
the Charleston Site.
"Budgeted Service Quantity" means the quantity of a Service the
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Service Provider has agreed to provide and the Service Receiver has agreed to
receive during the next Contract Year.
"Budgeted Service Quantity Percentage" means the quantity the Service
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Receiver has requested and the Service Provider has agreed to provide, expressed
as a percentage of the total of that Service which is budgeted to be produced or
available during the next Contract Year at the Charleston Site
"Capital Carrying Charge" means a cost to cover the financing of a
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capital project or capital investment by the Service Provider, as further
described in Section 5.01(c).
"Charleston Plant" means OLIN's chlor-alkali and pool chemicals
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facility located in Charleston, Tennessee as it existed and operated prior to
the Distribution Date.
"Charleston Site" means the combined operations of ▇▇▇▇ Corporation
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and Arch Chemicals, Inc. located in Charleston, Tennessee on the former site of
OLIN's Charleston Plant, as of the Distribution Date.
"Claim(s)" shall mean any action, claim, demand, interference,
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obligation, suit, arbitration or other proceeding brought or asserted by or
against a Party to this Agreement.
"Confidential Information" means any and all information owned or
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controlled by a Party and disclosed to the receiving Party by a disclosing Party
pursuant to this Agreement, in any form such as, but not limited to, visual,
oral, written, graphic, electronic or model form, including but not limited to,
know-how and trade secrets, whether of a business or a technical nature, whether
patented or not, and whether in the laboratory, pilot plant or commercial plant
stage (including without limitation, drawings, operating conditions,
specifications, safety instructions, environmental recommendations, and
emergency instructions).
"Contract Year" means the First Contract Year and each calendar year
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thereafter during the term of this Agreement, or any shorter period commencing
on any January 1 and ending, as to any Service upon expiration of its Term, and
as to this Agreement at the termination of this Agreement.
"Curtailment Plan" means the Charleston Site Plan for the sequence in
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which Services will be reduced or temporarily suspended for the various
operating units.
"Damages" shall mean all costs, liabilities, obligations, damages,
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fines, penalties, deficiencies, losses and judgments, including incidental
damages, consequential damages, punitive damages, strict liability, and
reasonable attorneys' fees, in each case after the application
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of any amounts recoverable under insurance contracts or similar arrangements and
recoverable from third parties by the Entity claiming indemnity.
"Distribution Agreement" means the Distribution Agreement dated as of
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February 1, 1999, between OLIN and ARCH.
"Distribution Date" has the meaning assigned to such term in the
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Distribution Agreement.
"Entity" shall mean any individual or person, or general partnership,
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limited partnership, limited liability company, corporation, joint venture,
trust, business trust, cooperative, association, foreign trust or foreign
business organization or government, or government organization, and the heirs,
executors, administrators, legal representatives, successors, and assigns of the
Entity when the context so permits.
"Environmental Laws" means any and all applicable regulations,
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ordinances, codes, licenses, permits, orders, approval, authorizations,
requirements and similar items and any and all applicable judicial or
administrative decrees, judgments or orders relating to the protection of human
health or the environment or to the protection of the health and safety of
employees and the public.
"First Contract Year" means the period from the Distribution Date
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until December 31, 1999.
"Fixed Costs" means those costs which do not vary directly with units
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of production or usage, as further described in Section 5.01(b).
"Force Majeure" means, for either Party, any circumstance(s) beyond
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the reasonable control of that Party, which prevents full performance,
including, but not limited to: acts of God; fire; accident; flood; explosion;
war; hurricanes; tornadoes; riots; government action or inaction or request of
Governmental Authority, including any law, decree, order or regulation of any
governmental agency or authority whether federal, state or local; strikes,
lockouts or labor disputes; injunction; failure or delay of transportation;
shortage of, or inability to obtain, supplies, equipment, fuel, power, labor or
other operational necessity; failure of third party suppliers to furnish raw
materials or services; or curtailment of power supply.
"Governmental Authority" means any federal, state or local government,
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governmental authority, regulatory or administrative agency, governmental
commission, board, bureau, court or tribunal or any other similar arbitral body.
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"Hours of Operation" means, for any Service, the days and times during
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which a Service Provider is required to provide such Service and during which a
Service Receiver shall accept such Service.
"Party/Parties" means either ARCH or OLIN or both of them.
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"Prime Rate" means the rate of interest published in the Wall Street
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Journal under the title "Money Rates," and defined therein as being the base
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rate on corporate loans at large money center commercial banks (or if no longer
published, an equivalent rate agreed by the Parties).
"Reasonable and Prudent Operator" means a person seeking to perform
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its contractual obligations and in so doing and in the general conduct of its
undertaking, exercising that degree of skill, diligence, prudence and foresight
which would reasonably and ordinarily be expected from an experienced operator
in substantial compliance with all applicable laws engaged in the same type of
undertaking in the same locality and under the same or similar circumstances and
conditions, and any reference to the standard of a Reasonable and Prudent
Operator herein shall be a reference to such degree of skill, diligence,
prudence and foresight as aforesaid. Notwithstanding the above, the term
Reasonable and Prudent Operator does not imply a higher standard of care which
may be applicable to commercial providers of a Service which a Party may provide
under this Agreement.
"Service" means the furnishing, supply, distribution and delivery of
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each service as set forth in Exhibit A hereto to be provided by or on behalf of
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a Party pursuant to the terms and conditions of this Agreement.
"Service Charges" shall mean the charges for a Service, comprised of
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Fixed Costs, Variable Costs and Capital Carrying Charges.
"Service Facilities" means, on any date of determination, any asset
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located at the Charleston Site used by the Service Provider on such date to
provide Services to the Service Receiver.
"Service Provider" shall mean the Party providing a Service hereunder.
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"Service Receiver" shall mean the Party receiving a Service hereunder.
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"Specification" means the Service Descriptions of the Service stated
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in the relevant section of Exhibit A, as those Service Descriptions may be
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amended from time to time either in accordance with the terms of the relevant
section of Exhibit A or by agreement in writing between the Parties.
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"Term" means for any Service, the period in which the Service Provider
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must provide a Service, commencing at the Distribution Date and continuing for
the term set forth in Exhibit A for such Service.
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"Utility Service" means the following services: Electricity and
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Electricity Distribution, Steam, Water Supply System and Treatment of HAN
Process Waste Water and HAN Area Storm Water. For purposes of the provisions of
this Agreement, Utility Services are included in "Services."
"Variable Costs" means, for any Service, costs that vary directly with
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units of production, as further described in Section 5.01(a).
"Willful Breach" consists of the following two elements: (a) a
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deliberate, volitional, non-coerced and non-accidental failure by a Party to
provide a Service in accordance with this Agreement, which is not due to Force
Majeure, and (b) the Party's failure, following written notice from the
Authorized Representative of the Service Receiver to the Authorized
Representative of the Service Provider, to immediately correct the failure in
all material respects within five (5) business days after receipt of such
notice.
ARTICLE II
PROVISION OF SERVICES
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2.01 Undertaking to Provide Services
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Each Service Provider shall provide or cause the Services to be
provided to the Service Receiver, and shall act as a Reasonable and Prudent
Operator with respect to its provision of Services (or, subject to the
provisions of Section 2.05, shall act as a Reasonable and Prudent Operator with
respect to its efforts to arrange for one or more third parties to provide
Services), in accordance with the terms and conditions set forth in this
Agreement, including, without limitation, the service standard provisions set
forth in Section 2.02.
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2.02 Service Standard
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(a) The Parties agree that a Service Provider's sole obligation and
undertaking with respect to the provision of Services pursuant to this Agreement
shall be to act as a Reasonable and Prudent Operator upon the terms and
conditions set forth herein. Further, the Service Provider shall only be liable
to the Service Receiver for Willful Breaches of the Reasonable and Prudent
Operator standard.
(b) The Service Provider shall initially provide Services to the Service
Receiver on substantially the same basis, and under substantially the same terms
and conditions as the Service Provider provides to its own operations and as
such Services were provided at the Charleston Plant prior to the Distribution
Date. Thereafter, the basis for provision of Services may reflect such non-
material changes as occur in the ordinary course of business, but any material
changes (i.e. changes which may have any impact on the Service Receiver
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operations, or may increase the cost thereof), must be approved in advance by
the Service Receiver, such approval not to be unreasonably withheld.
(c) No changes in the Specifications of any of the Services may be made
without the written consent of both the Service Provider and Service Receiver.
The Parties, however, can mutually agree to supply and receive Services which do
not accord with the Specifications, provided each such variation is agreed in
writing. In the event a Service Provider anticipates Specifications hereunder
may not be met, it shall promptly notify the Service Receiver.
2.03 Services Quantities
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(a) Subject to the terms of this Agreement, a Service Provider shall
provide each Service to the Service Receiver at the quantity requested by the
Service Receiver up to its Budgeted Service Quantity.
(b) Not later than August 31, 1999 and August 31 of each Contract Year
thereafter, the Service Receiver shall give to the Service Provider a written
notice setting forth the quantity of each Service requested by the Service
Receiver for the next succeeding Contract Year. Not later than sixty (60) days
after receiving such notice, the Service Provider and the Service Receiver will
agree, acting in good faith and based on reasonably determined future
projections, on the Budgeted Service Quantity to be made available to the
Service Receiver and the estimated charges therefor. For calendar year 1999 the
Budgeted Service Quantities for each Party shall be as stated in the 1999
Charleston Plant budget.
(c) If during any Contract Year the Service Receiver requests Services in
excess of the Budgeted Service Quantity, the Service Provider shall provide such
excess Services if unused capacity exists. In such case, the Fixed Cost
component of the Service Charge will be reset for
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the balance of the Contract Year to reflect properly the annualized Fixed Cost
component of the Services, including the Services provided in excess of the
Budgeted Service Quantity.
(d) If either Party requires increased Services to meet the need of its
expanded operating facilities, and unused capacity exists, the Service Provider
shall make such unused capacity available to the Party first requesting the
increased Services. If both Parties require and request a portion of unused
capacity, and their combined request exceeds the amount of unused capacity
existing at that time, the Service Provider will allocate the available unused
capacity to each Party on the basis of each Party's percentage use of the
Service.
2.04 Measurements
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(a) Measurements of the levels and quantities of Services to be provided
to Service Receiver shall be undertaken in accordance with the practices in
effect at the Charleston Site on the Distribution Date. In the event either
Party should desire an additional or improved system of meters, weights and
measures, then the Parties shall meet and discuss the implementation of such
request. Unless otherwise agreed, the requesting Party shall pay all expenses
related to the acquisition and installation of such improvements, and any
increased cost of operations.
(b) In the case of Services using meters to measure quantity:
(i) The Parties agree that the Party owning the meters shall bear
all costs of calibration except when the Party that does not own
the meter requests that a calibration be performed at a time
other than at the agreed upon interval and, upon such
calibration, it is determined that the reading was within the
stated range of accuracy of that meter.
(ii) If discrepancies in excess of 5% are determined between the sum
of the actual readings of all of Service Receiver's operations
receiving a Service at the Charleston Site and the meter reading
at the output source of the Service, the Service Receiver shall
be due a credit or debit against prior deliveries of that
quantity of the Service determined by multiplying the total
discrepancy (expressed as a percentage) by all quantities of
such Service delivered to the Service Receiver during the period
within which such discrepancy existed; provided that if such
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period cannot reasonably be determined, then such period shall
be deemed to be equal to one-half of the number of days between
the date of the last meter calibration and the date on which
such calibration was corrected.
(c) From time to time, as agreed by the Parties, each Party shall permit
the other Party (or its agents or representatives) to visit its relevant
facility or equipment at the Charleston Site in
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order to witness meter calibrations, tank strappings or other tests to be
conducted to verify the accuracy of equipment used to determine the quantity of
Services provided by or on behalf of a Service Provider to a Service Receiver;
provided that (i) such calibrations and tank strappings or other tests shall not
occur more frequently than every thirty (30) days, and (ii) each Party shall
cause its employees, agents and representatives to comply with all of the other
Party's rules and regulations and follow designated routes. The Party
responsible for taking the measurement will provide the other Party with two (2)
business days' notice of such calibrations, tank strappings or tests.
(d) If at any time any of the measuring devices are out of service,
the Party responsible therefor will make available to the other Party the
relevant data from up-stream or down-stream meters or measures or from elsewhere
to enable the Parties to determine or estimate as accurately as possible the
appropriate charges to be made while such meters or measures are out of service.
2.05 Entities to Provide Services
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(a) All Services shall be provided by employees of the Service
Provider or, at the Service Provider's election, by third parties with whom it
has contracted to provide such Services to itself. All references in this
Agreement to a Service Provider's "providing" a Service shall include both
direct Service provision by the Service Provider and Service provision by third
parties.
(b) Notwithstanding (a) above, in the event that a Service Provider
elects to utilize a third party to provide a Service and such third party
supplier did not provide such Service at the Charleston Site as of the
Distribution Date, then the Service Provider shall notify the Service Receiver
in advance, which notice shall include the terms on which the third party
supplier will be providing the Service, and the Service Receiver may elect
either to receive the affected Service to be provided by a third party supplier
or terminate the affected Service upon thirty (30) days written notice.
(c) All contracts with third party suppliers must contain appropriate
indemnities and insurance requirements of the third party supplier, and must
exclude liability of the Service Provider and the Service Receiver for any
punitive, special, indirect, or consequential damages, or lost profits or
business interruption, incurred by the third party supplier.
2.06 Warranties
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(a) The Service Provider warrants to the Service Receiver that the
Services delivered pursuant to this Agreement will meet the Specifications in
Exhibit A hereto except in the case of
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Services purchased by the Service Provider where the Service as supplied by a
third party supplier is not within the applicable specifications, in which case
Section 2.06(c) shall apply.
(b) The Service Receiver may refuse to accept or may reject any
Service which does not conform with the relevant Specification and shall notify
the Service Provider in writing within thirty (30) days after the receipt of
such non-conforming Service, in which case, the Service Provider shall at the
Service Recipient's option, either: (i) provide the Services again in
replacement for the non-conforming Service, or (ii) issue a credit to the
Service Recipient for the Service Charge allocable to such non-conforming
Service. Failure to give such notice shall constitute a waiver by the Service
Receiver of all claims with respect to the non-conforming Service.
(c) In the event that a third party supplier to the Service Provider
supplies any Service and that Service does not meet the Specification, then the
Service Provider shall: (i) notify the Service Receiver forthwith upon becoming
aware that the Service is outside the Specification, (ii) use reasonable
efforts to work with the Service Receiver and the third party supplier to bring
the Service within Specification, and (iii) provide the Service Receiver with
full cooperation in pursuing a Claim against the third party supplier. To the
extent that the Service Provider has complied with Section 2.05 and this Section
2.06(c), the Service Provider shall have no further liability in respect of any
Service supplied hereunder by a third party supplier which fails to meet the
Specification in the circumstances set out in this Section 2.06(c).
(d) EXCEPT FOR THE EXPRESS WARRANTIES ABOVE, SERVICE RECEIVER AND
SERVICE PROVIDER MAKE NO OTHER WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH
RESPECT TO THE SERVICES PROVIDED OR PRODUCT(S) MADE UNDER THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
2.07 Risk of Loss - Title
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Liability associated with and, as appropriate, title to, any Service
supplied hereunder shall pass to the Service Receiver at the point at which the
Service is received by the Service Receiver (i.e., comes under the operational
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control of the Service Receiver, as applicable). Before such point, the risk of
loss remains with the Service Provider. Except in the case of gross negligence
by either the Service Provider or Service Receiver, employees of each shall
utilize the applicable Workers Compensation program of their respective employer
as exclusive remedy.
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2.08 Monthly Meetings
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The Parties' Authorized Representatives, or such other person(s) a
Party may designate, shall meet monthly, or more often as may be required, to
review the Services being provided, the Service Charges for such Services, the
next ninety (90) days' projected requirements for Services and other related
items. Such a meeting of the Parties' Authorized Representatives will also be
held during the annual Budgeted Service Quantity meeting.
2.09 Regulatory Approvals
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The Service Provider shall endeavor to obtain all contract
modifications, permits, licenses and other authorizations from Governmental
Authorities needed to operate the Service Facilities and provide the Service
Receiver with the Services listed in Exhibit A. However, the Service Provider
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shall not be liable to the Service Receiver for any failure to provide the
Services if such failure is attributable to any delay or inability in obtaining
the necessary contract modifications or in obtaining the necessary permits,
licenses or authorizations from Governmental Authorities.
ARTICLE III
SERVICE FACILITIES
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3.01 Expansion / Improvement of Service Facilities
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(a) The Parties recognize that normal operations of the Service
Facilities require some ongoing level of capital improvement and expenditures.
Also capital improvements and expenditures may be required to meet local, state
or Federal regulations. To the degree that these expenditures are required to
maintain and operate the Service Facilities to the benefit of all the Service
users, the funding for such capital improvements shall be the responsibility of
the Service Provider. The Service Receiver will be obligated to participate in
these capital improvements and expenditures but will have the option of funding
its share of the capital expenditures, in which case the charges associated with
the capital improvement and expenditures will not be included in Capital
Carrying Charges and the Service Provider will not charge the Service Receiver
for depreciation. If the Service Receiver elects to fund its share of the
capital improvement and expenditure, its share will be based upon its percentage
usage or consumption during the past twelve (12) months. If, however, the
Service Receiver elects not to fund its share of the capital expenditure, it
will be charged start-up costs and on-going depreciation and Capital Carrying
Charges based upon its Budgeted Service Quantity Percentage in future years.
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(b) To the extent that capital improvements and expenditures are known,
they will be included in the annual capital budget by the Service Provider and
reviewed at budget time with the Service Receiver. Individual projects included
in the capital budget with costs totaling less than Two Hundred Thousand Dollars
($200,000) will be performed at the sole discretion of the Service Provider,
provided that the sum total of all such projects for an individual Service does
not exceed Six Hundred Thousand Dollars ($600,000) in any one calendar year. For
a project totaling less than Two Hundred Thousand Dollars ($200,000) but not
included in the annual capital budget, the Service Provider, after reviewing the
project with the Service Receiver, may proceed at its sole discretion with
implementation of the project provided that the aggregate sum of all projects
applicable to that particular Service does not exceed Six Hundred Thousand
Dollars ($600,000) for that calendar year.
(c) For capital improvements and expenditures in excess of Two Hundred
Thousand Dollars ($200,000) for any single project or the aggregate sum of such
projects exceeding Six Hundred Thousand Dollars ($600,000) for a particular
Service during a Contract Year, the Service Provider will review such capital
improvements and expenditures with and receive the approval of the Service
Receiver.
(d) To the extent that capital investment for the improvement or
expansion of the Service Facilities are made to meet a specific need of either
the Service Provider or the Service Receiver then the Party whose needs are
being met will be responsible for funding such capital improvements and
expenditures and all operating costs associated with such capital investments.
(e) If the Service Provider identifies a capital expenditure it considers
will provide sufficient cost savings to justify the expenditure, then the
Service Receiver will be asked to fund the expenditure in proportion to the
Service Receiver's consumption of such Service during the previous twelve (12)
month period. If the Service Receiver decides not to participate in the cost
saving project and the Service Provider proceeds with the project, then no
Capital Carrying Charges for such cost savings project will accrue to the
Service Receiver, and only the Service Provider shall receive the benefit of any
cost savings achieved from the project. The Service Charge for the Service to
the Service Receiver, if it decides not to participate in the project, shall be
computed to reflect the costs that the Service Provider would have incurred in
providing the Service had the cost saving project not been done.
(f) The Service Receiver also shall have the right to identify cost
savings projects and if the Service Provider elects not to participate in such
projects, the Service Receiver can direct that the Service Provider implement
the projects with funding by the Service Receiver and all cost benefits accruing
exclusively to the Service Receiver.
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3.02 Unused Service Assets, Land
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(a) If the Service Provider's operations at the Charleston Site no longer
require the provision of a Service, the Service Provider shall make available
for purchase by the Service Receiver the assets providing such Service at the
Service Provider's net book value of the assets.
(b) Each of the Parties agrees that as and when requested by the other
Party, it shall consider in good faith, without creating a binding obligation
hereunder, the sale of unused land by it to the requesting Party for expansions,
improvement of operations, safety and environmental concerns and other matters.
3.03 Rights of Way, Easements
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Each of the Parties agrees to grant to the other Party such temporary or
permanent rights of way, easements or access licenses, on mutually satisfactory
and commercially reasonable terms, for pipelines, communication lines and
transportation access that may be reasonably required by the other Party for
movement of raw materials and finished products; provided that such rights of
way, easements or access licenses do not interfere with the granting Party's
operations, and do not in any way impair the value of the granting Party's
property. In no event will the foregoing sentence obligate the granting Party to
make any grant or agreement which will cause it to be in breach of any agreement
to which it is a party or its assets are bound, or violates any law, rule or
regulation of a Government Authority applicable to the Charleston Site.
3.04 Relocation of Service Facilities
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Each Party shall have the right to relocate utilities and other equipment,
property or assets in order to accommodate plant expansions, construction of new
facilities, or the need to obtain Services by alternate means; provided that
such relocation shall not impair or add costs to the other Party's operations at
the Charleston Site. In the event that such relocation will cause an increase in
the Service Charge for the affected Service, then the Party effecting the
relocation shall be responsible for such increase.
ARTICLE IV
TERM AND TERMINATION
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4.01 Term of Agreement
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This Agreement shall become effective on the Distribution Date and
shall continue in full force and effect for an initial term of ten (10) years
and shall renew automatically
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thereafter from year to year until all Services have been terminated pursuant to
Section 4.02 below.
4.02 Duration of Services
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(a) The Service Provider will provide each Service for the Term described
for such Service on Exhibit A. The Service Receiver will accept each Service for
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any minimum period specifically provided for such Service in Exhibit A, if any,
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and thereafter until such time as the obligation to accept a Service is
terminated in the manner set forth in subsection (b) below.
(b) The Service Receiver may terminate a Service, upon such notice as is
set forth in the relevant section of Exhibit A, or if none is specified as to
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the Service Receiver, upon one year's advance written notice.
(c) After the expiration of the Term for a Service, the Service Provider
may terminate the provision of such Service, upon such notice as is set forth in
the relevant section of Exhibit A, or if none is specified as to the Service
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Provider, upon one (1) year's advance written notice; provided, however, that a
Service Provider may not terminate a Utility Service for so long as it provides
such utilities for its own operations or to any other Entity conducting
operations at the Charleston Site.
(d) From and after the Service termination date, all Service Charges
associated with such Service shall cease to occur, and neither Party shall have
an obligation to further provide or to accept such Service.
ARTICLE V
PAYMENTS FOR SERVICES
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5.01 Services Charges
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The Service Charges for Services provided by the Service Provider to
the Service Receiver shall include three (3) components: (1) Variable Costs;
(2) Fixed Costs; and (3) Capital Carrying Costs.
(a) Variable Costs cover the costs that vary in proportion to the
amount of Service being provided, as defined at the Charleston Plant immediately
prior to the Distribution Date (unless otherwise agreed by the Parties), and are
expressed in terms of dollars per unit of production of such Service. Actual
unit costs of production for the Charleston Site and actual
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volumes of consumption by the Service Receiver will be used to compute the
monthly Variable Cost Service Charge to the Service Receiver.
(b) Fixed Costs cover the costs of providing a Service which do not
vary in proportion to the amount of Service, as defined at the Charleston Plant
immediately prior to the Distribution Date (unless otherwise agreed by the
Parties), and shall cover such costs, without limitation, as operating labor,
maintenance labor, maintenance materials and contracts, laboratory, technical
and environmental support costs, depreciation, taxes and administrative costs.
Monthly Fixed Cost Service Charges to a Service Receiver will be based upon
total budgeted Fixed Costs for the Service multiplied by the Service Receiver's
Budgeted Service Quantity Percentage for the Service, adjusted semi-annually to
actual Fixed Costs as provided in Section 5.02(a) below.
(c) Capital Carrying Charges will apply to new capital investments
made by the Service Provider after the Distribution Date, and will consist of
all costs incurred by the Service Provider to make the capital investment for
the Service and properly accounted for as capital expenditures. The Capital
Carrying Charge will apply during the normal depreciation period for the
investment and will be at Prime Rate plus two (2) percentage points. The
formula for allocating Capital Carrying Charges properly chargeable to the
Service Receiver will be:
Monthly Charleston Site Capital Carrying Charges X Budgeted Service
Quantity Percentage
(d) All labor charges included in Service Charges shall be charged at
the fully loaded rate, which shall include wages/salary, fringe benefits, and as
applicable, supervision and a cost for equipment and tools required to perform
the Service.
5.02 Adjustments
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(a) The Fixed Costs reflected in the Service Charges paid monthly for
each Service will be adjusted semi-annually to reflect actual Fixed Costs
incurred for the period January through June, and for July through December,
which adjustments shall be included on the next invoice issued thereafter.
(b) If during any Contract Year, the Service Receiver's consumption or
use of a Service exceeds its Budgeted Service Quantity by more than 5%, the
Service Provider may, at its option, at the end of the Contract Year, ▇▇▇▇ a
Fixed Cost adjustment to the Service Receiver. If the Service Receiver, during
any Contract Year, consumes or uses less than the Budgeted Service Quantity, the
Service Receiver still will be responsible for its portion of the Site's Fixed
Costs and Capital Carrying Charges based upon its Budgeted Service Quantity,
unless prior arrangements have been made for the Service Provider to take and
consume or utilize the Service Receiver's planned consumption and to pay the
Fixed Costs thereon.
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(c) In the event of Force Majeure preventing the delivery of a Service
to the Service Receiver, the Service Receiver will continue to pay its
proportionate share of Fixed Costs and Capital Carrying Charges for a period up
to six (6) months, but payment of such Fixed Costs and Capital Carrying Charges
will ▇▇▇▇▇ after six (6) months for the duration of the Force Majeure.
(d) During other interruptions of a Service, the Service Receiver will
continue to pay its share of the Fixed Costs and Capital Carrying Charges of the
Service, however, in the event of a breach of this Agreement by the Service
Provider that results in the cessation of the Service, the Service Receiver will
not have any obligation to pay the Fixed Costs and Capital Carrying Charges of
that Service until the Service is resumed.
5.03 Invoicing and Payment
---------------------
(a) The Service Provider shall issue an invoice with reasonable
detailed support to the Service Receiver at the end of each month indicating the
quantity of Services received and the Service Charges for such Services.
Payment by the Service Receiver for Services received shall be due fifteen (15)
days after the date of the invoice.
(b) In the event the Service Receiver disputes the accuracy of any
invoice, the Service Receiver shall pay the undisputed portion of such invoice
and the Parties will promptly meet and seek to resolve the dispute.
(c) If the Service Receiver fails to pay any undisputed amount owed
under this Agreement, Service Receiver shall correct such failure promptly
following notice of the failure, and shall pay Service Provider interest on the
amount paid late at two percent (2%) above the Prime Rate prorated for the
number of days such overdue amounts are outstanding.
(d) All payments due under this Agreement shall be made by electronic
funds transfer, unless otherwise agreed by the Parties.
5.04 Taxes
-----
To the extent not included in the price Service Provider charges for
Services, Service Receiver shall pay to Service Provider the amount of any taxes
or charges set forth in (a) through (c) below imposed now or in the future by
any Governmental Authority including any increase in any such tax or charge
imposed on Service Provider after the Distribution Date:
(a) Any applicable sales, use, gross receipts, value added or similar
tax that is imposed as a result of, or measured by, any sale or Service rendered
hereunder unless covered by an exemption certificate;
15
(b) Any applicable real or personal property taxes, including any
special assessments, and any impositions imposed on Service Provider in lieu of
or in substitution for such taxes on any property used in connection with any
sale or Service rendered hereunder; and
(c) Any other governmental taxes, duties, and/or charges of any kind,
excluding any income or franchise taxes imposed on Service Provider, which
Service Provider is required to pay with respect to any sale or Service rendered
hereunder.
5.05 Advance Payments
----------------
Prior to the Distribution Date both Parties jointly will determine and
agree on whether an advance payment may be required by one Party to the other
under this Services Agreement, to compensate either Party for carrying costs
associated with any imbalance in cash disbursements in providing Services
hereunder.
ARTICLE VI
SHUTDOWNS; FORCE MAJEURE
------------------------
6.01 Maintenance, Planned and Unplanned Temporary Shutdowns
------------------------------------------------------
(a) Each Party will maintain the Service Facilities to the same
standards in effect at the Charleston Plant immediately prior to the
Distribution Date, which shall include at all times such maintenance as required
to comply with all applicable laws, rules and regulations of a Governmental
Authority.
(b) Each Party shall have the right and freedom to temporarily
shutdown its own facilities used for the production, distribution, supply or
receipt of Services as well as facilities supportive of such activities in the
event of Force Majeure circumstances or to ensure their continued safe and
efficient operation.
(c) The Parties shall use all reasonable efforts to minimize
interruptions in the supply and receipt of Services hereunder and to mitigate
the consequences for the other Party of any interruptions arising from
shutdowns.
(d) The Parties shall provide each other at least prior notice of any
planned shutdown, as soon as such schedule is established, but in no event less
than three (3) months in advance. The Authorized Representatives shall meet and
seek to coordinate such planned temporary shutdown, but the final decision on
the period(s) of any shutdown(s) shall be for the Party
16
owning the facility to be shut down, provided, however that no planned shutdowns
expected to lead to interruptions of supply, or the receipt of Services in the
aggregate exceeding fourteen (14) days per calendar year, shall be made unless
otherwise agreed by the Parties.
(e) In the event of an unplanned shutdown, the Party whose facility is
to be shut down must inform the other Party with as much notice as reasonably
practicable of its unplanned shutdown, of the expected commencement date and
extent of the shutdown, and plans for any partial and full resumption of supply
or receipt of the Service concerned.
(f) In the event of an emergency temporary shutdown, the Party whose
facility is concerned must inform the other Party as soon as reasonably
practicable and the Parties will cooperate fully to minimize the consequences
and risks, and to mitigate any losses.
(g) In the event that a planned or unplanned shutdown of a Service
Facility results in a reduction of the Service that is available, the available
Service will be apportioned between the Parties in accordance with the
Curtailment Plan for such Service, or in the absence of an applicable section
for the Service in the Curtailment Plan, based on usage or as otherwise agreed
by the Parties as being most practicable. The Service Provider shall use its
best efforts to restore the Service to full capacity as soon as possible and
minimize the Service Facility shutdown.
(h) Unplanned or emergency shutdowns causing interruptions of supply
for more than seven (7) days shall be deemed a case of Force Majeure.
6.02 Force Majeure.
-------------
(a) A Party's failure or inability to comply with the terms of this
Agreement shall not provide a basis for such party's liability to the other
party in the event performance is prevented by any Force Majeure event, provided
that such Party complies with its obligations under this Section 6.02.
(b) If a party is in a position of Force Majeure or is aware of the
likelihood of a situation constituting Force Majeure, it shall notify the other
party in writing promptly of the cause and extent of such non-performance or
likely non-performance, the date or likely date of commencement thereof, the
expected duration and estimated effect, and the means proposed to be adopted to
remedy or ▇▇▇▇▇ the Force Majeure; and the Parties shall without prejudice to
the other provisions of this Section 6.02 consult with a view to taking such
steps as may be appropriate to mitigate the effects of such Force Majeure.
(c) The party subject to Force Majeure shall act as follows:
17
(i) The affected party shall coordinate closely with the other
party, shall keep the other party regularly informed during the
course of the Force Majeure as to when resumption of performance
shall or is likely to occur, and shall use all reasonable
efforts to remedy or ▇▇▇▇▇ the Force Majeure as expeditiously as
possible; provided, however, nothing herein shall require a
Party to settle or compromise any strike or labor dispute.
(ii) In the case of a Force Majeure affecting the Service Provider,
the Service Provider will allocate such portions of the affected
Services that are available to ensure safety, health and
environmental compliance at the Charleston Site, such that after
the allocation the Service Receiver will receive the Service in
accordance with the Curtailment Plan, or if not provided for
therein, based on the usage level of such Service by said
facilities as a percentage of the total for the Charleston Site.
(iii) The affected party shall notify the other party and shall resume
performance as expeditiously as possible after termination of
the Force Majeure or the Force Majeure has abated to an extent
which permits resumption of such performance.
(d) Upon the occurrence and during the continuance of a Force Majeure,
a Service Receiver shall be entitled to obtain substitute Services on a
temporary or permanent basis as set forth in this paragraph. The Service
Provider shall cooperate with the Service Receiver's efforts to obtain temporary
substitute Services, including allowing a responsible third party to have
reasonable access to the Charleston Site and the Services Facilities to allow
for delivery of such Services. In the event of a Force Majeure event which has
a continuous duration of six (6) months or more, the Service Receiver shall be
entitled to obtain permanent substitute Services. In such case the Service
Provider will have no further obligation to provide and the Service Receiver
shall have no further obligation to accept such Service or Services and all
costs associated with such Service shall cease to accrue on the later of: (i)
the thirtieth (30th) day after the date on which the Service Receiver notifies
the Service Provider that it intends to exercise its right to obtain permanent
substitute Services and (ii) any later date of termination specified in such
notice.
18
ARTICLE VII
LIMITATION OF LIABILITY
-----------------------
7.01 Limitation of Liability.
-----------------------
The Parties shall have no liability to each other for any and all
Claims and/or Damages arising out of this Agreement, whether such Claims and/or
Damages arise on account of a Party's furnishing Services hereunder, the failure
to furnish Services hereunder, or otherwise, and whether or not such Claims
and/or Damages were caused by the negligence of a Party, including a Party's
sole negligence; provided, however, that the foregoing limitation shall not
apply to Claims and/or Damages to the extent caused by a Party's gross
negligence or Willful Breach.
7.02 Consequential Damages.
---------------------
Notwithstanding anything to the contrary contained herein or at law
and in equity, in no event (except in the case of Willful Breach) shall a Party
be liable to the other Party for punitive, special, indirect or consequential
damages (including, without limitation, damages for loss of business profits,
business interruption or any other loss) arising from or relating to any claim
made under this Agreement or regarding the provision of or the failure to
provide Service(s) hereunder, even if a Party had been advised or was aware of
the possibility of such damages.
7.03 Mitigation.
----------
▇▇▇▇ and ARCH (as the case may be) shall use all reasonable efforts
to mitigate the loss and damage (if any) incurred by it as a result of any
breach by another Party of that other Party's obligations under this Agreement.
ARTICLE VIII
INDEMNIFICATION
---------------
8.01 Indemnification
---------------
(a) ARCH shall indemnify, defend and hold harmless ▇▇▇▇, including its
affiliates, employees, representatives and agents (the "▇▇▇▇ Indemnitees") from
and against all Claims and Damages asserted by any third party or by ARCH
employees (including their families and estates) against the ▇▇▇▇ Indemnitees in
connection with, or as a result of, OLIN's provision of
19
Services under this Agreement except to the extent such Claims and Damages are
caused by the gross negligence or Willful Breach of any of the ▇▇▇▇ Indemnitees.
(b) ▇▇▇▇ shall indemnify, defend and hold harmless ARCH, including its
affiliates, employees, representatives and agents (the "ARCH Indemnitees") from
and against all Claims and Damages asserted by any third party or by ▇▇▇▇
employees (including their families and estates) against the ARCH Indemnitees in
connection with, or as a result of, ARCH's provision of Services under this
Agreement unless such Claims and/or Damages are caused by the gross negligence
or Willful Breach of any of the ARCH Indemnitees.
(c) Each Party shall indemnify, defend and hold harmless the other Party
from and against all monetary fines, penalties or the like, imposed by a
Governmental Authority against the Party entitled to indemnification arising
from a violation by the indemnifying Party of applicable laws, rules,
regulations, orders, or the like of the Governmental Authority.
8.02 Third Party Service Provider
----------------------------
(a) Where a third party supplier provides a Service on behalf of the
Service Provider hereunder and that third party (including its subcontractor,
employee or agent) files Claims and/or Damages against either Party (or both
Parties) relating to that third party's provision of a Service, the Parties
shall indemnify, defend and hold the other Party, its employees, representatives
and agents, harmless with respect to such Claims and/or Damages as follows:
(i) ▇▇▇▇ shall indemnify, defend (or provide for the defense) and
hold ARCH harmless from and against all third party supplier
Claims made by a third party supplier which provides Services to
ARCH on behalf of ▇▇▇▇ (including Claims and/or Damages of its
subcontractor, employee or agent) and/or Damages which are
alleged to occur in or on the Charleston Site, whether or not
such Claims and/or Damages are based (in whole or in part) on
the negligence of ▇▇▇▇, ARCH or the third party supplier, except
to the extent such Claims and/or Damages are caused by the gross
negligence of ARCH;
(ii) ARCH shall indemnify, defend (or provide for the defense) and
hold ▇▇▇▇ harmless from and against all third party supplier
Claims made by a third party supplier which provides Services to
▇▇▇▇ on behalf of ARCH (including Claims and/or Damages of its
subcontractor, employee or agent) and/or Damages which are
alleged to occur in or on the Charleston Site whether or not
such Claims and/or Damages are based (in whole or in part) on
the negligence of ▇▇▇▇, ARCH or the third party supplier, except
20
to the extent such Claims and/or Damages are caused by the gross
negligence of ▇▇▇▇.
(b) In no event will an indemnitor be liable under paragraph (a) for
punitive, special, indirect or consequential damages, lost profits or business
interruption claimed by a third party supplier.
8.03 Indemnification Procedures.
--------------------------
(a) In the event of any Claim for which a Party is entitled to
indemnification, the Party seeking indemnification shall immediately notify in
writing the indemnifying Party of such Claim and shall fully cooperate with the
indemnifying Party in the defense of the Claim and, at the indemnifying Party's
cost, permit the indemnifying Party's attorney(s), reasonably acceptable to the
indemnified Party, to handle and control the conduct and defense, and/or
settlement of such Claim, including making personnel and records available for
the defense of the Claim.
(b) The indemnifying Party shall keep the indemnitee(s) reasonably
informed regarding any claim, action or proceeding in which the indemnifying
Party is defending the indemnitee(s), and shall not enter into any settlement or
compromise of such claim, action or proceeding affecting the indemnitee(s)
without the indemnitee(s)'s consent, unless such settlement or compromise
contains a complete and unconditional release of the indemnitee(s). In no event
shall the indemnifying Party agree to a settlement which contains a non-monetary
component without the consent of the indemnitee(s), which consent shall not be
unreasonably withheld.
(c) The indemnification provisions of Sections 8.01 and 8.02 are
contingent upon the indemnitee(s) promptly turning over the complete control of
the claim and/or suit to the indemnifying Party.
8.04 Scope of Indemnification as Permitted by Applicable Law.
-------------------------------------------------------
Nothing in this Article VIII shall be construed to violate directly or
indirectly any applicable law prohibiting indemnification for the sole or
partial negligence of the indemnitee. In the event any provision of this
indemnity is contrary to applicable law, this indemnity shall not be void or
unenforceable, but shall be enforced to, and only to, the fullest extent
permitted by the applicable law.
21
ARTICLE IX
RECORDS AND AUDITS
------------------
9.01 Records
-------
(a) Each Service Provider shall maintain books of record and account,
recording the levels or quantities of Services provided by or on behalf of the
Service Provider to the Service Receiver under this Agreement, the costs and
expenses associated therewith and amounts paid by the Service Receiver.
(b) Each Service Provider agrees to maintain financial records
consistent with its normal practices and adequate to reflect fairly the
accuracy of charges invoiced under this Agreement. Should the Service Receiver
reasonably request the Service Provider to develop or maintain additional
records in connection with this Agreement, and if the Service Provider agrees,
the cost of this effort will be negotiated by the Parties and borne by the
Service Receiver.
9.02 Audits
------
(a) Third Party Audit (Cost of Service). From time to time as agreed
-----------------------------------
by the Parties, each Party shall have the right to have an independent certified
public accounting firm ("CPA firm"), mutually acceptable to the Parties, audit
the other Party's books of account and other records pertaining to a dispute
arising from the cost of Services (including invoiced and reimbursed costs)
provided pursuant to this Agreement for a period of five (5) years following the
end of the calendar year in which such disputed Services were rendered. Prior
to commencing its audit, the CPA firm shall execute a confidentiality agreement
reasonably acceptable to the audited Party. Upon completing its audit, the CPA
firm shall report only whether or not the charges from the Service Provider to
the Service Receiver hereunder were correct or, if not, the amount of any
overcharge or undercharge. The Parties agree to accept the determination of the
CPA firm as binding and final, and if the audit determines that either Party
owes money to the other Party, the owing Party shall promptly pay such sum to
the other Party. The cost of such audit shall be borne by the requesting Party
and shall be limited to a duration not to exceed two (2) months.
(b) Functional Audit. From time to time as agreed by the Parties, the
----------------
Service Receiver shall have the right to conduct functional audits of a Service
provided hereunder. Such audits shall be limited in scope to: (i) comparison
against a mutually agreed upon standard, or (ii) as required to effect
certification promulgated by a recognized industry organization (for example,
"ISO" certification) or by a Governmental Authority. Each Party shall bear its
own costs of any Functional Audits and such Functional Audits shall be limited
to a duration not to exceed two (2) weeks on site.
22
(c) Unrelated Information. Notwithstanding the above audit rights,
---------------------
the Service Provider shall have the right to redact from records which may be
audited information that is unrelated to the provision of Services to the
Service Receiver.
ARTICLE X
INSURANCE, SAFETY, HEALTH AND ENVIRONMENT
-----------------------------------------
10.01 Insurance
---------
(a) Each Party shall be responsible for maintaining insurance (which
may include self insurance) in coverages and amounts sufficient to replace its
own Service Facilities and production facilities, to cover potential liabilities
hereunder, and otherwise to comply with all applicable requirements of
Governmental Authorities.
(b) Each Party shall look to its own insurance (including self
insurance and any deductible amount) as its exclusive remedy to recover damages
for property damage, business interruption or extra expenses relating to an
insurable event. Each Party hereby waives its rights of recovery against the
other for any loss insured by fire, extended coverage and other property
insurance policies (including self insurance and any deductible amount) existing
for the benefit of such Party. Each Party shall obtain from its insurer a
waiver of subrogation against the other Party.
10.02 Safety, Health and Environment
------------------------------
(a) Each Party shall be responsible for complying with Environmental
Laws relating to the operation of its activities at the Charleston Site after
the Distribution Date. Notwithstanding the above, a Party may contract out the
record keeping and/or reporting activities required by any federal, state and
local law, provided that the Party shall not contract away its liability and
responsibility for assuring that any required records or reports comply with the
legal requirements, and are truthful and accurate.
(b) Unless otherwise agreed, each Party shall retain sole and complete
responsibility for the management, storage and proper disposal of wastes,
discharges and emissions in all media produced from its activities and shall
obtain necessary Governmental Authority permits, permissions or licenses to
effect this responsibility.
(c) Each Party shall notify the other Party on a timely basis of any
incidents or conditions which may have adverse safety, health or environmental
consequences to employees
23
or property of the other. Each Party shall provide information to the other
Party for any hazardous materials to which their employees may be exposed while
on the Charleston Site.
(d) Either Party shall have the right to immediately suspend the
provision of any Service under operation of this Agreement, without liability to
itself by informing the Authorized Representative of the other Party as soon as
practical by telephone followed by written notice, if at any time a Party
believes, in its sole reasonable judgment, that an unsafe practice related to
that Service, which endangers the employees of either Party, the general public,
or the environment, is being undertaken. Further, if this practice is not
corrected or substantial steps taken to effect its correction within fifteen
(15) days, then that Party may declare Force Majeure and suspend its obligations
in accordance with Section 6.02.
ARTICLE XI
DISPUTE RESOLUTION
------------------
11.01 Alternative Dispute Resolution
------------------------------
(a) The Parties understand and appreciate that their long term mutual
interests will be best served by effecting a rapid and fair resolution of any
claims or disputes which may arise out of this Agreement or from any dispute
concerning this Agreement's terms. Therefore, each Party agrees, to use its
best efforts to resolve all such disputes as rapidly as possible on a fair and
equitable basis. Toward this end, each Party agrees to develop and follow a
process for presenting, rapidly assessing, and settling claims and other
disputes on a fair and equitable basis.
(b) If any dispute or claim arising under this Agreement cannot be
readily resolved by the Parties pursuant to Section 11.01(a), the Parties agree
to refer the matter to the OLIN and ARCH Authorized Representatives which shall
meet and attempt to resolve the dispute within thirty (30) days from the date
the dispute was brought before its attention.
(c) If any dispute or claim arising under this Agreement cannot be
resolved pursuant to Section 11.01(b), the Parties agree to refer the matter to
a panel consisting of one (1) senior executive from each Party for review and
resolution. The senior executive shall not have been directly involved in the
claim or dispute. A copy of the Agreement terms, relevant facts, areas of
disagreement and a concise summary of basis of each side's contention will be
provided to both executives who shall review the same, and attempt to reach a
mutual resolution of the issue. The senior executives shall meet and attempt to
resolve the dispute within thirty (30) days of their appointment.
24
(d) If the dispute cannot be resolved by the senior executive panel
pursuant to Section 11.01(c), then within ten (10) days after the end of the
senior executives' conference the Parties will notify the Authorized
Representatives in writing and within thirty (30) days therefrom either Party
may refer the matter to arbitration for sole and final settlement by a board of
three (3) arbitrators in accordance with the Commercial Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association ("AAA").
(e) The Party electing arbitration shall notify the other Party in
writing in accordance with the Arbitration Rules and such notice shall be
accompanied by the name of the arbitrator selected by the Party serving the
notice. The second arbitrator shall be chosen by the other Party, and a neutral
arbitrator shall be chosen by the two arbitrators so selected. If a Party fails
to select an arbitrator or to advise the other Party of its selection within
thirty (30) days after receipt by such a Party of the notice of the intent to
arbitrate, the second arbitrator shall be selected by the AAA. If the third
arbitrator shall not have been selected within thirty (30) days after the
selection of the second arbitrator, the appointment of the third arbitrator
shall be made by the AAA. Arbitrators shall be selected taking into account
their background in the chemical industry and familiarity with chemical
production facilities, or other appropriate qualifications.
(f) All such proceedings shall be conducted in Norwalk, Connecticut
or another mutually agreed upon location. The arbitrators shall make detailed
findings of fact and law in writing in support of the decision of the arbitrator
panel, but shall not be empowered to award reimbursement of attorneys' fees and
other costs of arbitration to the prevailing Party. Any monetary award of the
arbitrators panel shall include interest from the date of any breach or any
violation of this Agreement. The arbitrators shall fix an appropriate rate of
interest from the date of the breach or other violation to the date when the
award is paid in full. The Parties agree that the decision of the arbitrators
shall be final and conclusive and that judgment on the arbitration award may be
entered in any court having jurisdiction over the Parties or their assets.
(g) The provisions of this Section 11.01 shall not be deemed to
preclude any Party hereto from seeking preliminary injunctive relief to protect
or enforce its rights hereunder, or to prohibit any court from making
preliminary findings of fact in connection with granting or denying such
preliminary injunctive relief, or to preclude any Party hereto from seeking
permanent injunctive or other equitable relief after and in accordance with the
decision of the arbitrator panel. Whether any claim or controversy is arbitrable
or litigable shall be determined solely by the arbitrator panel pursuant to the
provisions of this Section 11.01.
11.02 Ongoing Obligations.
-------------------
It is expressly agreed that the failure of the Parties to
resolve a dispute on any issue to be resolved hereunder shall not relieve either
Party from any obligation set forth in this Agreement. In addition, the Parties
expressly state their mutual determination that the failure to
25
resolve any such disputes shall not hinder or delay the providing of the
Services, and that, notwithstanding the pendency of any such dispute, neither
Party will be excused of its obligations hereunder to cooperate with the other
to effectuate the purposes of this Agreement.
ARTICLE XII
CONFIDENTIALITY
---------------
12.01 Confidentiality Obligation.
--------------------------
Each of the Parties agrees to keep confidential and neither disclose to
others nor use, except as permitted herein, any Confidential Information
received from the other Party pursuant to this Agreement. In the event that the
Service Provider elects to use a third party supplier to provide Services, the
Service Provider shall require that the third party supplier be bound by these
provisions of confidentiality in its provision of Services.
12.02 Limits on Disclosure.
--------------------
The receiving Party shall treat all Confidential Information in the same
manner and with the same degree of care as it uses with respect to its own
Confidential Information of like nature, except that the obligations set forth
herein shall not apply with respect to any Confidential Information which:
(i) Public Knowledge. Is generally available to the public or
----------------
subsequently becomes generally available to the public through
no breach by the receiving Party of secrecy obligations under
this Agreement or prior agreements between the Parties
concerning the Confidential Information; or
(ii) Received from Third Party. Is received from a third party who is
-------------------------
legally free to disclose such Confidential Information and who
did not receive such Confidential Information in confidence from
the disclosing Party; or
(iii) Independently Developed. Is independently developed by the
-----------------------
receiving Party without reference to the Confidential
Information received from the disclosing Party.
26
12.03 Subpoena or Demand.
------------------
A Party may disclose Confidential Information pursuant to a subpoena or
demand for production of documents in connection with any suit or arbitration
proceeding, any administrative procedure or hearing before a governmental or
administrative agency or instrumentality thereof, or any legislative hearing, or
any governmental audit or other similar proceeding, provided that the receiving
Party shall promptly notify the disclosing Party of the subpoena or demand and
provided further that in such instances, the Parties use their reasonable best
efforts to maintain the confidential nature of the Confidential Information by
protective order or other means.
ARTICLE XIII
MISCELLANEOUS
-------------
13.01 (a) Waiver. Neither Party shall be construed to have waived any
------
of its respective rights or interests in this Agreement by a failure, in any one
instance, to have asserted, or made claim on, such right at the time such Party
was entitled to assert same.
(b) Assignment. Neither Party shall assign this Agreement without the
----------
prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that ARCH or OLIN may
assign its rights and obligations under this Agreement in whole or in part
without consent to (i) any wholly owned subsidiary of ARCH or OLIN, so long as
the performance of such subsidiary is guaranteed by ARCH or OLIN, as the case
may be, or (ii) in connection with a sale by ARCH of all or substantially all of
the business conducted by ARCH at the Charleston Site, or by OLIN of all or
substantially all of the business conducted by OLIN at the Charleston Site.
Nothing in this Agreement, express or implied, is intended to confer any rights
or remedies under this Agreement on any person or entity other than ARCH or OLIN
and their respective successors and permitted assigns.
(c) Notices. Unless otherwise provided for herein, all notices or other
-------
communications authorized or required between the Parties hereto by any
provision of this Agreement shall be in writing and delivered by hand, by
national overnight courier or transmitted by registered or certified mail,
return receipt requested, postage prepaid, and in all cases addressed to the
respective Parties, at the address set forth below or such other address as may
be designated by the Parties hereto.
27
If to ARCH:
Arch Chemicals, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Plant Manager
If to OLIN:
▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇
Attn: Plant Manager
Unless otherwise provided herein, the date of receipt (or refusal to receive)
shall be deemed to be the date the notice is given.
(d) Modification; Entire Agreement. This Agreement (including the exhibits
------------------------------
and schedules referred to herein) represents the entire agreement of the Parties
with respect to the matters discussed herein, and supersedes all prior
agreements and understandings, oral and written, between the Parties with
respect to the subject matter herein. There shall be no modification,
amendment, change, or alteration of this Agreement unless reflected in a written
instrument executed by both Parties.
(e) Captions. Titles or captions of articles and sections contained in
--------
this Agreement are inserted only as a matter of convenience and for reference,
and in no way define, limit, extend, or describe the scope of this Agreement or
the intent of any provision hereof.
(f) Governing Law. This Agreement shall be governed by and construed
-------------
according to the laws of the State of Connecticut without regard to its conflict
of law provisions.
(g) No Public Utility. It is understood that neither Party hereto
-----------------
considers itself or the other Party to be a public utility, and neither Party
intends by this Agreement to engage in the business of being a public utility,
or to enjoy any of the power and privileges of a public utility or by its
performance of its obligations to dedicate to public or quasi-public use or
purpose any of the facilities which it operates, and the Parties agree that the
execution of this Agreement shall not, nor shall any performance or partial
performance, be or ever deemed, asserted or urged by the Parties to be a
dedication to public or quasi-public use of any such facilities of a Party, or
as subjecting a Party to any jurisdiction or regulation as a public utility. If
at any time an Entity or a Governmental Authority should initiate any action
claiming or asserting jurisdiction over a Party
28
as a public utility, or shall take jurisdiction in any proceeding whereby any
Entity should assert or claim that a Party is a public utility because of the
provision of a Service which is the subject of this Agreement, the Service
Provider shall have the right to terminate the supply of the Service under this
Agreement without penalty or further obligation to the Service Receiver at any
time thereafter by giving ninety (90) days written notice to the Service
Receiver of its intention to do so.
(h) Relationship of Parties. In all matters relating to this Agreement,
-----------------------
both Parties will be acting solely as independent contractors and will be solely
responsible for the acts of their employees, officers, directors, and agents.
Employees, agents, or contractors of one Party shall not be considered
employees, agents, or contractors of the other Party. Neither Party shall have
the right, power, or authority to create any obligation, express or implied, on
behalf of the other Party.
(i) Compliance. In performing its obligations, each Party will comply with
----------
all federal, state and local laws, ordinances, tariffs, and regulations of
Governmental Authorities applicable to such Party.
(j) Severability. In the event that any provision of this Agreement shall
------------
be found to be void or unenforceable, such findings shall not be construed to
render any other provision of this Agreement either void or unenforceable, and
all other provisions shall remain in full force and effect unless the provisions
which are invalid or unenforceable shall substantially affect the rights or
obligations granted to or undertaken by either Party.
(k) Survival of Certain Provisions. The Parties expressly agreed that
------------------------------
Article V (Payments for Services); Article VII (Limitation of Liability);
Article VIII (Indemnification) and Article X (Safety, Health and Environment)
shall survive any termination or expiration of this Agreement.
29
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be execute by their duly authorized representatives as of the day and year first
above written.
▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Vice President, General Counsel and Secretary
ARCH CHEMICALS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
Vice President
30
EXHIBIT A
---------
SERVICE: Electricity and Electricity Distribution
PROVIDER: OLIN
SERVICE DESCRIPTION
. OLIN will transmit annually to ARCH approximately 83,800MKWH of 13.2KV, three
phase, AC power for use in the existing ARCH facilities. OLIN will make all
arrangements with the power supplier for delivery of electricity to the site.
. AC power will be made available to ARCH at the load sides of Switchgear #1
and #19. ARCH will own HTH Feeder Lines #1 and #2 which feed power to
Switchgear #4 and #18 for further distribution through unit substations to
the ARCH operating units.
. ARCH will own and maintain all the electric power distribution system from
the load sides of Switchgear #1 and #19 to the operating units.
. Any modifications to the ARCH power distribution system require OLIN
approval. ARCH will operate the ARCH power distribution system in a manner
approved by OLIN. Any reasonable recommendations with regard to reliability,
power factor control, system coordination, engineering standards, operating
and maintenance practices, etc. made by OLIN to ARCH must be implemented by
ARCH in the time frame reasonably required by OLIN.
. ARCH will notify OLIN immediately of any load changes in ARCH's AC power
requirements.
SERVICE CHARGE
. OLIN will ▇▇▇▇ ARCH monthly for AC electric power actually used (expressed in
MKWH) by ARCH and at a weighted average rate of all elements of the power
▇▇▇▇ (including the firm, LIP and ESP rates for the total of AC and DC
Charleston Site power purchases from TVA for the month) as billed to OLIN by
TVA.
. The AC electric power used monthly by ARCH will be the sum of the meter
readings expressed in MKWH, at unit substations Nos. 9, 10, 11, 16, 17, 18,
19, 27, 28, 36, 37, 38, 39, 34 and 35 plus meter readings or estimates of
other miscellaneous uses of power by ARCH.
31
. OLIN will ▇▇▇▇ ARCH a flat sum of $1,600 per month to cover ARCH's allocation
of costs for routine maintenance and repairs to the incoming plant power line
and to Switchgear #1 and #19. The cost of any major repairs will be shared
according to the ratio of demand of each company for the prior calendar year.
. Line losses will be computed monthly by OLIN (MKWH billed by TVA minus sum of
all Charleston Site AC and DC power meter readings) and 10% of the overall
Site power losses will be billed to ARCH at the weighted average noted above.
. Olin will seek to obtain the most favorable electricity prices possible for
Chlor-Alkali as an on-going activity. Both companies will work together to
adjust their operations to utilize the most favorably priced power.
. In the event that the price for ESP power becomes higher than the price for
firm power, each Party has an option to either take an economic curtailment
(i.e., a voluntary cutback in operations in view of the high cost of
incremental ESP power) and reduce or eliminate its use of ESP power or
continue to take its allotted share of ESP power in addition to its allotted
portion of firm and LIPS power. The Party (or Parties) continuing to take ESP
power under such circumstances will pay for the ESP power first, at the going
ESP power rate, and the remainder of each Party's power consumption will be
at the weighted average rate. For purposes of this section only, the quantity
of power allotted to each Party in each power category (i.e., firm, LIPS and
ESP) will be determined by multiplying the quantity in each category as
billed by TVA in the preceding month multiplied by a fraction, the numerator
being the Party's power demand for the preceding month and the denominator
being the total power demand of the Charleston Site during the preceding
month.
. Both parties will establish their minimum firm power requirements as of the
Distribution Date. As long as the total minimum firm power requirements for
the Charleston Site are less than the firm power available under the existing
power supply contract, the current methodology of using a weighted average
rate will be used to determine Arch's electricity costs. If the firm power
offered in a new power supply contract is less than the total minimum firm
power requirements of both Parties, the two Parties will each restate their
minimum firm power requirements. If the restated total minimum firm power
requirements still exceed the amount of firm power offered, and the firm
power requirements of the two Parties are not equal, the Party with the
higher firm power requirement will pay a full firm power rate for the unequal
firm power increment between the two Parties. The remaining power consumption
of each Party will be billed at the weighted average rate (including the
equal portions of firm power).
32
TERM:
. OLIN will transmit AC electric power to ARCH for the duration of its present
electric power supply contract with TVA. The incoming plant power line and
Switchgear #1 and #19 will be made available to ARCH for the life of the
facilities.
33
Exhibit A
SERVICE: Steam
PROVIDER: ARCH
SERVICE DESCRIPTION
. ARCH will provide 150 psig saturated steam to OLIN for use in the Chlor-
Alkali Plant, the Charleston Administration Building, the Tech Center and for
other miscellaneous users.
. Steam will be provided at the downstream side of the 150 psig regulator
located in the Boilerhouse.
. ARCH will add a meter at a point beyond the first block valve on the 150 psig
steam line in Piperack West of TRU area, to measure the steam flow to the HTH
Plant.
SERVICE CHARGE
. Fixed Costs associated with the entire operation of the Boilerhouse
(including those associated with the boiler feed water turbine and the
deareator) will be allocated to OLIN monthly based upon OLIN's Budgeted
Service Quantity Percentage for steam.
. OLIN's Budgeted Service Quantity of steam will include steam requirements for
the Chlor-Alkali Plant, Administration Building, Tech Center and other
miscellaneous users.
. Variable Cost of steam will be charged to OLIN based upon the quantity of
steam used by OLIN in any month and the unit variable cost of producing and
distributing steam during that month.
. By-product 30 psig steam from the SO2 Plant will be supplied directly to HTH
Decomposition Unit. The volume of steam provided to HTH Decomp will be added
to the volume of steam produced at the Boilerhouse in calculating the
Variable Unit Cost of steam production.
TERM:
. ARCH will provide steam to OLIN at Charleston as long as ARCH
provides steam to its own Charleston operations. OLIN, as
Service Receiver, will have the right to terminate this
Service upon providing two years advance written notice.
34
Exhibit A
SERVICE: Water Supply System Consisting of Treated Water, Cooling Water and
Potable Water
PROVIDER: OLIN
SERVICE DESCRIPTION
. OLIN will provide treated water, cooling water and potable water to ARCH.
. The Charleston Site water system is not metered to the individual operating
units; hence, the volume of treated water, cooling water and potable water
used directly by ARCH's operating units will be estimated in a manner
consistent with past practices at Charleston. For 1999 ARCH's Charleston
operations are estimated to consume 20% of all the Sites' treated water,
cooling water and potable water.
. Either Party will notify the other if any modifications are required to be
made to any of the water systems. Any major modifications require prior
approval of both Parties before the modification is performed.
. The following water specifications apply
. Treated Water-ambient temperature, less than .5ppm Cl\\2\\, 60 psig and
pH of 8 to 8.5.
. Cooling Water-less than 90 degrees F, corrosion inhibited, minimum 50
psig.
. Potable Water-ambient temperature, higher than 60 psig, Cl\\2\\
content-greater than 1.0ppm and turbidity less than 0.5.
. The total Site treated water (which is used directly by the operating units
and fed as a raw material to the potable water and cooling water systems) is
calculated from the amount of AC electric power that is metered to the
treating water system.
Total Treated Water AC Usage (metered) = Estimated M Gals. Treated Water Used for the entire Charleston Site.
--------------------------------------
33 KWH/M Gals.
SERVICE CHARGE
. For each month of 1999, ARCH will be allocated and billed for 20% (based upon
past Charleston Plant practices) of the volume of treated water, cooling
water and potable water produced and used at the Charleston Site multiplied
by the variable unit cost.
. During 1999, 20% of the Fixed Costs of the Charleston Site Water System will
be allocated to ARCH.
. There will be no additional charge to ARCH for the amount of treated water
used as boiler feed water.
35
TERM:
. OLIN will provide treated water, cooling water and potable water to ARCH for
as long as such Service is provided to its own Charleston Site facilities.
36
Exhibit A
SERVICE: Treatment of HAN Process Waste Water and HAN Area Storm Water
PROVIDER: OLIN
SERVICE DESCRIPTION
. ARCH will continue to treat HAN process waste water and HAN area
storm water for removal of mercury contaminants before discharge
into the OLIN system.
. OLIN will analyze the samples and give approval before HAN storm or
process waters are discharged into the OLIN system consistent with
the practices employed at the Charleston Plant prior to the
Distribution Date.
SERVICE CHARGE
. There will be no charge to ARCH for treatment of the HAN area storm
water if the HAN unit is not operating.
. If the HAN unit is operating, OLIN will charge to ARCH its
proportionate share of costs for analytical work based on the time
that is required to perform these analyses.
TERM:
. OLIN will provide this Service for ARCH for an Initial Term of ten
(10) years with ARCH reserving the right to terminate this Service
upon 90 days advance written notice.
37
Exhibit A
SERVICE: Automotive Maintenance Service
PROVIDER: ARCH
SERVICE DESCRIPTION
. ARCH will provide maintenance service to all internal
combustion powered equipment at the Charleston Site. This
includes forklift trucks, pick-up trucks, mobile cranes,
manlifts, vacuum truck, trackmobiles, automobiles, emergency
generator, firewater pumps, etc.
. All work will be performed upon receipt of a properly approved
work order.
. Work will be performed for OLIN on an as-requested basis.
SERVICE CHARGE
. Mechanics time and material used will be recorded on the work
order covering each job performed by the Autoshop.
. Mechanic's time will be billed to OLIN at a fully loaded rate
which includes the use of equipment and tools.
. Spare parts used from the Autoshop inventory or purchased from
outside sources will be billed to OLIN at cost plus 10%.
TERM:
. Autoshop maintenance services will be provided to OLIN for as
long as ARCH operates the Autoshop for its own equipment at
the Charleston Site.
38
Exhibit A
SERVICE: Emergency Response
PROVIDER: OLIN
SERVICE DESCRIPTION
. OLIN shall provide emergency response equipment to ARCH's Charleston
facilities consistent with emergency response service provided to OLIN's
Charleston Plant prior to the Distribution Date.
. However, OLIN and ARCH each shall be responsible for managing its own
disaster responses, including implementation of their respective Emergency
Plans which will be shared between the companies.
. Emergency response will include, but not be limited to response to plant
emergencies, chemical releases, chemical spills, fire, explosions, etc.
. OLIN will provide and maintain appropriate emergency response equipment
(including the fire truck, ambulance and the Emergency Equipment Building
with the Crisis Management Center) in a ready state.
. The Charleston Site Emergency Response Team will include ARCH and OLIN
employees who will be the first level primary responders, the number to be
agreed upon by the respective Plant Managers. Each company will assign an on-
scene incident commander as well as a higher level crisis team, to respond to
incidents of such company. Employees' wages associated with time spent in
training will be absorbed by the employees' companies and not charged to
OLIN's emergency response cost account.
. ARCH will have access to the Charleston Site emergency communication system.
ARCH shall maintain, and replace if necessary, the emergency radios and
pagers used in connection with the system and ensure that they are in an
operable condition at all times.
. The command post for an incident shall be the Crisis Management Center.
SERVICE CHARGE
. All costs, Fixed and Variable, associated with the Charleston Site emergency
response system (exclusive of employees' wages applicable to training time)
will be accumulated and
39
billed monthly to ARCH on basis of ARCH's Charleston head count as a
percentage of the total Charleston Site head count.
TERM:
. This Service will be provided by ▇▇▇▇ to ARCH for as long as ▇▇▇▇ provides
this Service to its own Charleston operations. ARCH reserves the right to
terminate this Service upon two (2) years advance written notice.
40
Exhibit A
SERVICE: Environmental Services
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ shall provide to ARCH, on a routine basis, certain
environmental services, performed for the ARCH operating facilities
prior to the Distribution Date and which have not been assigned
specifically to ARCH personnel. These Services include, but are not
limited to, operation of the Site ponds and HTH landfill,
monitoring outfalls, monitoring for NPDES compliance, obtaining
samples and monitoring compliance with stormwater permits and
preparing required reports to regulatory agencies and to ARCH
Management (excluding those reports specifically assigned to each
company including Title V permits and reports, HTH landfill permits
and report, etc.).
. ▇▇▇▇ shall communicate with and advise ARCH Charleston Plant
Management of all environmental developments which may impact
ARCH's Charleston operations.
SERVICE CHARGE
. Work performed exclusively for ARCH, such as placing material in
the HTH landfill and the pond dredging of HTH sediment, will be
performed under a work order recording time and material. Labor
will be billed to ARCH at a fully-loaded rate (to cover cost of
equipment and tools used) and material at cost.
. Work performed on shared facilities, such as monitoring outfalls,
for NPDES compliance (including analytical sampling and testing),
testing Site drinking water and operating Site sanitary system will
be recorded as to time and material. Labor will be billed to each
Party at a fully-loaded rate (to cover cost of equipment and tools
used) and material at cost at an agreed upon allocation percentage
(agreed to each year at budget time) which for 1999 is budgeted to
be 45% to ARCH and 55% to ▇▇▇▇.
TERM:
. This Service will be provided by ▇▇▇▇ to ARCH for an Initial Term
of ten (10) years with ARCH reserving the right to terminate any
specific Service for
41
which ARCH has an independent permit which case the allocation of
costs will be adjusted accordingly.
42
Exhibit A
SERVICE: Fire Water
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ shall provide firewater to ARCH through the Charleston Site
firewater system. The Charleston Site firewater system shall have
the capability of delivering 4,500 gallons per minute at 150 psig.
. ARCH, or its designated representative may conduct inspections of
the elements of the Charleston Site firewater system serving ARCH,
including, but not limited to, piping, deluge system, hose houses,
fire monitors and fire pumps. Firewater pumps shall be flow tested
annually or as required by regulation or by the insurance carriers.
. Each Party shall notify the other promptly if any part of its
respective portion of the firewater system is out of service for
any reason.
. Each Party will comply with reasonable recommendations by an
independent inspection agency retained by the parties' respective
insurance carriers concerning maintenance of the firewater system.
. No modifications will be made to the firewater system as it relates
to either company's operations at Charleston unless mutually agreed
upon by both parties.
. Use of the firewater system for tasks normally performed at the
site (such as louvre dryer washes) will continue to follow the same
permit and notification procedures consistent with the practices
and procedures in place before the Distribution Date.
SERVICE CHARGE
. ▇▇▇▇ will ▇▇▇▇ ARCH monthly for its proportionate share of the
Fixed Costs of operating and maintaining the Charleston Site
firewater system. Such proportionate share be based upon ARCH's
percentage of the total personnel located at the Charleston Site.
TERM:
. This Service will be provided to ARCH for the life of the
Charleston Site facilities.
43
Exhibit A
SERVICE: Gasoline and Diesel Fuel
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ will order, receive and store gasoline and diesel fuel for all
automotive equipment and other internal combustion powered
equipment at the Charleston Site. The gasoline and diesel oil pumps
are located at the west side of the HTH Mechanical Shop.
. Gasoline and diesel fuel will be dispensed to ARCH's authorized
personnel. Records will be maintained and costs allocated per the
current method of allocation until such time that a credit card or
other suitable system is in place.
SERVICE CHARGE
. Until a credit card system is implemented, ▇▇▇▇ will ▇▇▇▇ ARCH
monthly for the quantity of gasoline and diesel oil withdrawn
multiplied by the average cost of gasoline and diesel oil for that
particular month.
. There will be no Fixed Cost charges to ARCH for this service.
. Any discrepancies at month end between the sums on the withdrawal
tickets and the pump readings will be allocated to each Party on
the basis of percentage of use.
TERM:
. This Service will be provided by ▇▇▇▇ to ARCH for as long as ▇▇▇▇
provides this service to its own automotive equipment and other
internal combustion powered equipment at Charleston.
44
Exhibit A
SERVICE: Hydrogen
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. Hydrogen from OLIN's Chlorine cells will be cooled and blown to
ARCH's J-3 Plant and to ARCH's Boilerhouse. At the Boilerhouse ARCH
will accept the hydrogen at the outlet side of the main block
valve.
. Hydrogen will first be provided to OLIN's HCL operation and to
ARCH's J-3 Plant before being available for burning in the boilers.
. Hydrogen in ARCH's J-3 Plant and Boilerhouse will displace or
reduce the use of natural gas.
. The hydrogen provided by ▇▇▇▇ will be measured in MCF, will have a
pressure of 5-6 psig at the cells and will be greater than 99.5%
H\\2\\.
. Hydrogen provided to J-3 will be metered through an existing meter
in the H\\2\\ line to J-3. Approximately 163,000MCF H\\2\\ are
budgeted to be used by J-3 in 1999.
SERVICE CHARGE
ARCH will be billed for the quantity of hydrogen received by ARCH at the
boilerhouse and at the J-3 Plant as follows:
. For calendar year 1999, hydrogen will be supplied to ARCH at no
charge.
. For calendar year 2000, hydrogen will be billed to ARCH at 25% of
the equivalent BTU value of natural gas received at the Charleston
Site.
. For calendar year 2001, hydrogen will be billed to ARCH at 50% of
the equivalent BTU value of natural gas received at the Charleston
Site.
. For calendar year 2002 and beyond, hydrogen will be billed to ARCH
at 67.5% of the equivalent BTU value of natural gas received at the
Charleston Site.
TERM:
. Hydrogen will continue to be provided to ARCH' J-3 Plant and to the
Boilerhouse as long as it is available from OLIN's Chlorine cells.
▇▇▇▇ does have the right to pursue alternate economical uses for
the hydrogen and if successful may terminate this Service upon
giving ARCH one (1) year advance written notice.
45
Exhibit A
SERVICE: Hydrochloric Acid
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ will supply 30 36% Hydrochloric Acid (HCL) to ARCH from the
Brine Area HCL Tank.
. HCL is provided to ARCH from either of two sources internal
production by OLIN's Chlor-Alkali Plant or outside purchases.
. HCL delivered to ARCH will be measured at the HTH Acid Meter. From
the total reading of the HTH Acid Meter will be deducted the HCL
meter reading at Secondary Treatment of the Chlor-Alkali Plant to
obtain actual usage by ARCH.
SERVICE CHARGE
. ▇▇▇▇ will ▇▇▇▇ ARCH at the market price as reported in the Chemical
Marketing Reporter in effect on September 1 of each year and as
budgeted by the Parties for the next year for regular grade 30-36%
Hydrochloric Acid. If at the end of the year, the year's average
market price varies by more than 20% from the budgeted price (i.e.
the September 1 reported price from the prior year), the actual
price of HCL received under this Agreement will be adjusted
accordingly.
TERM:
. ▇▇▇▇ will provide ARCH with HCL for an Initial Term of ten (10)
years with ARCH reserving the right to terminate this Service upon
90 days advance written notice.
46
Exhibit A
SERVICE: Laboratory Space and Facilities in Technology Center
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ will provide laboratory space and facilities in the Technology
Center for ARCH employees to conduct quality assurance work
. Such laboratory space and facilities will be dedicated by ▇▇▇▇ for
ARCH's exclusive use.
SERVICE CHARGE
. ▇▇▇▇ will ▇▇▇▇ ARCH monthly for use of laboratory space and
facilities at an annual cost agreed to between ▇▇▇▇ and ARCH at
budget time each year for the next succeeding Calendar Year.
TERM:
. ▇▇▇▇ will provide this service for ARCH for an Initial Term of ten
(10) years subject to termination of this Service by either Party
upon one (1) year advance written notice.
47
Exhibit A
SERVICE: Laboratory Services
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ shall provide to ARCH laboratory services to conduct trace
metal analyses of incoming raw materials, processes and finished
products.
. At budget time each year, ARCH will advise ▇▇▇▇ of the estimated
number of analyses that may be performed and ▇▇▇▇ and ARCH will
determine and agree upon the estimated number of man hours that may
be required to perform the analyses during the next Contract Year.
. ▇▇▇▇ shall provide this Service to ARCH as requested and as
available.
SERVICE CHARGE
. ▇▇▇▇ shall ▇▇▇▇ ARCH each month at a cost for the analyses
performed during the previous month based on a rate for ▇▇▇▇
analytical services established and agreed to annually at budget
time.
TERM:
. ▇▇▇▇ shall provide this Service for an Initial Term of ten (10)
years with ARCH having the right to terminate this Service upon
ninety (90) days written notice.
48
Exhibit A
SERVICE: Medical
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ will provide to ARCH's Charleston Site employees the following
but not all inclusive, medical services
. Employment and exit physical examinations
. Regular periodic health physicals
. Treatment of occupational injuries and illnesses
. Non-occupational injuries and illness will be attended to as
staff time is available
. Surveillance examinations for all employees for audiometric and
pulmonary functions
. Return to work authorization
. Substance abuse screening
. Wellness and blood borne pathogens programs
. In performing medical services to ARCH, OLIN's medical staff will
maintain logs of medical visits by ARCH personnel and will retain
medical records to comply with OSHA requirements. Medical records
of ARCH's personnel will receive the same confidentiality as
accorded to OLIN's Charleston employees.
SERVICE CHARGE
▇▇▇▇ will ▇▇▇▇ ARCH for its proportionate share of the Charleston Medical
Department expenses based on head count and as per the below formula.
ARCH Monthly Charge = Total Monthly Charleston Site Medical Dept. Expenses Charleston Site Head Count for the month
----------------------------------------------------- X ------------------------------------------------
Total Charleston Site Head Count for the month
TERM:
. ▇▇▇▇ will provide medical services to ARCH's Charleston personnel
for as long as such Service is provided to OLIN's Charleston
employees.
49
Exhibit A
SERVICE: Natural Gas and Natural Gas Distribution
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ will provide natural gas to ARCH's Boilerhouse and J-3 Plant.
. Natural gas to J-3 will be provided on an as-required basis as a
replacement for the unavailability of sufficient hydrogen for the
J-3 operation. The maximum amount of natural gas that can be
consumed at J-3, in lieu of all the hydrogen, is approximately
55,000 MCF per year.
. Natural gas will be provided to ARCH's Boilerhouse as a fuel
supplement to hydrogen. Natural gas will be used in the Boilerhouse
to full extent of its availability before resorting to the use of
fuel oil.
. Natural gas consumed by J-3 will be based upon meter readings of
the combined J-3/TRU gas stream at the Boilerhouse and the gas
meter reading in the TRU building.
. J-3 Natural Gas Consumption = Meter reading of combined J-3/TRU gas
stream minus gas meter reading in TRU building.
. Natural gas consumed in the Boilerhouse will be the sum of the gas
meter readings on Boilers Nos. 1, 2 and 3.
SERVICE CHARGE
. ▇▇▇▇ will ▇▇▇▇ ARCH for natural gas volumes actually used in any
month multiplied by the same rate per MCF (or per MMBTU) as ▇▇▇▇
pays to the Charleston Site natural gas supplier.
. No natural gas distribution system Fixed Costs will be billed to
ARCH.
TERM:
. ▇▇▇▇ will provide natural gas to ARCH as long as natural gas is
provided by ▇▇▇▇ to its operations at the Charleston Site.
50
Exhibit A
SERVICE: Pipe Racks
PROVIDER: ▇▇▇▇ and ARCH
SERVICE DESCRIPTION
. Each Party will own and maintain the pipe racks located within the
battery limits of its Charleston Site operations.
. The maintenance of the pipe lines on or within the pipe racks will
be the responsibility of the Party owning the pipe lines.
. Each Party will negotiate in good faith to make unused pipe rack
capacity available for use by the other Party for expansions or
improvements to operations.
SERVICE CHARGE
. Since each Party will maintain its own pipe racks there will be no
charges from one Party to the other.
TERM: Life of the facilities.
51
Exhibit A
SERVICE: Propane
PROVIDER: ARCH
SERVICE DESCRIPTION
. ARCH will order, receive, and store propane gas for mobile
equipment and other gas burning equipment at the Charleston Site.
. Propane gas will be dispensed by qualified personnel.
. Records and billing will occur consistent with past practice until
such time as a revised system is instituted such as credit card
purchasing.
SERVICE CHARGE
. ARCH will ▇▇▇▇ ▇▇▇▇ monthly for the quantity of propane gas
withdrawn during the month multiplied by the then average unit cost
of the propane inventory.
. There will be no Fixed Cost charges for this service.
TERM:
. This Service will be available to ▇▇▇▇ for as long as ARCH provides
this Service to its own Charleston facilities.
52
Exhibit A
SERVICE: Rail Car Switching and Storage and Track Maintenance
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ will provide rail car switching service for lime cars for
ARCH's Charleston Site.
. ARCH will have the responsibility of notifying and coordinating
with OLIN's Customer Satisfaction Team Leader the schedule for
movement of loaded and unloaded lime cars.
. The HTH track spur can accommodate a total of 13 rail cars one
spotted for unloading and twelve available for unloading. Under
normal circumstances this spur should provide sufficient rail car
storage capacity for the HTH operation. If the need arises to store
more than 13 ARCH railcars at the Charleston Site, upon ARCH's
request, ▇▇▇▇ will make additional track available on a temporary
basis if ▇▇▇▇ has such track to make available. If ▇▇▇▇ cannot make
additional track space available, ▇▇▇▇ will assist ARCH in
arranging for outside storage of excess cars.
. ARCH will be responsible for maintaining the lime railroad tracks
up to and including the switch on those tracks. ▇▇▇▇ will be
responsible for maintaining all other tracks in the Charleston
Site.
SERVICE CHARGE
. ▇▇▇▇ will ▇▇▇▇ ARCH for rail cars switched in and out of the
Charleston Site for ARCH at an annualized rate of $65,000 for 1999,
and for future years in an amount to be agreed as part of the
budgeting process for such year.
. Fixed costs of repairing the track mobile and maintaining the main
line track in the Charleston Site will be allocated and billed to
ARCH on the basis of the percentage of the total number of rail
cars delivered to or shipped from the Charleston Site that are for
ARCH's account.
. Costs of repairing any railcar damage, which occurs while the car
is in the Charleston Site, will be the responsibility of the Party
causing the damage.
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Derailing costs will be the responsibility of the Party causing the
derail of cars.
TERM:
. This Service shall be provided by ▇▇▇▇ to ARCH for an Initial Term
of 10 years; however, ARCH has the right to terminate this Service
upon giving one (1) year advance written notice.
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Exhibit A
SERVICE: Recovered Salt
PROVIDER: ARCH
SERVICE DESCRIPTION
. Salt is recovered by ▇▇▇▇ at the Chlor Alkali Salt Centrifuge from
the saturated brine slurry pumped to Chlor Alkali 510 brine system
from ARCH's HTH Unit. Weak brine streams are pumped by ▇▇▇▇ to the
J-3 Salt Dissolver and a saturated brine solution is returned to
the Chlor Alkali 812 brine system.
. The slurry from the HTH Unit will contain less than 15%
Hypochlorite and the saturated brine from J-3 will have less than
1.0 ppm Nickel.
. Approximately 27,000 dry tons of salt is budgeted to be recovered
by ▇▇▇▇ in 1999.
SERVICE CHARGE
The quantity of salt recovered by ▇▇▇▇ in the salt centrifuge is estimated based
upon the total caustic soda used in the J-3 and HTH Units, multiplied by a
factor based on salt in the recovery stream adjusted for any known losses and
for salt carried into the HTH products. Salt recovered by ▇▇▇▇ at the salt
centrifuge will be billed to ▇▇▇▇ as follows:
. For calendar year 1999, recovered salt will be supplied at no
charge.
. For calendar year 2000, recovered salt will be billed at 25% of the
budgeted outside-purchase delivered salt price, less freight.
. For calendar year 2001, recovered salt will be billed at 50% of the
budgeted outside-purchase delivered salt price, less freight. For
calendar year 2002 and beyond, recovered salt will be billed at
67.5% of the budgeted outside-purchase delivered salt price, less
freight.
TERM:
. ▇▇▇▇ will accept the saturated brine from the HTH and J-3 Units for
the life of the Service Facilities.
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Exhibit A
SERVICE: Site Security and Gate Access
PROVIDER: ▇▇▇▇
SERVICE DESCRIPTION
. ▇▇▇▇ will provide directly or through an outside contractor the
security services for the Charleston Site.
. ARCH will prepare and update in a timely manner a Policy and
Procedures Manual which will apply to ARCH employees and ARCH
visitors entering the Charleston Site and which will be
administered by the security personnel at the Main Gate and
Contractors' Gate. This Manual will continuously be consistent with
▇▇▇▇ Policies and Procedures in effect at the time.
. The Main Gate will be used by ARCH employees for ingress and egress
to ARCH facilities on a 24 hour basis.
. Security personnel to the Main Gate will log all visitors to the
Site, handle documents for outbound shipments (as required),
conduct safety orientations, monitor the Weather Alert System and
monitor the Mutual Aid Radio.
. ▇▇▇▇ security personnel will monitor and ▇▇▇▇ will maintain the
chlorine sensors located at the Site's perimeter.
. ▇▇▇▇ shall make available to ARCH the truck scales located at the
main gate. Weigh tickets will be supplied to the truck driver at
the time of weighing, if requested. There will be no charge to ARCH
for use of the truck scales.
SERVICE CHARGE
. All costs, both Fixed and Variable, will be accumulated and billed
monthly to ARCH on the basis of ARCH's Charleston head count as a
percentage of the total Charleston Site head count.
TERM:
. This Service will be provided by ▇▇▇▇ to ARCH for the life of the
Charleston Site; however, ARCH reserves the right to terminate this
Service upon one (1) year advance written notice.
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Exhibit A
SERVICE: Specialized Skills Support
PROVIDER: Either Party
SERVICE DESCRIPTION
. Either Party will provide to the other company, on an as-requested,
as-available basis, specialized skills support (including the
necessary equipment to perform the specialized skills) such as, but
not limited to: specialty welding, refrigeration mechanics and
freon recovery, vibration analysis, infrared testing, fan balancing
and machinists and crane operations.
SERVICE CHARGE
. Personnel providing specialized skills support to the Service
Receiver will be billed at a fully-loaded hourly rate to include
the cost of equipment and tools.
TERM:
. Either Party will provide specialized skills support to the other
Party for an Initial Term of ten (10) years.
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