-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IiMC8JKkLO8VLgz5404ZIjxd8hIrXVQ3++dqvKeFCpLeNd04b/4qJWMLj6Vp5GxW J/RgI6dYgBf5r10LILTUYA== 0000899243-96-000277.txt : 19960408 0000899243-96-000277.hdr.sgml : 19960408 ACCESSION NUMBER: 0000899243-96-000277 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19960405 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STERLING CHEMICALS INC CENTRAL INDEX KEY: 0000795662 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 760185186 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10059 FILM NUMBER: 96544709 BUSINESS ADDRESS: STREET 1: 1200 SMITH ST, SUITE 1900 CITY: HOUSTON STATE: TX ZIP: 77002-4312 BUSINESS PHONE: 7136503700 MAIL ADDRESS: STREET 1: 1200 SMITH ST SUITE 1900 CITY: HOUSTON STATE: TX ZIP: 77002-4312 10-K/A 1 FORM 10-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A -------------------- [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission File Number 1-10059 STERLING CHEMICALS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) -------------------- DELAWARE 76-0185186 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1200 SMITH STREET SUITE 1900 77002-4312 HOUSTON, TEXAS (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANTS'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 650-3700 -------------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ------------------- COMMON STOCK, PAR VALUE $.01 PER SHARE NEW YORK STOCK EXCHANGE, INC. SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. As of April 1, 1996, the number of shares of common stock outstanding was 55,689,991. As of such date, the aggregate market value of common stock held by nonaffiliates, based upon the closing price of these shares on the New York Stock Exchange, was approximately $552 million. DOCUMENTS INCORPORATED BY REFERENCE: (1) Portions of the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1995 (Part II Items 5-8 & Part IV Item 14(a)(1) (2) Portions of the Company's Definitive Proxy Statement dated December 21, 1995 (Part III Items 10-12). PART IV ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) Financial Statements, Financial Statement Schedules and Exhibits 1. Consolidated Financial Statements
PAGE ---- Report of Management..................................... * Report of Independent Accountants........................ * Sterling Chemicals, Inc. Consolidated Balance Sheet as * of September 30, 1995 and 1994.......................... * Sterling Chemicals, Inc. Consolidated Statements of Operations for the fiscal years ended September 30, 1995, 1994 and 1993..................................... * Sterling Chemicals, Inc. Consolidated Statement of Changes in Stockholders' Equity for the fiscal years ended September 30, 1995, 1994 and 1993................. * Sterling Chemicals, Inc. Consolidated Statement of Cash Flows for the fiscal years ended September 30, 1995, 1994 and 1993........................................... * Notes to Consolidated Financial Statements............... *
* Incorporated herein by reference to the appropriate portions of the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1995. 2. All schedules for which provision is made in Regulation S-X of the Securities and Exchange Commission are not required under the related instruction or are inapplicable and, therefore, have been omitted 3. Exhibits Exhibit No.'s 10.51, 10.52 and 10.55 are being refiled to disclose the term of each contract which was previously omitted when these Exhibits were filed with the Company's annual report on Form 10-K for the year ended September 30, 1995. Confidential treatment has been requested with respect to portions of these Exhibits, and such request has been granted. Except as otherwise noted under "Description of Exhibit," each exhibit not filed herewith is incorporated by reference to the exhibit of the same number filed with the Company's Registration Statement on Form S-1 dated October 12, 1988 (Registration No. 33-24020).
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 2.1 --Purchase Agreement dated as of August 20, 1992 between Tenneco Canada Inc. as Seller, and Sterling Pulp Chemicals, Ltd. and Sterling Canada, Inc. as Buyers (the "Purchase Agreement"), incorporated by reference from Exhibit 2.1 to the Company's Current Report on Form 8-K dated as of September 3, 1992. 3.1 --Restated Certificate of Incorporation of the Company. 3.2 --Amended By-laws of the Company,incorporated by reference from exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 4.2 --Form of Registration Rights Agreements dated as of July 30, 1986 among the Company and the holders of Common Stock listed on the signature page thereto.
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- +10.1 --Assets Purchase Agreement dated August 1, 1986, between Monsanto Company and the Company, incorporated by reference from exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992. **10.2 --Credit Agreement dated April 13, 1995, among the Company, Texas Commerce Bank National Association as Agent and as a Lender and Other Lenders. **10.2(a) --Guaranty dated as of September 28, 1995, among the Company, Texas Commerce Bank National Association as Agent and as a Lender and Other Lenders. **10.2(b) --First Amendment to Credit Agreement dated September 28, 1995, among the Company, Texas Commerce Bank National Association as Agent and as a Lender and Other Lenders. **10.3 --Credit Agreement dated September 28, 1995, among Sterling Pulp Chemicals, Ltd., Texas Commerce Bank National Association as agent and as a lender and Other Lenders. **10.4 --Credit Agreement dated as of April 28, 1995, between Sterling Pulp Chemicals, Ltd. and the Bank of Nova Scotia. 10.6 --Sterling Chemicals, Inc. Salaried Employees' Pension Plan (Restated as of October 1, 1993), incorporated by reference from exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.6(a) --Supplement to the Sterling Chemicals, Inc. Salaried Employee's Pension Plan (Restated as of January 1, 1994), incorporated by reference from exhibit 10.6(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.6(b) --First and Second Amendments to the Sterling Chemicals, Inc. Salaried Employees' Pension Plan dated April 27, 1994 and September 23, 1994, respectively, incorporated by reference from exhibit 10.6(b) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.8 --Sterling Chemicals, Inc. Hourly Paid Employees' Pension Plan (Restated as of October 1, 1993), incorporated by reference from exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.8(a) --Supplement to the Sterling Chemicals, Inc. Hourly Paid Employee's Pension Plan (Restated as of January 1, 1994), incorporated by reference from exhibit 10.8(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.8(b) --First Amendment to the Sterling Chemicals, Inc. Hourly Paid Employees' Pension Plan dated April 27, 1994, incorporated by reference from exhibit 10.8(b) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.9 --Sterling Chemicals, Inc. Amended and Restated Savings and Investment Plan, incorporated by reference from exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.9(a) --Supplements to the Sterling Chemicals, Inc. Savings and Investment Plan for Hourly Paid Employees and Salaried Employees, incorporated by reference from exhibit 10.10(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.9(b) --First and Second Amendments to the Sterling Chemicals, Inc. Amended and Restated Savings and Investment Plan dated April 27, 1994 and October 26, 1994, respectively, incorporated by reference from exhibit 10.10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.10 --Sterling Chemicals, Inc. Pension Benefit Equalization Plan. 10.11 --Sterling Chemicals, Inc. 1989 Omnibus Stock and Incentive Plan. 10.12 --Sterling Chemicals, Inc. Amended and Restated Employee Stock Ownership Plan, incorporated by reference from exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.12(a)--First Amendment to the Sterling Chemicals, Inc. Amended and Restated Employees' Stock Ownership Plan dated April 27, 1994, incorporated by reference from exhibit 10.12(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994.
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- +**10.13 --Styrene Monomer Conversion Contract dated November 3, 1995, between Monsanto Company and the Company. +10.17 --Styrene Monomer Sales Contract dated as of August 1, 1991, between the Company and Monsanto Company, incorporated by reference from exhibit 10.12(A) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1990. +10.18 --Styrene Monomer Exchange Contract dated as of August 1, 1991, between the Company and Monsanto Company, incorporated by reference from exhibit 10.13(A) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1990. +10.19 --Acrylonitrile Exchange Contract dated January 1, 1994, between the Company and Monsanto Company, incorporated by reference from exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. +10.21 --Production Agreement dated April 15,1988 between BP Chemicals Americas Inc. and the Company and First and Second Amendment thereto. +10.22 --Agreement dated May 2, 1988, between E.I. du Pont de Nemours and Company and the Company. 10.23 --License Agreement dated April 15, 1988, between BP Chemicals Americas Inc. and the Company. +10.24 --Product Sales Agreement dated August 1, 1986, between BASF Corporation and the Company, incorporated by reference from exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992. +10.24(a) --Amendment No. 3 to Product Sales Agreement as of January 1,1994, between BASF Corporation and the Company, incorporated by reference from exhibit 10.22(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.25 --License Agreement dated August 1, 1986, between Monsanto Company and the Company. +10.26 --Amended Lease and Production Agreement dated August 8, 1994, between BP Chemicals Americas Inc. and the Company, incorporated by reference from exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.30 --Form of Indemnity Agreement executed between the Company and each of its officers and directors, incorporated by reference from exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.31 --Agreement dated January 30, 1987, among J. Virgil Waggoner, Gordon A. Cain and the Company, regarding capital stock of the Company. 10.32 --Amended and Restated Sterling Chemicals, Inc. Hourly Employees' Profit Sharing Plan, incorporated by reference from exhibit 10.32 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.33 --Amended and Restated Sterling Chemicals, Inc. Salaried Employee's Profit Sharing Plan, incorporated by reference from exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.34 --Sterling Chemicals, Inc. Amended and Restated Supplemental Employee Retirement Plan, incorporated by reference from exhibit 10.34 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1989 (Commission File Number 1-10059). 10.35 --Sterling Chemicals, Inc. Deferred Compensation Plan, incorporated by reference from exhibit 10.35 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1989 (Commission File Number 1-10059). 10.36 --Article of Agreement between the Company, its successors and assigns, and Texas City, Texas Metal Trades Council, AFL-CIO Texas City, Texas, May 1, 1993 to May 1, 1996, incorporated by reference from exhibit 10.35 to the Company's Annual Report on Form 10- K for the fiscal year ended September 30, 1993.
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 10.38 --Conditional Performance Guaranty dated as of August 20, 1992, by Albright & Wilson, Ltd. in favor of Sterling Pulp Chemicals, Ltd., Sterling Canada, Inc. and the Indemnities identified in Section 10.2 of the Purchase Agreement, incorporated by reference from exhibit 10.38 to the Company's Current Report on Form 8-K dated September 3, 1992. 10.39 --Performance Guaranty dated as of August 20, 1992, by the Company in favor of Tenneco Canada Inc., Rio Linda Chemical Co., Albright & Wilson Americas, Inc. and the Indemnities identified in Section 10.3 of the Purchase Agreement, incorporated by reference from exhibit 10.39 to the Company's Current Report on Form 8-K dated September 3, 1992. 10.45 --Lease dated March 1, 1990 between Procter & Gamble, Inc. and Tenneco Canada Inc., as amended by a Lease Modification Agreement dated August 9, 1991, and Consent and Assignment Agreement dated as of August 21, 1992 among 982174 Ontario Limited, Sterling Pulp Chemicals, Ltd., Proctor & Gamble, Inc., Tenneco Canada Inc. and The Bank of Nova Scotia, incorporated by reference from exhibit 10.45 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992. 10.46 --Lease dated July 1, 1977 between Canadian National Railway Company and ERCO Industries Limited, and Consent and Assignment Agreement dated as of August 21, 1992 among Tenneco Canada Inc., Sterling Pulp Chemicals, Ltd., Canadian National Railway Company and The Bank of Nova Scotia, incorporated by reference from exhibit 10.46 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992. +10.48 --Sales and Purchase Agreement dated April 1, 1994, between BP Chemicals Ltd. and the Company, incorporated by reference from exhibit 10.48 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. +10.49 --Contract for Sale and Purchase of Ethylene dated October 28, 1988, between Phillips 66 Company and the Company, incorporated by reference from exhibit 10.49 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.50 --Agreement between Sterling Pulp Chemicals Ltd. North Vancouver British Columbia and Pulp, Paper and Woodworkers of Canada Local 5 British Columbia effective December 1, 1994 to November 30, 1997, incorporated by reference from exhibit 10.50 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. +*10.51 --Contract for Sale and Purchase of Ethylene effective January 1, 1995, between Phillips Chemical Company and the Company. +*10.52 --Chemical Products Sales Agreement--Ethylene, dated December 7, 1994, between Lyondell Petrochemical Company and the Company. **10.53 --Agreement between Sterling Pulp Chemicals Ltd. Buckingham, Quebec and the Energy and Chemicals Workers Union effective November 30, 1994 to November 30, 1997. **10.54 --Agreement between Sterling Pulp Chemicals Ltd., Buckingham, Quebec, and the Office and Professional Employees International Union, effective June 25, 1995 to November 14, 1997. +*10.55 --Product Supply Agreement dated May 15, 1995, between Praxair Hydrogen Supply, Inc. and the Company. **13.1 --Sterling Chemicals, Inc. Annual Report to Shareholders for the fiscal year ended September 30, 1995. **27.0 --Financial Data Schedule.
- ---------- * Filed herewith. ** Previously filed with the Company's annual report on Form 10-K for the year ended September 30, 1995. + Confidential treatment has been requested with respect to portions of this Exhibit, and such request has been granted. 4 (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended September 30, 1995. However, on October 31, 1995, the Company filed a Current Report on Form 8-K describing the engagement of the firm of Arthur Andersen LLP as its independent auditors for the year ending September 30, 1996, to replace the firm of Coopers & Lybrand L.L.P. 5 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. STERLING CHEMICALS, INC. (Registrant) By /s/ J. Virgil Waggoner ------------------------------- (J. Virgil Waggoner) President and Chief Executive Officer DATE: APRIL 4, 1996 By /s/ Jim P. Wise ------------------------ (Jim P. Wise) Vice President - Finance and Chief Financial Officer DATE: APRIL 4, 1996 6 LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 2.1 --Purchase Agreement dated as of August 20, 1992 between Tenneco Canada Inc. as Seller, and Sterling Pulp Chemicals, Ltd. and Sterling Canada, Inc. as Buyers (the "Purchase Agreement"), incorporated by reference from Exhibit 2.1 to the Company's Current Report on Form 8-K dated as of September 3, 1992. 3.1 --Restated Certificate of Incorporation of the Company. 3.2 --Amended By-laws of the Company,incorporated by reference from exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 4.2 --Form of Registration Rights Agreements dated as of July 30, 1986 among the Company and the holders of Common Stock listed on the signature page thereto. +10.1 --Assets Purchase Agreement dated August 1, 1986, between Monsanto Company and the Company, incorporated by reference from exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992. **10.2 --Credit Agreement dated April 13, 1995, among the Company, Texas Commerce Bank National Association as Agent and as a Lender and Other Lenders. **10.2(a) --Guaranty dated as of September 28, 1995, among the Company, Texas Commerce Bank National Association as Agent and as a Lender and Other Lenders. **10.2(b) --First Amendment to Credit Agreement dated September 28, 1995, among the Company, Texas Commerce Bank National Association as Agent and as a Lender and Other Lenders. **10.3 --Credit Agreement dated September 28, 1995, among Sterling Pulp Chemicals, Ltd., Texas Commerce Bank National Association as agent and as a lender and Other Lenders. **10.4 --Credit Agreement dated as of April 28, 1995, between Sterling Pulp Chemicals, Ltd. and the Bank of Nova Scotia. 10.6 --Sterling Chemicals, Inc. Salaried Employees' Pension Plan (Restated as of October 1, 1993), incorporated by reference from exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.6(a) --Supplement to the Sterling Chemicals, Inc. Salaried Employee's Pension Plan (Restated as of January 1, 1994), incorporated by reference from exhibit 10.6(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.6(b) --First and Second Amendments to the Sterling Chemicals, Inc. Salaried Employees' Pension Plan dated April 27, 1994 and September 23, 1994, respectively, incorporated by reference from exhibit 10.6(b) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.8 --Sterling Chemicals, Inc. Hourly Paid Employees' Pension Plan (Restated as of October 1, 1993), incorporated by reference from exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.8(a) --Supplement to the Sterling Chemicals, Inc. Hourly Paid Employee's Pension Plan (Restated as of January 1, 1994), incorporated by reference from exhibit 10.8(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.8(b) --First Amendment to the Sterling Chemicals, Inc. Hourly Paid Employees' Pension Plan dated April 27, 1994, incorporated by reference from exhibit 10.8(b) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.9 --Sterling Chemicals, Inc. Amended and Restated Savings and Investment Plan, incorporated by reference from exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.9(a) --Supplements to the Sterling Chemicals, Inc. Savings and Investment Plan for Hourly Paid Employees and Salaried Employees, incorporated by reference from exhibit 10.10(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.9(b) --First and Second Amendments to the Sterling Chemicals, Inc. Amended and Restated Savings and Investment Plan dated April 27, 1994 and October 26, 1994, respectively, incorporated by reference from exhibit 10.10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994.
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 10.11 -Sterling Chemicals, Inc. 1989 Omnibus Stock and Incentive Plan. 10.12 -Sterling Chemicals, Inc. Amended and Restated Employee Stock Ownership Plan, incorporated by reference from exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.12(a) -First Amendment to the Sterling Chemicals, Inc. Amended and Restated Employees' Stock Ownership Plan dated April 27, 1994, incorporated by reference from exhibit 10.12(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. +**10.13 --Styrene Monomer Conversion Contract dated November 3, 1995, between Monsanto Company and the Company. +10.17 --Styrene Monomer Sales Contract dated as of August 1, 1991, between the Company and Monsanto Company, incorporated by reference from exhibit 10.12(A) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1990. +10.18 --Styrene Monomer Exchange Contract dated as of August 1, 1991, between the Company and Monsanto Company, incorporated by reference from exhibit 10.13(A) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1990. +10.19 --Acrylonitrile Exchange Contract dated January 1, 1994, between the Company and Monsanto Company, incorporated by reference from exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. +10.21 --Production Agreement dated April 15,1988 between BP Chemicals Americas Inc. and the Company and First and Second Amendment thereto. +10.22 --Agreement dated May 2, 1988, between E.I. du Pont de Nemours and Company and the Company. 10.23 --License Agreement dated April 15, 1988, between BP Chemicals Americas Inc. and the Company. +10.24 --Product Sales Agreement dated August 1, 1986, between BASF Corporation and the Company, incorporated by reference from exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992. +10.24(a) -Amendment No. 3 to Product Sales Agreement as of January 1,1994, between BASF Corporation and the Company, incorporated by reference from exhibit 10.22(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.25 --License Agreement dated August 1, 1986, between Monsanto Company and the Company. +10.26 --Amended Lease and Production Agreement dated August 8, 1994, between BP Chemicals Americas Inc. and the Company, incorporated by reference from exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.30 --Form of Indemnity Agreement executed between the Company and each of its officers and directors, incorporated by reference from exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.31 --Agreement dated January 30, 1987, among J. Virgil Waggoner, Gordon A. Cain and the Company, regarding capital stock of the Company. 10.32 --Amended and Restated Sterling Chemicals, Inc. Hourly Employees' Profit Sharing Plan, incorporated by reference from exhibit 10.32 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.33 --Amended and Restated Sterling Chemicals, Inc. Salaried Employee's Profit Sharing Plan, incorporated by reference from exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.34 --Sterling Chemicals, Inc. Amended and Restated Supplemental Employee Retirement Plan, incorporated by reference from exhibit 10.34 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1989 (Commission File Number 1-10059). 10.35 --Sterling Chemicals, Inc. Deferred Compensation Plan, incorporated by reference from exhibit 10.35 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1989 (Commission File Number 1-10059).
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 10.36 --Article of Agreement between the Company, its successors and assigns, and Texas City, Texas Metal Trades Council, AFL-CIO Texas City, Texas, May 1, 1993 to May 1, 1996, incorporated by reference from exhibit 10.35 to the Company's Annual Report on Form 10- K for the fiscal year ended September 30, 1993. 10.38 --Conditional Performance Guaranty dated as of August 20, 1992, by Albright & Wilson, Ltd. in favor of Sterling Pulp Chemicals, Ltd., Sterling Canada, Inc. and the Indemnities identified in Section 10.2 of the Purchase Agreement, incorporated by reference from exhibit 10.38 to the Company's Current Report on Form 8-K dated September 3, 1992. 10.39 --Performance Guaranty dated as of August 20, 1992, by the Company in favor of Tenneco Canada Inc., Rio Linda Chemical Co., Albright & Wilson Americas, Inc. and the Indemnities identified in Section 10.3 of the Purchase Agreement, incorporated by reference from exhibit 10.39 to the Company's Current Report on Form 8-K dated September 3, 1992. 10.45 --Lease dated March 1, 1990 between Procter & Gamble, Inc. and Tenneco Canada Inc., as amended by a Lease Modification Agreement dated August 9, 1991, and Consent and Assignment Agreement dated as of August 21, 1992 among 982174 Ontario Limited, Sterling Pulp Chemicals, Ltd., Proctor & Gamble, Inc., Tenneco Canada Inc. and The Bank of Nova Scotia, incorporated by reference from exhibit 10.45 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992. 10.46 --Lease dated July 1, 1977 between Canadian National Railway Company and ERCO Industries Limited, and Consent and Assignment Agreement dated as of August 21, 1992 among Tenneco Canada Inc., Sterling Pulp Chemicals, Ltd., Canadian National Railway Company and The Bank of Nova Scotia, incorporated by reference from exhibit 10.46 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992. +10.48 --Sales and Purchase Agreement dated April 1, 1994, between BP Chemicals Ltd. and the Company, incorporated by reference from exhibit 10.48 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. +10.49 --Contract for Sale and Purchase of Ethylene dated October 28, 1988, between Phillips 66 Company and the Company, incorporated by reference from exhibit 10.49 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. 10.50 --Agreement between Sterling Pulp Chemicals Ltd. North Vancouver British Columbia and Pulp, Paper and Woodworkers of Canada Local 5 British Columbia effective December 1, 1994 to November 30, 1997, incorporated by reference from exhibit 10.50 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. +*10.51 --Contract for Sale and Purchase of Ethylene effective January 1, 1995, between Phillips Chemical Company and the Company. +*10.52 --Chemical Products Sales Agreement--Ethylene, dated December 7, 1994, between Lyondell Petrochemical Company and the Company. **10.53 --Agreement between Sterling Pulp Chemicals Ltd. Buckingham, Quebec and the Energy and Chemicals Workers Union effective November 30, 1994 to November 30, 1997. **10.54 --Agreement between Sterling Pulp Chemicals Ltd., Buckingham, Quebec, and the Office and Professional Employees International Union, effective June 25, 1995 to November 14, 1997. +*10.55 --Product Supply Agreement dated May 15, 1995, between Praxair Hydrogen Supply, Inc. and the Company. **13.1 --Sterling Chemicals, Inc. Annual Report to Shareholders for the fiscal year ended September 30, 1995. **27.0 --Financial Data Schedule.
- ---------- * Filed herewith. ** Previously filed with the Company's annual report on Form 10-K for the year ended September 30, 1995. + Confidential treatment has been requested with respect to portions of this Exhibit, and such request has been granted. 9 EX-10.51 2 CONTRACT Exhibit 10.51** ***OMITTED INFORMATION DENOTED BY ASTERISKS (***) HAS BEEN FILED SEPARATELY WITH THE COMMISSION AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.*** CONTRACT FOR SALE AND PURCHASE OF ETHYLENE THIS CONTRACT, entered into this first day of January 1995, by and between STERLING CHEMICALS, INC., a Delaware corporation having an office in Houston, Texas, hereinafter called "BUYER", and PHILLIPS CHEMICAL COMPANY, a division of Phillips Petroleum Company, a Delaware corporation with an operating office in Bartlesville, Oklahoma, hereinafter called "SELLER"; WITNESSETH: In consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows: ARTICLE I: SALE AND PURCHASE SELLER hereby sells and agrees to deliver and BUYER hereby purchases and agrees to receive and pay for during the period, on the terms and conditions, and at the price hereinafter stated, (***) per contract year of ethylene (plus or minus (***), at BUYER's option) beginning January 1, 1995, and continuing thereafter for the term provided for in Article II below. Deliveries shall be made in approximately equal monthly installments, and in no event shall SELLER be required to deliver or BUYER be required to receive in any month more than (***). ARTICLE II: CONTRACT TERM This contract shall be effective January 1, 1995. It shall remain in full force and effect for a primary term of five (5) years beginning on the effective date, and continuing thereafter, unless and until terminated by either party by the giving of written notice of termination to the other party of at least (***) months in advance of the date of termination specified in such termination notice, which date of termination so specified shall be the last day of the primary term or the last day of any contract year thereafter. As used herein, the term "contract year" refers to the period of (***) commencing January 1, 1995, and to each succeeding twelve-month period. ARTICLE III: PRICE (***) ARTICLE IV: SPECIFICATIONS All of the ethylene sold and purchased hereunder shall meet the specifications set forth in Exhibit "A" attached hereto and by this reference made a part hereof as fully as though herein set forth at length. ARTICLE V: DELIVERY AND TITLE TRANSFER Deliveries of ethylene hereunder shall be made to BUYER at the point of delivery, which shall be the inlet of the first flange of BUYER's pipeline from SELLER's meter, or meter designated by SELLER, in BUYER's Texas City, Texas facility,or other mutually 6 agreed locations. Title and risk of loss shall pass from SELLER to BUYER at said point of delivery. BUYER shall have no responsibility or liability on account of anything which may be done, happen or arise with respect to ethylene before delivery, and SELLER shall have no responsibility or liability on account of anything which may be done, happen or arise with respect to ethylene after delivery. SELLER shall bear all costs of transporting the ethylene to said point of delivery, and BUYER shall bear all costs of transporting the ethylene from said point of delivery. Delivery shall be made at the pressure agreed to by BUYER and SELLER, and in a manner typical of industry practices. ARTICLE VI: MEASUREMENT SELLER or its designee shall install, maintain, and operate facilities whereby the volume of ethylene delivered by SELLER to BUYER is measured and the temperature and pressure recorded, and BUYER shall grant to or arrange for SELLER or its designee all necessary rights and easements for the installation, maintenance, operation, and removal of said meter and facilities. BUYER shall provide all utilities necessary for the operation of the meter station. BUYER, if it so elects and gives notice of such election to SELLER, shall have the right to observe the periodic recalibration of such meter and facilities, to be made at SELLER's expense as often as necessary but no less frequently than once each month. BUYER may, at its option and at its sole cost and expense, install a check meter at said point of delivery; and in the event it does so, SELLER will furnish BUYER with information to permit BUYER to duplicate SELLER's meter. The volume of ethylene delivered by SELLER hereunder each day shall be determined by reference to daily readings of SELLER's meter. For this purpose, a day shall be construed to extend from 7:00 a.m. on one day to 7:00 a.m. on the next succeeding day, and correction factors and calculations from such meter readings for the purpose of determining the daily quantities of ethylene delivered hereunder shall conform with procedures mutually agreed upon by the parties. Such daily quantities shall be converted to pounds of ethylene in accordance with the method set forth in Exhibit "B" attached hereto and by this reference made a part hereof as fully as though herein set forth at length. In the event representatives of the parties hereto are unable to agree (1) on whether any ethylene delivered hereunder meets the specifications set forth in Article IV hereof, or (2) on the measurement of any ethylene delivered hereunder for which provision is made in this Article Vl, or (3) on the determination of pounds of ethylene delivered hereunder in accordance with the methods prescribed in Exhibit "B", any and all such disputes shall be resolved either by Chas. Martin Inspectors of Petroleum, Inc., or E. W. Saybolt and Company, at the election of the party raising the question, or if neither shall accept the assignment to resolve the dispute, then by such other recognized referee as may be agreed upon by the parties. The decision of such referee with respect to such matters shall be final, conclusive, and binding on each of the parties hereto and the charges of such referee shall be borne equally by the parties. ARTICLE VII: INVOICING AND PAYMENT SELLER shall invoice BUYER for ethylene sold and purchased hereunder no more often than once during each calendar month for the preceding months' sales. Such invoices shall be dispatched promptly by SELLER, telegraphically or otherwise, so as to be received by BUYER within three (3) days of the date of invoice. Payment shall be made by BUYER to SELLER on or before the 15th day following the date of each invoice by telegraphic transfer or other means satisfactory to SELLER, of immediately available funds to SELLER's account at such bank or depository as is designated in the invoice. Late payments for purchases shall be assessed a delinquency charge on a daily basis at the rate equivalent to the Chase Manhattan Bank prime rate plus one (1) percent on the unpaid balance (excluding late payments due to SELLER's invoicing errors). In no event shall the delinquency charge exceed the legal maximum. It is agreed that SELLER may decline to make deliveries of ethylene under this contract except for cash payable upon delivery whenever SELLER shall have reasonable doubt as to BUYER's financial responsibility and shall so advise BUYER, whereupon BUYER shall have the privilege of satisfying SELLER as to BUYER's financial responsibility. If SELLER is so satisfied, deliveries may be resumed hereunder on the terms provided in the first paragraph of this Article Vll. SELLER may exercise its rights under this Article Vll at any time and from time to time during the continuance of this contract. ARTICLE VIII: TAXES In addition to the price of ethylene hereunder, BUYER shall assume liability for and pay all taxes associated with the sale, use or delivery of ethylene under this contract, including all new or increased taxes, excise taxes including Superfund taxes, fees, or other charges (but excluding taxes based upon net income, altemative minimum taxable income, excess profits, corporate franchise taxes and property taxes), imposed by any governmental authority upon the sale, use or delivery of the ethylene sold hereunder, including but not limited to, any and all taxes associated with the manufacture of ethylene. If BUYER is exempt from the payment of such taxes, fees or other charges, BUYER shall furnish to SELLER proper exemption certificates to cover the ethylene purchased hereunder. All other taxes, fees or governmental charges shall be for SELLER's account. ARTICLE IX: RECORDS To the extent that records of either party are to be used in the administration of this contract, the party whose records are to be used agrees to keep true and correct records pertaining to this contract and all transactions related thereto and to maintain such records for a period of at least two (2) years after termination of this contract. On written request by either party and at such party's expense, such party may have a firm of independent certified public accountants audit any and all such records of the other party at any time or from time to time for the purpose of confirming the accuracy of such records and the manner in which such records have been used in the administration of this contract; provided, however, that such accountants shall not disclose to the party requesting the audit any information obtained during such audit and shall only report to such party the results of the audit and whether same shows compliance with the terms of this contract, or as the case may be, the respects in detail in which the terms of this contract have not been complied with. The right to audit such records shall expire two (2) years after termination of this contract. ARTICLE X: NOTICES All notices provided for herein shall be considered as properly given if in writing and delivered personally or sent by overnight courier, telex, telefax, or registered or certified mail return receipt requested and postage prepaid, duly directed to the post office addresses of the parties hereto: BUYER: Sterling Chemical, Inc. 1200 Smith Street, Suite 1900 Houston, Texas 770024312 Attn: Director-Commercial Telefax: (713)-654-9551 SELLER: Phillips Chemical Company, a division of Phillips Petroleum Company 8 Adams Building Bartlesville, Oklahoma 74004 Attn: Ethylene Director Telefax: (918)-662-1016 or at such other address as either party shall from time to time designate for the purpose by registered or certified letter, properly addressed, with sufficient postage prepaid and return receipt requested, addressed to the other party. The date of service of a notice served by mail shall be the date on which such notice is received as shown by a green receipt card from the United States Post Office or other messenger service. The date of service of a notice transmitted by any other means shall be the date received. ARTICLE XI: CLAIMS No claim of any kind, whether as to ethylene delivered (whether or not conforming to specifications) or for nondelivery of ethylene and whether or not based on negligence, shall be greater in amount than the purchase price of the ethylene in respect of which such claim is made. IN NO EVENT SHALL A PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES, WHETHER OR NOT CAUSED BY OR RESULTING FROM THE NEGLIGENCE OF THE PARTY IN THE PERFORMANCE OF DUTIES UNDER THIS CONTRACT. BUYER shall notify SELLER within forty (40) days of date of delivery of any claim, and failure of BUYER to make such claim within forty (40) days shall operate as a waiver of any claim. ARTICLE XII: FORCE MAJEURE No liability (except payment by BUYER for ethylene sold hereunder) shall result to either party from delay in performance or nonperformance arising from any cause or causes reasonably beyond the control of the party affected, including but not limited to the following, which shall be deemed to be beyond the reasonable control of such party: acts of God; fire, flood, war, accident; labor trouble (from whatever cause); shortage of or inability to obtain any goods deliverable hereunder or raw materials therefor from such party's existing or intended sources of supply; shortage of or inability to obtain equipment or transportation; or compliance with any law, regulation, order, direction or request made by governmental authority or person purporting to act therefor. When such cause or causes result in a reduction in the amount of ethylene available from SELLER's production facilities, SELLER shall allocate its available supply of ethylene among its contract customers, and among its own operations (including its subsidiaries and affiliated companies), on a pro-rata basis using average annual volume commitments, where ranges exist, as a reference point. Deliveries pursuant to such allocation shall be in complete discharge of SELLER's obligation hereunder for so long as such cause or causes continue. When such cause or causes result in a reduction in the amount of ethylene that is consumed at BUYER's facilities, BUYER shall allocate its available ethylene consumption capacity among its contract suppliers, including affiliates of BUYER, on a pro-rata basis using average annual volume commitments, where ranges exist, as a reference point. Purchases pursuant to such allocation shall be in complete discharge of BUYER's obligation hereunder for so long as such cause or causes continue. Deficiencies in deliveries of ethylene hereunder by reason of any such cause or causes shall be canceled from the contract with no liability to either party therefor. If a Force Majeure declaration by SELLER meets the following uiteria, then BUYER shall have an alternate supply option. The Force Majeure declaration must be in effect for more than (***), and the allocation level must be considered to be a significant reduction in the supply to BUYER (an allocation of (***) or less of the contract commitment provided in Article I without regard to (***) to activate the alternate supply option. With written notification of thirty (30) days prior to the end of the (***) period, BUYER may request an alternate supply or release from the volume commitment for the remaining term of the contract for the amount affected by Force Majeure. SELLER then has (***) from receipt of BUYER's notification to respond to BUYER with the following options: (a) SELLER may satisfy BUYER's minimum remaining monthly contractual quantity (excluding volume under Force Majeure for the ninety (90) day period set forth above) through means outside SELLER's normal supply channels, such as outside ethylene purchases, loans, or exchanges, at a cost to BUYER equivalent to the price under this contract, or SELLER may supply ethylbenzene containing an equivalent quantity of ethylene at an agreed upon price. (b) If SELLER and BUYER cannot agree to a mutually acceptable supply option under subparagraph (a), then BUYER is released from the volume obligation for the amount covered by the Force Majeure declaration for the remaining period of the contract. The contract volume in effect at the end of the (***) period shall then become the volume commitment set out in Article I above (***). A party affected by force majeure shall promptly notify the other party (and shall confirm such notification in writing) explaining the date such event commenced and the nature, details and expected duration thereof. The affected party shall advise the other from time to time as to progress in remedying the force majeure situation and as to the time when the affected party expects to resume the performance of its obligations and shall notify the other as to the expiration of any such event as soon as the affected party knows thQ date thereof. ARTICLE XIII: WAIVERS The right of either party to require strict performance by the other party of any or all obligations imposed upon such other party by this contract shall not in any way be affected by previous waiver forbearance or course of dealing. ARTICLE XIV: WARRANTIES SELLER warrants that all ethylene delivered hereunder will comply with the specifications set forth in Exhibit "A", that said ethylene will have been produced in compliance with the requirements of the Fair Labor Standards Act of 1938, as amended, and that SELLER will convey good title thereto. THE FOREGOING WARRANTIES ARE EXCLUSIVE, AND ARE IN LIEU OF ALL OTHER WARRANTIES (WHETHER WRITTEN OR ORAL, EXPRESS OR IMPLIED), INCLUDING, WITHOUT LIMITATION, WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ARTICLE XV: ASSIGNABILITY All of the terms, conditions, and provisions hereof shall extend to and be binding upon the respective parties hereto, their successors and assigns; provided, however, that neither party shall assign this contract or any interest herein without the prior written consent of the other party; except that either party may, without the consent of the other, assign this contract or any interest herein to any company of which it is a subsidiary or to any fifty percent (50%) or more owned subsidiary or affiliated company (but in such event, the party assigning shall not be relieved of its primary liability hereunder to the other party hereto), or to a corporation with which such party merges or to which such party's assets used in the performance hereunder shall be sold and conveyed during the term hereof. However, BUYER has the right to assign this Contract to any party acquiring all or substantially all of BUYER's assets or styrene facility (located in Texas City, Texas). ARTICLE XVI: ENTIRETY OF AGREEMENT This instrument contains the entire agreement between the parties hereto regarding the sale, purchase and delivery of ethylene during the period provided herein; and all prior promises, agreements or warranties, written or verbal, shall be cancelled and superseded hereby and shall be of no further force or effect unless embodied herein. No modifications of this contract shall be valid unless in writing and signed by both parties, and no modifications shall be effected by the acknowledgment or acceptance of any purchase orders or printed forms containing different conditions. ARTICLE XVII: APPLICABLE LAW The validity, interpretation and performance of this contract shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, this contract is executed in duplicate for each party by and through its respective officers duly authorized, as of the date first above written. PHILLIPS CHEMICAL COMPANY, A DIVISION OF PHILLIPS PETROLEUM COMPANY By: /s/ Guy Sutherland (Guy Sutherland) Title: Sr. V.P. KGK mpH/sterconU April 3,1995 STERLING CHEMICAL. INC. BY: /s/ Robert W. Roten (Robert W. Roten) Title: Executive V.P. and Chief Operating Officer EXHIBIT A PHILLIPS CHEMICAL COMPANY ETHYLENE PRODUCT SPECIFICATION
PROPERTY UNITS MINIMUM MAXIMUM TEST METHOD Ethylene Purity mol% 99.85% GC Ethane ppm mol 1500 PPC 6605-AG-1 Methane ppm mol 1000 PPC 6605-AG-1 Acetylene ppm mol 5 PPC 8705-AG Alcohols as Methanol ppm wt 20 PPC 6605-AG Carbon Dioxide ppm mol 10 PPC 6605-AG-1 Carbon Monoxide ppm mol 5 PPC 6605-AG-1 Hydrogen ppm mol 5 PPC 6605-AG-1 Other Olefins ppm mol 100 PPC 6605-AG-1 Oxygen ppm mol 5 PPC 6605-AG-1 Total Sulfur ppm wt 2 ASTM D-3246 Water ppm wt 5 PPC 6316 EK
EXHIBIT B Method of Conversion of Volumes of Ethylene to Pounds of Ethylene. The pounds of ethylene delivered daily shall be determined in accordance with the method outlined in the booklet entitled "Phillips Chemical Company Ethylene Flow Measurement Manual" as revised January 1, 1985. The methods of gas flow measurement and the methods of gas volume computation outlined in the manual referred to above will be controlling; provided, however, that revisions in the aforesaid manual may be made at any time during the life of this contract upon agreement by both parties. EX-10.52 3 SALES AGREEMENT Exhibit 10.52 ***OMITTED INFORMATION DENOTED BY ASTERICS (***) HAS BEEN FILED SEPARATELY WITH THE COMISSION AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.*** CHEMICAL PRODUCTS SALES AGREEMENT - ETHYLENE THIS AGREEMENT between LYONDELL PETROCHEMICAL COMPANY, with an office at 1221 McKinney, Houston, Tx 77010, hereinafter referred to as "SELLER," and STERLING CHEMICALS, INC., with an office at 1200 Smith Street, Suite 1900, Houston, Tx 77002, hereinafter referred to as "BUYER"; W I T N E S S E T H: SELLER agrees to sell and BUYER agrees to purchase and pay for Product in accordance with the provisions below: 1. PRODUCT AND SPECIFICATIONS: Ethylene meeting specifications set forth in Exhibit A, attached hereto ("Product"). 2. QUANTITY: BUYER is obligated to buy a minimum quantity of (***) of BUYER's Texas City, Texas facility's ethylene requirements (the "Annual Minimum") estimated to be (***) of Product annually ("Estimated Annual Minimum") and (***) of Product monthly ("Estimated Monthly Minimum".) SELLER is obligated to sell up to a maximum quantity of (***) of Product annually (the "Annual Maximum") and (***) lbs. of Product monthly ("Monthly Maximum".) In the event BUYER's Product purchase orders from SELLER fall below the Estimated Annual Minimum, BUYER shall ensure that BUYER's Product purchases from SELLER are no less than the Annual Minimum. In the event BUYER gives timely shipment orders for Product and SELLER, without excuse, does not deliver Product ordered up to the Monthly Maximum(as may be limited by the Annual Maximum), SELLER shall not sell ethylene to other customers, except proportionately equivalent shares of the maximum quantity obligations under term sales contracts with such customers. In the event that BUYER's annual Product purchases fall below the Estimated Annual Minimum in any year, SELLER may elect to reduce the Estimated Annual Minimum and Annual Maximum for all subsequent years by up to the difference between Estimated 1 Annual Minimum and the actual quantity purchased in said year, upon written notice to BUYER no later than the (***) following the year of such purchase shortfall. In the event of such reduction, the Annual Minimum, Estimated Monthly Minimum and Monthly Maximum shall be reduced by the same percentage as the Annual Minimum is reduced. SELLER's rights under this paragraph shall supplement all other rights available to SELLER under this Agreement. Exercise by SELLER of the rights under this paragraph shall not constitute a waiver of any other rights SELLER may have. 3. TERM: January 1, 1995, to December 31, 1999, inclusive, and continuing from year to year thereafter, unless terminated on December 31, 1999, or on any December 31, thereafter by either party giving written notice of termination not less than 1 year prior to the effective date of termination. 4. (***) 5. COMPETITIVE OFFERS: If BUYER receives a bona fide offer to sell to it, Product of similar Annual Maximum and quality for shipment to the same delivery points covered by this proposal, for a term not less than the remaining term of the agreement, from a responsible domestic manufacturer not affiliated with BUYER, at a price lower than that provided under this Agreement, then BUYER shall give SELLER written notice thereof and SELLER will, at its option (if satisfied as to the facts surrounding said lower price) give BUYER written notice within 10 days thereafter of its intent to either (1) meet such lower price, or (2) "Release" BUYER from its obligation to purchase from SELLER such quantities during the offer period provided that BUYER accepts the offer and buys the quantity offered at the lower price. In the event that SELLER meets a competitive offer under the terms of this Article, BUYER shall not, during the offer period, use a competitive offer from the same supplier or an affiliate of the same supplier, as the basis for seeking or requesting another "meet competition" price or other form of price concession from SELLER. Such subsequent competitive offers are not bona fide for the purpose of this agreement. Dissimilar product exchanges, barters, processing agreements, transactions tied to or contingent upon other agreements, and any other arrangements other than a direct purchase of Product, are not deemed offers to sell or to buy for the purpose of this Article. Any quantity of Product sold, or to be sold, hereunder by SELLER, at a "meet competition" price, due to SELLER's having given a price concession in response to a qualified competitive offer, shall be purchased by BUYER from SELLER at the original "meet competition" price for the duration of the offer period, i.e., such Product is not eligible for rebate or for additional discounting during such period. If SELLER Releases BUYER, SELLER may, at its sole discretion, elect to reduce the Estimated Annual Minimum and Annual Maximum for the remainder of the Agreement 2 term subsequent to the period of Release; such annual quantity reduction to be equal to the quantity Released. In such event, the Annual Minimum, Monthly Minimum and Monthly Maximum shall be reduced by the same percentage as the Estimated Annual Minimum is reduced. Such option shall be exercised by written notice by SELLER to BUYER not later than 20 days prior to the date in which the competitive offer Release period ceases to be effective. 6. TRANSPORTATION TERMS: Product delivered via pipeline to BUYER's Texas City, Texas plant or other mutually agreed upon locations ("Delivery Point"). 7. TITLE AND RISK OF LOSS: Title and risk of loss to Product will pass from SELLER to BUYER at the Delivery Point, when Product passes the connecting flange of the delivering pipeline to the receiving pipeline. 8. SHIPMENT ORDERS: Buyer shall give SELLER shipping instructions at least five days prior to the date on which shipments are requested to be scheduled. 9. DETERMINATION OF QUANTITY: SELLER will operate or cause to be operated a meter whereby quantities of Product delivered will be measured and its temperature and pressure recorded. The volume of Product delivered, pursuant to the Agreement, for each day will be determined by reference to daily readings of SELLER's meter. A day will be deemed the period from 7:00 a.m. on one day to 7:00 a.m. on the next succeeding day. Correction factors and calculations from such meter readings for the purpose of determining the daily quantities of Product delivered will conform with procedures set forth below. If the parties are unable to agree, procedures and quantities will be determined by E. W. Saybolt and Company or such other mutually agreed upon inspector, whose determination will be binding upon the parties who will equally bear the cost of such independent inspector. SELLER agrees to calibrate flow meters, pressure recorders, and temperature recorders at least once a month and at other times as may be agreed upon by the parties. If a third party is used to make the delivery to BUYER, the frequency of calibrations will be consistent with the third party's normal operating practices. BUYER will have the right to witness the calibrations. Following such calibrations, any equipment found to be inaccurate to any degree will be adjusted immediately to measure accurately. If following a calibration, any metering equipment is found to be inaccurate by one-half percent (0.5%) or more, then the quantity of Product previously delivered will be retroactively adjusted at the rate of such inaccuracy for any period of inaccuracy which is definitely known or agreed upon, but in case the 3 period is not definitely known or agreed upon, then for a period deemed to be one-half (1/2) of the number of days from the last previous calibration until the correction not exceeding, however, fifteen days. If for any reason the custody transfer meters are out of service so that the quantity of material delivered through such meters cannot be ascertained, the quantity of material delivered during the period the meters are out of service will be estimated and agreed upon by the parties upon the basis of the best available data, using in order of preference the following methods: (a) By using the registration of any check measuring equipment of BUYER, if installed and properly operating. (b) By using any measurement equipment which SELLER may have in the flowing stream if agreed upon by BUYER. (c) By a third party mutually agreed upon by the parties. All quantities of Product will be corrected for temperature to sixty degrees Fahrenheit (60.F) in accordance with current methods which are set forth in American Petroleum Institute Routine Catalog Number 852-25650 (Chapter 11.3.2.1) or other method mutually agreed to by both parties. 10. QUALITY AND TESTING: Samples or on-line analysis at the mutually agreed input sampling point will be the basis for determining compliance with quality specifications. SELLER's or SELLER's exchange partner's laboratory analysis or on-line analyzer will determine whether product specifications have been met. SELLER or SELLER's exchange partner shall continually monitor the quality of Product introduced into the pipeline for compliance with said specifications. However, if abnormalities develop in BUYER's plant operation, BUYER may request that SELLER arrange, and if so requested by BUYER, SELLER will arrange, for three representative samples to be taken daily. Two samples will be delivered to BUYER, and one will be retained by SELLER for analysis by analytical test methods set forth in Exhibit A (or by SELLER approved test methods if not set forth therein.) SELLER shall advise BUYER of the analysis of its sample. If a difference in analysis is reported by BUYER and cannot be reconciled within one week of BUYER's notice thereof, one of the samples will be submitted to a competent outside laboratory, agreed upon by BUYER and SELLER, for referee analysis (which analysis will be made by following the analytical test methods set forth in Exhibit A hereof). The cost of such independent analysis will be borne equally by BUYER and SELLER, and the results of such analysis will be binding. 4 11. PAYMENT AND CREDIT: BUYER shall pay SELLER for product by electronic funds transfer ("EFT") into SELLER's account per SELLER's instructions, net 22 days from last day of the month. If payment due date occurs on a bank holiday (except Monday) or a Saturday, BUYER shall EFT not later than the prior business day and if due date occurs on a Sunday or a Monday bank holiday, EFT not later than the next business day. If BUYER shall fail to pay SELLER in accordance with said terms, SELLER shall notify BUYER in writing of such payment default and if BUYER does not cure said default within 10 days, or if BUYER has 3 payment defaults in a calendar year, at its option SELLER may either (1) suspend deliveries until all indebtedness is paid in full, or (2) place BUYER on a cash-in-advance status until arrangements are made for security satisfactory to SELLER or, at SELLER's option, until all indebtedness to SELLER is paid in full. All timely payments under this Agreement shall be made without early payment discount. BUYER shall pay SELLER the maximum lawful rate of interest on past due payment obligations. Any preexisting obligation of BUYER to make payment for Product delivered hereunder shall survive termination of this Agreement for any reason. Prior to the commencement of deliveries of Product hereunder, and at any time and from time to time thereafter upon demand from SELLER, BUYER shall provide SELLER such credit information as may reasonably be required by SELLER to determine BUYER's creditworthiness. If at any time, in the reasonable opinion of SELLER, the financial responsibility of BUYER may be impaired or unsatisfactory such that SELLER reasonably believes that BUYER may no longer fulfill SELLER's reasonable requirements for unsecured credit on sums owed on outstanding invoices plus for future Product orders SELLER shall have the right to require BUYER to provide SELLER with the most recent audited or unaudited cash flow data and other financial information relevant to BUYER's ability to pay. Upon such request and until analysis of such information is completed, not to exceed two business days after such information is provided (during which time SELLER shall not disclose the suspension to any third party), or if such information fails to reasonably substantiate BUYER's ability to pay, SELLER shall have the right to restrict or suspend Product deliveries unless BUYER pays on a cash-in-advance of delivery basis or, at BUYER's option, BUYER posts a suitable letter of credit covering up to two months of receivables, from a reliable financial institution. Alternatively, at SELLER's option, BUYER and SELLER may make other arrangements to secure future transactions hereunder. If deliveries are suspended, or if deliveries are secured as provided herein, and BUYER subsequently furnishes SELLER with sufficient evidence of financial responsibility, then SELLER shall immediately resume Product deliveries or rescind the security requirements, as applicable. If SELLER's suspension of shipments or demand for security under this paragraph of Section 11 is determined to be arbitrary and capricious, SELLER shall be liable to BUYER for direct costs and compensatory damages arising therefrom. 12. TAXES: Any tax (other than income, ad valorem or franchise tax) , excise, fee, or other charge or any increase therein, now or hereafter imposed directly or indirectly by law upon Product, components of Product, or raw material from which Product is derived, 5 or on the production, manufacture, storage, sale, transportation or delivery thereof, which SELLER is required to pay or collect, including, without limitation, Superfund excise taxes and taxes on gasoline blend stocks and additives, shall, at SELLER's option, be paid by BUYER in addition to the price. It is the intent of the parties that any such tax may be passed on via explicit surcharge to BUYER, whether included in the current invoice, or added retroactively to price. Retroactive surcharges may include such interest for which SELLER is liable, in case that, subsequent to the original invoice, a law, regulation, ruling or determination of a taxing authority is deemed to cause SELLER to be liable for the tax. 13. GOVERNMENTAL ACTION AFFECTING CONTRACT TERMS: If any governmental action substantially affects the right to maintain or change the price or other terms of this Agreement, then at any time such governmental action is in effect, either party shall have the right, at its option, to (1) terminate this Agreement upon 30 days notice to the other party, or (2) postpone, by written notice to the other party, the effective date of any price change or change of other terms to the extent so affected until such date or dates as it is not so affected. By its election to postpone rather than terminate, the party does not waive its right to terminate thereafter. 14. OFFSETS: In the event of BUYER's default in payments or in its quantity purchase obligations hereunder, SELLER may offset damages arising therefrom, including, without limitation, withholding payment, delivery or acceptance of product, material or services, relating to any agreement or transaction with BUYER, its subsidiaries or affiliates. 15. CLAIMS: All claims of BUYER with respect to the measurement and evaluation of quality or quantity of Product sold and delivered pursuant to this Agreement, shall be deemed waived and forever barred, unless BUYER notifies SELLER of the nature and details of the claim in writing within (***) after receipt of the shipment by BUYER. Any such claim which is not asserted as a claim, counterclaim, defense or set-off in a judicial proceeding instituted within 2 years after the cause of action arises shall be forever waived, barred and released. BUYER assumes all risk and responsibility for handling the Product, for the results obtained by the use of the Product in manufacturing processes or otherwise, and for the results obtained by the use of said Product in combination with other substances. If any description, advice or suggestion is given, it is given and accepted at BUYER's risk, and SELLER shall not be responsible or liable therefor or for the results thereof. 6 16. PRODUCT HAZARDS: BUYER acknowledges that it has been adequately warned and understands the warnings by SELLER of the risks associated with handling, shipping, storing, using and disposing of the Product, including, without limitation, those set forth in SELLER's Material Safety Data Sheet for Product ("MSDS"). BUYER further acknowledges it is familiar with the Product and has independent knowledge of such risks, which are known in BUYER's industry. BUYER shall maintain compliance with all safety and health related governmental requirements concerning Product and shall take all reasonable and practicable steps to inform, warn and familiarize its employees, agents, contractors and customers with all hazards associated with the Product, including handling, shipment, storage, use and disposal. BUYER shall not deliver or consign commercial or sample quantities of Product to any Party whom BUYER reasonably believes will handle, ship, store, use or dispose of said Product in a dangerous manner or contrary to law or the advice of SELLER. 17. INDEMNIFICATION: SELLER shall indemnify BUYER Group for Liability and Costs relating to Product Incidents which occur while, SELLER its employees, contractors, subcontractors or agents have custody of Product where such Liability and Costs arise from or relate to any such Product Incident's harm to SELLER or its employees, customers, contractors, subcontractors or agents because of exposure to Product or explosion or combustion of Product. BUYER shall indemnify SELLER Group for Liability and Costs relating to Product Incidents which occur while BUYER, its employees, contractors, subcontractors or agents have custody of Product where such Liability and Costs arise from or relate to any such Product Incident's harm to BUYER or its employees, contractors, subcontractors or agents because of exposure to specification conforming Product or explosion or combustion of specification conforming Product. "SELLER Group" means SELLER and/or any of its agents, officers, directors, employees, contractors, representatives, and insurers. "BUYER Group" means BUYER and/or any of its agents, officers, directors, employees, contractors, representatives, and insurers. To "indemnify" means to defend and fully hold harmless from and against all liability, damages, losses, costs and expenses (including reasonable attorneys' fees, court costs and other costs of suit), for claims, demands, suits or judgments (hereinbefore "Liability and Costs") based on any Product related incident causing property damage, personal injury or death (hereinbefore "Product Incidents"), whether or not claimants allege indemnitee's negligence as a cause. 7 18. WARRANTIES: SELLER warrants Product shall meet the specifications established in this Agreement. SELLER warrants free and clear title on all Product produced by SELLER and that such Product is produced in compliance with the requirements of the Fair Labor Standards Act of 1938, as amended. There are no rightful patent infringement claims as to the Product itself available to any third party. SELLER makes no other express or implied warranty, statutory or otherwise, concerning the Product, including without limitation, no warranty of fitness for a particular purpose, warranties of merchantability, or warranties as to quality or correspondence with description or sample. SELLER does not warrant against United States patent infringement by way of the use of the Product in combination with other materials or in the operation of any process. 19. LIMITATION OF DAMAGES: BUYER'S exclusive remedy for any and all delivery shortfalls or contamination of Product sold under this Agreement, including, but not limited to, any allegations of breach of warranty, breach of contract, negligence or strict liability, shall be limited, at SELLER's option, to either the payment for then current market value cover costs incurred to replace such Product, or the replacement of the Product for which a valid claim is made. In the event of any such delivery shortfalls or contamination, SELLER shall not be liable to BUYER for any lost or prospective profits or any other special, consequential, incidental or indirect losses or damages from the sale of Product under this agreement or for any failure of performance related hereto. This limitation does not affect either party's rights respecting claims for personal injury (including death) or physical property damage. 20. FORCE MAJEURE AND ALLOCATION: Neither Party shall be responsible for any loss and or damage resulting from any delay in performing or failure to perform any provisions of this Agreement (other than BUYER's obligation to make payments for Product delivered under this Agreement), so long as any such failure or delay arises from fires, floods, storms, earthquakes, tidal waves, wars, military operations, national emergencies, civil commotions, strikes or other differences with workers or unions, or from any delay or failure in delivery when the supplies of either Party or the facilities of production, manufacture, transportation or distribution which otherwise would be available to either Party are impaired by mechanical breakdowns, or by the order, requisition, request or recommendation of any governmental agency or acting governmental authority, or either Party's compliance therewith or by governmental proration, regulation or priority, or the inability of SELLER to obtain on terms deemed by SELLER to be practicable, feedstock or other raw material (including energy sources), or from any other delay or failure due to any causes beyond either party's control similar or dissimilar to any such causes. When such cause or causes exist, the Party so affected shall have the right 8 in its sole discretion to restrict or cease deliveries or receipt of Product hereunder. SELLER's obligation to sell Product is subject to modification and reduction in accordance with any present or future allocation program of SELLER based upon laws, rules or regulations, orders, demand or requests of any governmental authority. During the continuance of any of the herein referenced contingencies, the obligations of SELLER and BUYER shall be suspended and proportionately abated except for BUYER's obligation to pay SELLER for Product delivered. If, due to any such contingency, either Party has not delivered or accepted delivery of the contracted quantity of Product for a period of at least (***), the other Party may terminate this Agreement by giving not less than (***) prior written notice of termination. Upon the occurrence of any of the Force Majeure events described in the section hereof, the Party claiming Force Majeure shall notify the other Party promptly in writing of such event and, to the extent possible, inform the other Party of the expected duration of the Force Majeure event and the volumes of Product to be affected by the termination, suspension or curtailment of performance under the Agreement. In the event that, at any time, the quantity of Product available from the plant ordinarily producing Product for sale hereunder ("Plant"), should be insufficient to fulfill SELLER's future sales volume commitments because of Plant production shortages due to any other event reasonably related to such shortages, SELLER, at its option, may (1) allocate its available supply of Product equitably among all term contract customers of SELLER during the period of such production shortage contingency, and/or (2) deliver Product to such customers, including BUYER, obtained from third Party sources. 21. GENERAL: A. Assignment: This Agreement shall be binding upon and inure to the benefit of the successors of BUYER and SELLER, but shall not be assigned by either Party and if assignment is attempted it shall be null and void without the prior written consent of the other Party, which consent shall not unreasonably be withheld, except that assignment to a parent corporation, subsidiary of a parent corporation, or a successor to substantially all of the chemical business of SELLER or the styrene monomer business of BUYER shall not require the other Party's consent to become effective. B. Governing Law: THIS AGREEMENT IS TO BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS. IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, THEY SHALL USE THEIR BEST EFFORTS TO MUTUALLY AGREE UPON AN ALTERNATIVE FORM OF DISPUTE RESOLUTION ("ADR") BEFORE AN ADR PANEL OR ADR INDIVIDUAL IN HOUSTON, TEXAS; ANY 9 JUDGMENT ENTERED THEREUPON SHALL BE FILED ONLY IN THE STATE OR FEDERAL COURTS OF TEXAS. IN THE EVENT OF (a) FAILURE TO AGREE ON ADR METHOD, (b) FAILURE TO CONSENT TO A NON-BINDING ADR DECISION, OR (c) APPEAL OF, OR CHALLENGE TO, AN ADR DECISION, THEN ANY LEGAL ACTIONS FILED MAY BE BROUGHT ONLY IN THE STATE OR FEDERAL COURTS AT HOUSTON, TEXAS. C. Duty Drawback: BUYER shall obtain and complete U.S. Customs Bureau forms and any other documentation required for duty drawback credits for BUYER's exports of eligible goods derived from or containing Product. SELLER will first claim any available drawback on any and all Products eligible for drawback which are exported by SELLER or its agent. SELLER shall then transmit to BUYER the Certificates of Delivery/Manufacture for remaining drawback Product available to SELLER as are necessary to file said drawback claim. Such drawback Product shall be allocated by SELLER among SELLER's customers if the remaining quantities of drawback Product which may be covered by the Certificates are insufficient to cover export quantities eligible for drawback. BUYER shall file a duty drawback entry for the maximum quantity of eligible Product covered by the Certificates furnished to BUYER and transmit (***) of all proceeds obtained to SELLER. D. No Waiver: Failure of either Party to require performance of any provision of this Agreement shall not affect either Party's right to require full performance thereof at any time thereafter, and the waiver by either Party of a breach of any provisions hereof shall not constitute a waiver of a similar breach in the future or of any other breach or nullify the effectiveness of such provision. E. Entire Agreement: This Agreement and any attachments or addenda hereinafter set forth contain the entire agreement between the parties hereto and there are no oral representations, stipulations, warranties, agreements or understandings with respect to the subject matter of this Agreement which are not fully expressed herein. Neither this Agreement nor its execution has been induced by any representation, stipulation, warranty, agreement or understanding of any kind other than those herein expressed. F. No Modification: No amendment, addition to, alteration, modification or waiver of all or any part of this Agreement shall be of any force or effect, whether by course of conduct or otherwise, unless in writing and signed by SELLER and BUYER. If the provisions of this Agreement and the provisions of any purchase order or order acknowledgment written in connection with this Agreement conflict, then the provisions of this Agreement shall prevail. 10 G. Notices: Any notices given under this Agreement shall be in writing and addressed to the other Party at the address specified in the first paragraph of this Agreement. Notice may be given by U.S. mail (first class or certified), any personal delivery service, fax, or telex. Any notice required or permitted hereunder shall be deemed given upon the earlier of (1) the day of actual receipt by the Party to whom notice is being given or the following business day if actual receipt is during a non-business day of the receiving Party or is after regular business hours on a business day of the receiving Party, or (2) the fourth day after being deposited postage prepaid in the U.S. Mail as first class mail. Notice by fax or telex shall be deemed to be in actual receipt upon the completion of transmission to the receiving Party. For purposes hereof, all notices to SELLER shall be directed to the attention of the Commercial Manager, Light Olefins; and if faxed, transmitted to the Commercial Manager, Light Olefins at (713) 652-7383; and all notices to BUYER shall be transmitted to Elizabeth A. Trent, Raw Material Coordination Manager or successor; and if faxed; transmitted to Elizabeth A. Trent, Raw Material Coordination Manager or successor at (713) 654-9551. If, prior to the execution of this document by both parties, SELLER delivers Product to BUYER and BUYER receives Product from SELLER at any time within the Term stated herein, any such transactions will be governed by the terms and conditions hereof, except for any such terms or conditions expressly rejected in writing by BUYER prior to Product delivery, the parties by their conduct agreeing to be so bound. The parties recognize and agree that neither shall be obligated by their course of conduct to perform any future transactions hereunder unless and until this document is fully executed. IN WITNESS WHEREOF, SELLER and BUYER have executed this Agreement effective as of the date first above written. LYONDELL PETROCHEMICAL COMPANY STERLING CHEMICALS, INC. (SELLER) (BUYER) By: /s/ Bob G. Gower By: /s/ James S. Williams Print Name: Bob G. Gower Print Name: James S. Williams Title: Chairman and CEO Title: Director - Commercial Date: 12/20/94 Date: December 7, 1994 11 EXHIBIT A ETHYLENE PRODUCT SPECIFICATIONS
COMPONENT CONTRACT TEST METHODS SPECIFICATION Ethylene; mol % 99.85 min. ASTM D 2505 Methane; mol % 0.1 max. ASTM D 2505 Ethane; mol % 0.15 max. ASTM D 2505 Propylene and Heavier; mol ppm 100 max. ASTM D 2505 Carbon Monoxide; wt. ppm 5 max. ASTM D 2504 Carbon Dioxide; wt. ppm 10 max ASTM D 2505 Sulfur; wt. ppm 5 max. ASTM D 3246 Water; wt. ppm 10 max. LYON 5981 Acetylene; wt. ppm 5 max. ASTM D 2505 Oxygen; wt. ppm 5 max. ASTM D 2504 Hydrogen; wt. ppm 5 max ASTM D 2504 Ammonia, wt. ppm 1 max LYON 5234 Methanol; wt. ppm 10 max LYON 5881
12 EXHIBIT B Method of Conversion of Volumes of Ethylene to Pounds of Ethylene The pounds of ehtylene delivered daily shall be determined in accordance with the method outlined in the booklet entitled "Phillips Chemical Company Ethylene Flow Measurement Manual" as revised January 1, 1985. The methods of gas flow measurement and the methods of gas volume computation outlined in the manual referred to above will be controlling; provided, however, that revisions in the aforesaid manual may be made at any time during the life of this contract upon agreement by both parties. 13 EX-10.55 4 AGREEMENT Exhibit 10.55* ***OMITTED INFORMATION DENOTED BY ASTERISKS (***) HAS BEEN FILED SEPARATELY WITH THE COMISSION AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.*** BUSINESS CONFIDENTIAL PRODUCT SUPPLY AGREEMENT BETWEEN PRAXAIR HYDROGEN SUPPLY, INC. AND STERLING CHEMICALS, INC. May 15, 1995 TABLE OF CONTENTS ARTICLE 1 2 DEFINITIONS 2 Section 1.1 "Adjustable Facility Fee" 2 Section 1.2 "Affiliate" 2 Section 1.3 "Agreement" 2 Section 1.4 "Blend Gas" 2 Section 1.5 "Blend Gas Contract Volume" 2 Section 1.6 "Blend Gas Delivery Point" 3 Section 1.7 "Blend Gas Totalizer" 3 Section 1.8 "Buyer's Annual Grace Period" 3 Section 1.9 "Buyer's Blend Gas Requirements" 3 Section 1.10 "Buyer's Carbon Monoxide Requirements" 3 Section 1.11 "Buyer's Hydrogen Requirements" 3 Section 1.12 "Buyer's Pipelines" 4 Section 1.13 "Buyer's Plant" 4 Section 1.14 "Buyer's Required Rates" 4 Section 1.15 "Carbon Monoxide" 4 Section 1.16 "Carbon Monoxide Contract Volume" 4 Section 1.17 "Carbon Monoxide Delivery Point" 4 Section 1.18 "Carbon Monoxide Totalizer" 5 Section 1.19 "Confidential Information" 5 Section 1.20 "Contract Volume of Products" 5 Section 1.21 "Contract Year" 5 Section 1.22 "Cubic Foot" 5 Section 1.23 "Event of Default" 5 Section 1.24 "Excess Shutdown Period" 5 Section 1.25 "Facility Site" 5 Section 1.26 "Feed/Fuel Fee" 6 Section 1.27 "First Additional Term" 6 Section 1.28 "Fixed Facility Fee" 6 Section 1.29 "Force Majeure Event" 6 Section 1.30 "Ground Lease" 6 Section 1.31 "Guarantor" 6 Section 1.32 "Guaranty" 6 Section 1.33 "Hydrogen" 6 Section 1.34 "Hydrogen Contract Volume" 6 Section 1.35 "Hydrogen Delivery Point" 7 Section 1.36 "Hydrogen Totalizer" 7 Section 1.37 "Initial Term" 7 Section 1.38 "Maximum Shutdown Period" 7 Section 1.39 "Metering Equipment" 7 Section 1.40 "Month" 7 Section 1.41 "MSCF" 7 Section 1.42 "Natural Gas" 7 Section 1.43 "New NG Index" 7 Section 1.44 "New PPI Index" 7 Section 1.45 "NG Base" 7
Section 1.46 "PPI Base" 7 Section 1.47 "Products" 8 Section 1.48 "Proprietary Rights" 8 Section 1.49 "Second Additional Term" 8 Section 1.50 "Seller's Facility" 8 Section 1.51 "Startup" 8 Section 1.52 "Steam" 8 Section 1.53 "Steam Contract Volume" 8 Section 1.54 "Steam Delivery Point" 8 Section 1.55 "Steam Fee" 8 Section 1.56 "Steam Totalizer" 9 Section 1.57 "Supplemental Hydrogen" 9 Section 1.58 "Term" 9 Section 1.59 "Texaco Information" 9 Section 1.60 "Utilities Agreement" 9 ARTICLE 2 9 STARTUP 9 Section 2.1 Startup 9 Section 2.2 Seller's Penalty for Late Startup 10 Section 2.3 Exceptions to Seller's Penalty for Delay 10 Section 2.4 Buyer's Penalty for Late Startup 10 Section 2.5 Exceptions to Buyer's Penalty for Late Startup 11 Section 2.6 Obligation to Deliver after Startup 11 Section 2.7 Covenant Regarding Delay 11 ARTICLE 3 11 DELIVERY OF CARBON MONOXIDE 11 Section 3.1 Obligation to Deliver Carbon Monoxide 11 Section 3.2 Carbon Monoxide Pressure 11 Section 3.3 Title to and Risk of Loss of Carbon Monoxide 12 Section 3.4 Carbon Monoxide Volume 12 ARTICLE 4 13 DELIVERY OF BLEND GAS 13 Section 4.1 Obligation to Deliver Blend Gas 13 Section 4.2 Blend Gas Pressure 13 Section 4.3 Title to and Risk of Loss of Blend Gas 13 Section 4.4 Blend Gas Volume 13 ARTICLE 5 14 DELIVERY OF HYDROGEN AND SUPPLEMENTAL HYDROGEN 14 Section 5.1 Obligation to Deliver Hydrogen 14 Section 5.2 Delivery of Supplemental Hydrogen 14 Section 5.3 Hydrogen Pressure 14 Section 5.4 Title to and Risk of Loss 14 Section 5.5 Hydrogen Volume 14
ARTICLE 6 15 DELIVERY OF STEAM 15 Section 6.1 Steam Delivery Obligation 15 Section 6.2 Title to and Risk of Loss of Steam 16 ARTICLE 7 16 SHUTDOWNS, FAILURES TO DELIVER AND FAILURES TO TAKE 16 Section 7.1 Seller's Maximum Shutdown Period 16 Section 7.2 Seller's Failure to Deliver; No Force Majeure 16 Section 7.3 Buyer's Failure to Take; No Force Majeure 18 Section 7.4 Seller's Failure to Deliver; Seller's Force Majeure 20 Section 7.5 Buyer's Failure to Take; Buyer's Force Majeure 22 Section 7.6 Mandatory Shut Down 23 ARTICLE 8 23 PRICING AND PAYMENT 23 Section 8.1 Purchase Price for Products 23 Section 8.2 Fixed Facility Fee 24 Section 8.3 Adjustable Facility Fee; Feed/Fuel and Steam Fees 24 Section 8.4 Supplemental Hydrogen 25 Section 8.5 Payment for Supplemental Hydrogen 26 Section 8.6 Terms of Payment 26 ARTICLE 9 27 TAXES 27 ARTICLE 10 28 FORCE MAJEURE 28 Section 10.1 Force Majeure Events 28 Section 10.2 Settlement of Strikes 29 Section 10.3 Notice of Force Majeure 30 ARTICLE 11 30 LIMITATION OF LIABILITY 30 Section 11.1 Acknowledgement of Hazards 30 Section 11.2 No Consequential Damages 31 ARTICLE 12 31 SELLER'S PRODUCT WARRANTIES; DISCLAIMERS 31 ARTICLE 13 34 REPRESENTATIONS AND WARRANTIES OF BUYER 34 Section 13.1 Organization, Good Standing and Corporate Power 34
Section 13.2 Authority Relative to Agreement 34 Section 13.3 No Conflict with Other Instruments or Proceedings 34 Section 13.4 No Litigation or Proceedings. 35 ARTICLE 14 35 REPRESENTATIONS AND WARRANTIES OF SELLER 35 Section 14.1 Organization, Good Standing and Corporate Power 35 Section 14.2 Authority Relative to Agreement 36 Section 14.3 No Conflict with Other Instruments or Proceedings 36 Section 14.4 No Litigation or Proceedings 36 Section 14.5 Compliance with Laws 37 Section 14.6 Proprietary Rights 37 ARTICLE 15 37 METERING EQUIPMENT 37 Section 15.1 Meter Testing 37 Section 15.2 Data Transmission 38 ARTICLE 16 39 ALTERNATIVE FEEDSTOCKS 39 ARTICLE 17 39 EXCESS PRODUCTION 39 ARTICLE 18 40 EVENTS OF DEFAULT; DISPUTE RESOLUTION 40 Section 18.1 Events of Default 40 Section 18.2 Dispute Resolution Meeting 41 Section 18.3 Failure to Resolve Dispute; Arbitration 42 Section 18.4 Right to Terminate Agreement 43 ARTICLE 19 43 ACCESS TO INFORMATION 43 Section 19.1 Access to Information 43 Section 19.2 Access to Seller's Facility 44 Section 19.3 Access to Seller's Personnel 44 Section 19.4 Limitations on Disclosure 44 ARTICLE 20 45 CAPACITY OF SELLER'S FACILITY 45 Section 20.1 Initial Capacity 45 Section 20.2 Capacity Expansion 45 ARTICLE 21 46 INITIAL AND ADDITIONAL TERMS 46 Section 21.1 Initial Term 46
Section 21.2 Additional Terms 46 ARTICLE 22 47 MISCELLANEOUS 47 Section 22.1 Assignment 47 Section 22.2 Confidentiality 48 Section 22.3 Applicable Law 51 Section 22.4 Notice 51 Section 22.5 Waiver 52 Section 22.6 Headings 52 Section 22.7 Entire Agreement 52 Section 22.8 Relationship between Parties 53 Section 22.9 Severability 53 Section 22.10 Amendment 54 Section 22.11 Pronouns and Plurals 54 Section 22.12 Section Numbers 54 EXHIBIT A: FEE CALCULATIONS A-1 EXHIBIT B: DESCRIPTION OF SELLER'S FACILITY B-1 EXHIBIT C: PRODUCT SPECIFICATIONS C-1 EXHIBIT D: NATURAL GAS SPECIFICATIONS D-1
PRODUCT SUPPLY AGREEMENT THIS PRODUCT SUPPLY AGREEMENT made and entered into as of May 15, 1995, by and between PRAXAIR HYDROGEN SUPPLY, INC., a Delaware corporation ("Seller"), and STERLING CHEMICALS, INC., a Delaware corporation ("Buyer"); W I T N E S S E T H: WHEREAS, Buyer requires substantial quantities of Carbon Monoxide, Blend Gas, Hydrogen and Steam for use at Buyer's Plant, and has requested Seller to supply such quantities of Carbon Monoxide, Blend Gas, Hydrogen and Steam; and WHEREAS, Seller has represented to Buyer that it is willing and able to design, construct and operate, at Seller's expense and in accordance with the terms of the Ground Lease, a facility for the production of Carbon Monoxide, Blend Gas, Hydrogen and Steam on the Facility Site from which Seller will be able to supply Carbon Monoxide, Blend Gas, Hydrogen and Steam to Buyer on a reliable basis, achieving an average on-stream operating time of (***) or better; and WHEREAS, in reliance on such representation by Seller, Buyer is willing to shut down its existing syngas plant, which currently produces Buyer's requirements for Carbon Monoxide, Hydrogen and Blend Gas for its acetic acid and oxoalcohol units, and rely exclusively on Seller's Facility for its requirements of these Products; NOW THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained and the mutual benefits to be derived therefrom, Buyer and Seller agree as follows: ARTICLE 1 - DEFINITIONS Unless otherwise stated in this Agreement, the following terms shall have the meanings ascribed to them below, and the following definitions shall be equally applicable to both the singular and plural forms of any of the terms herein defined: Section 1.1 "Adjustable Facility Fee" means the variable fee payable by Buyer to Seller as provided in Section 8.3. Section 1.2 "Affiliate" of a party shall mean a corporation, at least 50% of the voting securities of which is owned directly or indirectly by such party; a corporation which owns directly or indirectly at least 50% of the voting stock of such party; or a corporation, at least 50% of the voting securities of which is owned directly by a corporation which owns directly or indirectly at least 50% of the voting stock of such party. Section 1.3 "Agreement" means this Product Supply Agreement, as the same may be amended from time to time in accordance with its terms. Section 1.4 "Blend Gas" means a gas mixture conforming to the specifications set forth in Exhibit C, attached hereto and made a part hereof. Section 1.5 "Blend Gas Contract Volume" means, during any Month, Blend Gas containing an average of (***) of Hydrogen and Carbon Monoxide produced by Seller's Facility, calculated by dividing the total number of pounds delivered in any Month by the hours in such Month. Section 1.6 "Blend Gas Delivery Point" means the flange where Buyer's Pipelines will be connected to Seller's Facility at the Blend Gas custody transfer point depicted in Exhibit B attached hereto and made a part hereof. Section 1.7 "Blend Gas Totalizer" means Seller's metering equipment to be installed and maintained by Seller at Seller's Facility to measure the quantities of Blend Gas delivered to Buyer hereunder. Section 1.8 "Buyer's Annual Grace Period" shall have the meaning ascribed to it in Section 7.3(b). Section 1.9 "Buyer's Blend Gas Requirements" means Buyer's total present and future requirements, in gaseous form, of Blend Gas, other than that supplied in cylinders, for use at the oxoalcohol unit located at Buyer's Plant up to the Blend Gas Contract Volume. Section 1.10 "Buyer's Carbon Monoxide Requirements" means Buyer's total present and future requirements, in gaseous form, of Carbon Monoxide, other than Carbon Monoxide supplied in cylinders, for use at the acetic acid and oxoalcohol units located at Buyer's Plant up to the Carbon Monoxide Contract Volume. Section 1.11 "Buyer's Hydrogen Requirements" means Buyer's total present and future requirements, in gaseous form, of Hydrogen, other than that supplied in cylinders, for use at the oxoalcohol unit located at Buyer's Plant up to the Hydrogen Contract Volume. Section 1.12 "Buyer's Pipelines" means the system of trunk and service pipelines to be installed, owned and operated by Buyer for the transmission of (i) feedstocks and utilities to Seller's Facility, and (ii) Carbon Monoxide, Blend Gas, Hydrogen (and Supplemental Hydrogen) and Steam produced by Seller's Facility from the respective points of connection of Buyer's Pipelines with Seller's Facility. The points at which Buyer's Pipelines will connect with Seller's Facility are depicted in Exhibit B. Section 1.13 "Buyer's Plant" means Buyer's chemical plant in Texas City, Texas and any additions or modifications thereto and replacements thereof. Section 1.14 "Buyer's Required Rates" means the volume of any or all of the Products required by Buyer, during any given Month, not to exceed the Contract Volume of Products. Section 1.15 "Carbon Monoxide" means carbon monoxide conforming to the specifications set forth in Exhibit C. Section 1.16 "Carbon Monoxide Contract Volume" means during any Month an average of (***) of Carbon Monoxide produced by Seller's Facility, calculated by dividing the total number of pounds delivered in any Month by the hours in such Month. Section 1.17 "Carbon Monoxide Delivery Point" means the flange where Buyer's Pipelines will be connected to Seller's Facility at the Carbon Monoxide custody transfer point depicted in Exhibit B. Section 1.18 "Carbon Monoxide Totalizer" means Seller's metering equipment to be installed and maintained by Seller at Seller's Facility to measure the quantities of Carbon Monoxide delivered to Buyer hereunder. Section 1.19 "Confidential Information" has the meaning ascribed to it in Section 22.2. Section 1.20 "Contract Volume of Products" means, collectively or individually, as the context requires, 100% each of the Blend Gas Contract Volume, the Carbon Monoxide Contract Volume and the Hydrogen Contract Volume. Section 1.21 "Contract Year" means a period of one (1) year commencing on the August 1 next following the date of Startup and on each subsequent anniversary of such date during the Term; provided, however, that the period of time commencing on the date of Startup and ending on the July 31 next following the date of Startup shall also be a Contract Year, with appropriate prorations to the extent such period is less than twelve months. Section 1.22 "Cubic Foot" means the quantity of Carbon Monoxide, Blend Gas or Hydrogen that would occupy a volume of one cubic foot at a temperature of 60 degrees Fahrenheit and 14.696 pounds per square inch absolute pressure. Section 1.23 "Event of Default" shall have the meaning ascribed to it in Section 18.1. Section 1.24 "Excess Shutdown Period" shall have the meaning ascribed to it in Section 7.2. Section 1.25 "Facility Site" means the parcel of land that will be leased by Buyer to Seller pursuant to the Ground Lease, as depicted on Exhibit B. Section 1.26 "Feed/Fuel Fee" means the fee payable by Buyer to Seller for Natural Gas as provided in Section 8.3 or for any alternative feedstock as provided in Article 16. Section 1.27 "First Additional Term" has the meaning ascribed to it in Section 21.2. Section 1.28 "Fixed Facility Fee" means the fixed fee payable by Buyer to Seller as provided in Section 8.2. Section 1.29 "Force Majeure Event" has the meaning ascribed to it in Section 10.1. Section 1.30 "Ground Lease" means that certain Ground Lease Agreement of even date herewith between Buyer as lessor and Seller as lessee, as same may be amended from time to time in accordance with the provisions thereof. Section 1.31 "Guarantor" means Praxair, Inc., a Delaware corporation, and its successors and permitted assigns. Section 1.32 "Guaranty" means that certain Guaranty Agreement of even date herewith pursuant to which Guarantor, for the benefit of Buyer, has unconditionally guaranteed the obligations of Seller hereunder and under the Utilities Agreement and the Ground Lease. Section 1.33 "Hydrogen" means hydrogen conforming to the specifications set forth in Exhibit C. Section 1.34 "Hydrogen Contract Volume" means during any Month an average of (***) of Hydrogen produced by Seller's Facility, calculated by dividing the total number of pounds delivered in any Month by the hours in such Month. Section 1.35 "Hydrogen Delivery Point" means the flange where Buyer's Pipelines will be connected to Seller's Facility at the Hydrogen custody transfer point depicted in Exhibit B. Section 1.36 "Hydrogen Totalizer" means Seller's metering equipment to be installed and maintained by Seller at Seller's Facility to measure the quantities of Hydrogen (and Supplemental Hydrogen) delivered to Buyer hereunder from Seller's Facility. Section 1.37 "Initial Term" has the meaning ascribed to it in Section 21.1. Section 1.38 "Maximum Shutdown Period" shall have the meaning ascribed to it in Section 7.1. Section 1.39 "Metering Equipment" shall have the meaning ascribed to it in Section 15.1. Section 1.40 "Month" means that period of time beginning at 12:01 a.m., Houston, Texas time on the first day of any calendar month and extending to 12:01 a.m. Houston, Texas time on the first day of the following calendar month. Section 1.41 "MSCF" means one thousand (1,000) standard Cubic Feet. Section 1.42 "Natural Gas" means natural gas delivered by Buyer to Seller's Facility conforming to the specifications set forth in Exhibit D attached hereto and made a part hereof. Section 1.43 "New NG Index" shall have the meaning ascribed to it in Section 8.4. Section 1.44 "New PPI Index" shall have the meaning ascribed to it in Section 8.4. Section 1.45 "NG Base" shall have the meaning ascribed to it in Section 8.4. Section 1.46 "PPI Base" shall have the meaning ascribed to it in Section 8.4. Section 1.47 "Products" means Carbon Monoxide, Blend Gas,Hydrogen and Steam, individually and collectively. Section 1.48 "Proprietary Rights" shall have the meaning ascribed to it in Section 14.6. Section 1.49 "Second Additional Term" has the meaning ascribed to it in Section 21.2. Section 1.50 "Seller's Facility" means the facilities to be constructed, owned and operated by Seller for the production and delivery of Products for sale and delivery to Buyer pursuant to this Agreement and for the sale of Hydrogen to third parties. The location of Seller's Facility is depicted on Exhibit B. Section 1.51 "Startup" means the date by which Seller initially has produced Carbon Monoxide, Blend Gas, Hydrogen and Steam at Buyer's Required Rates up to the Contract Volume of Products for a continuous period of 48 hours. Section 1.52 "Steam" means steam produced by Seller's Facility conforming to the specifications set forth in Exhibit C. Section 1.53 "Steam Contract Volume" means the volume of steam produced by Seller's Facility. Section 1.54 "Steam Delivery Point" means the flange where Buyer's Pipelines will be connected to Seller's Facility at the Steam custody transfer point depicted in Exhibit B. Section 1.55 "Steam Fee" means the fee payable by Buyer to Seller for Steam sold hereunder as provided in Section 8.3. Section 1.56 "Steam Totalizer" means Seller's metering equipment to be installed and maintained by Seller at Seller's Facility to measure the quantities of Steam delivered to Buyer hereunder. Section 1.57 "Supplemental Hydrogen" means (i) all Hydrogen delivered to Buyer hereunder at the Hydrogen Delivery Point from a source other than Seller's Facility when Seller's Facility is not producing Hydrogen, and (ii) when Seller's Facility is producing Hydrogen and Buyer's Hydrogen Requirements exceed the Hydrogen Contract Volume, the volume of Hydrogen delivered to Buyer at the Hydrogen Delivery Point in excess of the Hydrogen Contract Volume. Section 1.58 "Term" has the meaning ascribed to it in Section 21.2. Section 1.59 "Texaco Information" has the meaning ascribed to it in Section 19.4. Section 1.60 "Utilities Agreement" means that certain Utilities Agreement of even date herewith between Seller and Buyer pursuant to which Buyer will provide certain utilities to Seller for use at Seller's Facility, as same may be amended from time to time in accordance with the provisions thereof. ARTICLE 2 - STARTUP Section 2.1 Startup. Seller shall use its best efforts to achieve Startup by February 1, 1996. Seller shall give Buyer not less than two days' notice prior to each attempt to achieve Startup and Buyer shall be entitled to have its representatives present at Seller's Facility to observe each such attempt and to verify that Startup has occurred. Subject to the limitations contained in Section 19.4, Seller shall provide all data reasonably requested by Buyer to help Buyer verify Startup. Section 2.2 Seller's Penalty for Late Startup. Subject to Section 2.3, Seller will pay to Buyer penalty payments in lump sums of (***) each if Startup is not achieved by the following penalty dates: June 1, 1996, July 1, 1996, August 1, 1996, September 1, 1996 and October 1, 1996. If Startup is not achieved by October 1, 1996, Buyer may elect to initiate the dispute resolution procedures contained in Article 18 hereof. Section 2.3 Exceptions to Seller's Penalty for Delay. To the extent that delay in Startup is caused by Buyer or by a Force Majeure Event, each penalty date specified in Section 2.2 will be extended by the period of such delay. Seller shall notify Buyer as soon as possible after the occurrence of any act or omission by Buyer, or the occurrence of any Force Majeure Event, that will cause a delay in Startup and the expected length of such delay. Section 2.4 Buyer's Penalty for Late Startup. Subject to Section 2.5, Buyer will pay to Seller penalty payments in lump sums of (***) each if Startup is not achieved by the following penalty dates because Buyer has requested Seller to delay Startup after Seller's Facility is mechanically complete and technically capable of achieving Startup: June 1, 1996, July 1, 1996, August 1, 1996, September 1, 1996 and October 1, 1996. If Seller's Facility is mechanically complete and technically capable of achieving Startup, and Startup is not achieved by November 1, 1996 because Buyer has requested Seller to delay Startup, Buyer shall pay the Fixed Facility Fee and (***) of the Adjustable Facility Fee until Startup occurs. Section 2.5 Exceptions to Buyer's Penalty for Late Startup. To the extent that Buyer's request that Seller delay Startup is caused by Seller or by a Force Majeure Event, each penalty date specified in Section 2.4 will be extended by the period of such delay. Buyer shall notify Seller as soon as possible after the occurrence of any act or omission by Seller, or the occurrence of any Force Majeure Event, that will cause Buyer to request a delay in Startup and the expected length of such delay. Section 2.6 Obligation to Deliver after Startup. Except as otherwise provided in this Agreement, after Startup Seller agrees to deliver the Products to Buyer at Buyer's Required Rates during the Term, and Buyer agrees to pay for Products delivered in accordance with the terms of this Agreement. Section 2.7 Covenant Regarding Delay. Seller covenants that it will not delay Startup for any reason (including, without limitation, the absence of contracts with third parties for the sale of hydrogen produced at Seller's Facility) once Seller's Facility is mechanically complete and it is technically feasible to achieve Startup. ARTICLE 3 - DELIVERY OF CARBON MONOXIDE Section 3.1 Obligation to Deliver Carbon Monoxide. After Startup Seller shall sell and deliver to Buyer and Buyer shall purchase and receive from Seller, on the terms and conditions set forth herein, Buyer's Carbon Monoxide Requirements. Section 3.2 Carbon Monoxide Pressure. Carbon Monoxide will be delivered to the Carbon Monoxide Delivery Point at a pressure of not less than (***), or greater than (***), per square inch gauge pressure. Buyer shall be responsible for installing and maintaining appropriate relief devices on Buyer's Pipelines with respect to Buyer's receipt of Carbon Monoxide. Section 3.3 Title to and Risk of Loss of Carbon Monoxide. Title to and risk of loss of Carbon Monoxide shall pass to Buyer at the Carbon Monoxide Delivery Point. Section 3.4 Carbon Monoxide Volume. Seller will deliver Carbon Monoxide to the Carbon Monoxide Delivery Point under as uniform conditions and rates as possible and in a manner commensurate with good operating practices. However, Seller will vary the volume of Carbon Monoxide delivered hereunder as may be necessary to accommodate savings that may occur in the production of acetic acid by Buyer's Plant of approximately (***). Seller represents and warrants to Buyer that Seller's Facility has been designed to operate, and following Startup can and will be operated, to deliver the Carbon Monoxide Contract Volume in accordance with the terms of this Agreement. ARTICLE 4 - DELIVERY OF BLEND GAS Section 4.1 Obligation to Deliver Blend Gas. After Startup Seller shall sell and deliver to Buyer and Buyer shall purchase and receive from Seller, on the terms and conditions set forth herein, Buyer's Blend Gas Requirements. Section 4.2 Blend Gas Pressure. Blend Gas will be delivered to the Blend Gas Delivery Point at a pressure of not less than (***), or greater than (***), per square inch gauge pressure. Buyer shall be responsible for installing and maintaining appropriate relief devices on Buyer's Pipelines with respect to Buyer's receipt of Blend Gas. Section 4.3 Title to and Risk of Loss of Blend Gas. Title to and risk of loss of Blend Gas shall pass to Buyer at the Blend Gas Delivery Point. Section 4.4 Blend Gas Volume. Seller will deliver Blend Gas to the Blend Gas Delivery Point under as uniform conditions and rates as possible and in a manner commensurate with good operating practices. However, Seller will vary the volume of Blend Gas delivered hereunder from (***) of the Blend Gas Contract Volume, as may be necessary to accommodate the operation of Buyer's Plant. In addition, in order to accommodate the operation of Buyer's Plant, Seller will vary the volume of Blend Gas delivered hereunder by as much as (***) above or below the volume produced at Seller's Facility during steady state operation in the ordinary course of the operation of Seller's Facility. Seller represents and warrants to Buyer that Seller's Facility has been designed to operate, and after Startup can and will be operated, to deliver the Blend Gas Contract Volume in accordance with the terms of this Agreement. ARTICLE 5 - DELIVERY OF HYDROGEN AND SUPPLEMENTAL HYDROGEN Section 5.1 Obligation to Deliver Hydrogen. After Startup Seller shall sell and deliver to Buyer and Buyer shall purchase and receive from Seller, on the terms and conditions set forth herein, Buyer's Hydrogen Requirements. Section 5.2 Delivery of Supplemental Hydrogen. After Startup Seller will, from time to time at the request of Buyer, sell and deliver Supplemental Hydrogen to Buyer, subject to Seller's prior commitments for the sale of hydrogen to third parties. Buyer will purchase any Supplemental Hydrogen received from Seller on the terms and conditions set forth herein. Section 5.3 Hydrogen Pressure. Hydrogen and Supplemental Hydrogen will be delivered to the Hydrogen Delivery Point at a pressure of not less than (***), or greater than (***), per square inch gauge pressure. Buyer shall be responsible for installing and maintaining appropriate relief devices on Buyer's Pipelines with respect to Buyer's receipt of Hydrogen produced by Seller's Facility and Supplemental Hydrogen. Section 5.4 Title to and Risk of Loss. Title to and risk of loss of Hydrogen (and Supplemental Hydrogen) shall pass to Buyer at the Hydrogen Delivery Point. Section 5.5 Hydrogen Volume. Seller will deliver Hydrogen (and, if any Supplemental Hydrogen is sold and purchased hereunder, such Supplemental Hydrogen) to the Hydrogen Delivery Point under as uniform conditions and rates as possible and in a manner commensurate with good operating practices. However, Seller agrees that it will vary the volume of Hydrogen delivered hereunder from (***) of the Hydrogen Contract Volume, as may be necessary to accommodate the operation of Buyer's Plant. In addition, in order to accommodate the operation of Buyer's Plant, Seller will vary the volume of Hydrogen delivered hereunder by as much as (***) above or below the steady state operation of Seller's Facility during steady state operation in the ordinary course of the operation of Seller's Facility. Seller represents and warrants to Buyer that Seller's Facility has been designed to operate, and after Startup can and will be operated, to deliver the Hydrogen Contract Volume in accordance with the terms of this Agreement. ARTICLE 6 - DELIVERY OF STEAM Section 6.1 Steam Delivery Obligation. After Startup, Seller shall deliver and Buyer shall accept the Steam Contract Volume at the Steam Delivery Point at a pressure of not less than (***) pounds per square inch gauge pressure, and at a temperature of (***) degrees Fahrenheit, and meeting the specifications set forth in Exhibit C; provided, however, that the boiler feedwater supplied by Buyer to Seller pursuant to the Utilities Agreement meets the expected specifications set forth therein. The expected quantity of Steam (in pounds per hour) that Seller's Facility will produce at various operating rates (expressed as a percentage of the Carbon Monoxide Contract Volume) is set forth on Attachment 1 to Exhibit C; provided, however, Buyer shall be obligated to take all Steam produced by Seller's Facility in quantities up to (***) of the quantities shown on Attachment 1 to Exhibit C, but shall not be obligated to pay for Steam delivered in quantities in excess of (***) of the quantities shown on Attachment 1 to Exhibit C. Buyer shall be responsible for installing and maintaining appropriate relief devices on Buyer's Pipelines with respect to Buyer's receipt of Steam. Section 6.2 Title to and Risk of Loss of Steam. Title to and risk of loss of Steam shall pass to Buyer at the Steam Delivery Point. ARTICLE 7 - SHUTDOWNS, FAILURES TO DELIVER AND FAILURES TO TAKE Section 7.1 Seller's Maximum Shutdown Period. After Startup, Seller will have the right from time to time, upon 14 days (or such shorter period as circumstances reasonably dictate) prior notice to Buyer, to shut down Seller's Facility for up to a maximum of (***) hours during any Contract Year (the "Maximum Shutdown Period") for the purpose of making ordinary repairs for maintenance and/or thawing necessary and consistent with proper operation. For purposes of calculating the Maximum Shutdown Period, any hour during which Seller does not deliver the Products (or any one of them) at (***) of Buyer's Required Rates shall be treated as an hour during which Seller has shut down Seller's Facility even if no prior notice thereof was given by Seller to Buyer. However, a shutdown of Seller's Facility (i) as a result of a Force Majeure Event, or (ii) at a time when each of Buyer's Blend Gas Requirements, Hydrogen Requirements and Carbon Monoxide Requirements is zero, shall not be included in calculating the Maximum Shutdown Period. Section 7.2 Seller's Failure to Deliver; No Force Majeure. (a) If subsequent to Startup Seller delivers Products, but such deliveries are at rates below Buyer's Required Rates for a period of time in excess of the Maximum Shutdown Period for any reason other than a Force Majeure Event (the "Excess Shutdown Period"), for the Excess Shutdown Period Buyer shall pay a prorated Fixed Facility Fee and a prorated Adjustable Facility Fee based upon the portion that the amount of Products actually delivered bears to Buyer's Required Rates therefor. If Seller shall fail to deliver any Product during any Contract Year for any Excess Shutdown Period, Buyer shall have no obligation to pay any part of the Fixed Facility Fee or the Adjustable Facility Fee for the Excess Shutdown Period. (b) In the event that Buyer's Required Rates for any Product equal the Contract Volume of Products and Seller shall be unable to supply the Contract Volume of Products thereof after the expiration of the Maximum Shutdown Period for any Contract Year for any reason other than a Force Majeure Event, Seller shall give Buyer prompt notice of Seller's inability to deliver the full Contract Volume of Products. In such event, the authorized representatives of each of the parties shall be obligated to meet within 24 hours after receipt by Buyer of such notice from Seller. Seller shall be obligated to present, at such meeting, a plan to remedy its failure to deliver. Additionally, Seller shall be obligated to restore delivery of such Product to Buyer's Required Rates therefor within a reasonable period of time, taking into account the scope of the technical requirements and the correction period associated with the modifications required to so restore delivery. Seller shall be obligated to use all reasonable commercial efforts to achieve such result. In the event that delivery of Products is not restored to Buyer's Required Rates within a reasonable period of time, Seller shall use its best efforts to provide Products from a facility other than Seller's Facility to satisfy Buyer's Required Rates up to the Contract Volume of Products, and Seller shall provide such Products at the same cost to Buyer as it would have provided Products from Seller's Facility; provided, however, that to the extent that the cost of providing Products from another facility exceeds two times the amount that Buyer would have paid for Products from Seller's Facility, Seller shall not be obligated to pay (or bear the cost of) the amount of such excess. If, however, Buyer shall agree to pay (or bear the cost of) the amount in excess of two times the cost of providing Products from another facility, Seller shall be obligated to continue to provide Products from such other location. (c) In the event that Seller is unable to supply a Product at Buyer's Required Rates therefor for any reason other than a Force Majeure Event, Buyer may elect to purchase such Product from another supplier to the extent Seller is unable to supply such Product up to Buyer's Required Rates therefor. In such event, Seller will pay Buyer for the difference between the amount that Buyer would have paid for Products delivered from Seller's Facility and the amount actually paid for such Products by Buyer, up to two times the amount that Buyer would have paid for Products delivered from Seller's Facility. (d) Notwithstanding the other provisions of this Agreement, in the event that Seller is unable to supply Products at Buyer's Required Rates on a sustained basis for any reason other than a Force Majeure Event, and such inability continues for a period of (***) consecutive days, Buyer may elect to initiate the dispute resolution procedures contained in Article 18 hereof. Section 7.3 Buyer's Failure to Take; No Force Majeure. (a) Seller's Facility will be operated and maintained to accommodate planned shutdowns of the acetic acid unit at Buyer's Plant. To the extent practicable, Buyer and Seller will cooperate in scheduling planned shutdowns of their respective plants. (b) Following Startup, Buyer shall be entitled to a grace period of eight days (plus such number of additional days during which Buyer and Seller have jointly scheduled planned shutdowns) during any Contract Year ("Buyer's Annual Grace Period") for planned shutdowns of its acetic acid unit. During Buyer's Annual Grace Period, Buyer shall not be obligated to take Products from Seller and Buyer shall be obligated to pay Seller only the Fixed Facility Fee. (c) If after Buyer's Annual Grace Period during any Contract Year, Buyer is unable to take at least (***) of the Carbon Monoxide Contract Volume for any reason other than a Force Majeure Event of Buyer at a time when Seller is able to provide at least (***) of the Carbon Monoxide Contract Volume, Buyer shall pay the full amount of the Fixed Facility Fee and (***) of the Adjustable Facility Fee. In such event, Buyer shall receive a credit equal to the difference between the Adjustable Facility Fee paid and the cost of the Carbon Monoxide actually taken; provided, however, that such credit will only be applied to Carbon Monoxide taken in excess of the Carbon Monoxide Contract Volume during the twelve-month period immediately following the period of reduced purchase of Carbon Monoxide by Buyer. (d) If Buyer's acetic acid unit is shut down but other operations at Buyer's Plant require Blend Gas and Hydrogen, Seller will use reasonable efforts to operate Seller's Facility as efficiently as possible at reduced production rates to enable Seller's Facility to meet such requirements. Buyer acknowledges that operating Seller's Facility in order to deliver Products at Buyer's Required Rates that are less than (***) of the Carbon Monoxide Contract Volume will be inefficient and Buyer agrees that if Seller so operates Seller's Facility at Buyer's request, Seller and Buyer shall agree on an appropriate adjustment to the Feed/Fuel Fee payable by Buyer hereunder for any Month in which Seller's Facility is so operated to compensate Seller for such inefficiency; provided, that Seller shall not be required to operate Seller's Facility at rates below (***) of the Carbon Monoxide Contract Volume if operating at such rates will result in a violation by Seller of its air emissions permit with respect to Seller's Facility. Section 7.4 Seller's Failure to Deliver; Seller's Force Majeure. (a) If at any time after Startup Seller experiences a Force Majeure Event which causes a total shutdown of Seller's Facility for a period of time in excess of the Maximum Shutdown Period, Buyer shall pay (***) of the Fixed Facility Fee and (***) of the Adjustable Facility Fee for such period, but not to exceed a total of (***) days during the Initial Term, or a total of (***) days during each of the First Additional Term and the Second Additional Term. To the extent that prior to such Seller's Force Majeure Event, Buyer has purchased Carbon Monoxide in excess of (***) of the Carbon Monoxide Contract Volume during the preceding twelve months, Buyer may apply all amounts it paid in excess of (***) as a credit against the Adjustable Facility Fee, thus reducing the payments required from Buyer during Seller's Force Majeure Event. Buyer may also apply such credit to payments for Carbon Monoxide after the termination of a Seller's Force Majeure Event until such credit has been fully utilized. (b) In the event of partial deliveries by Seller during a period in which Seller's Force Majeure Event has occurred and is continuing, the period of the Force Majeure Event shall be prorated in calculating the number of days of Seller's Force Majeure Event and the amount of credit that Buyer may apply in the manner set forth in Section 7.4(a) shall also be prorated. (c) If the time Seller's Facility is shut down for Seller's Force Majeure Events exceeds (***) days during the Initial Term ((***) days in the case of each of the First Additional Term and the Second Additional Term), but is less than (***) days ((***) days in the case of each of the First Additional Term and the Second Additional Term), Buyer shall pay (***) of the Fixed Facility Fee and (***) of the Adjustable Facility Fee for such period; provided, however, that Buyer's obligation to pay (***) each of the Fixed Facility Fee and the Adjustable Facility Fee shall be reduced by purchases of Carbon Monoxide in excess of (***) of the Carbon Monoxide Contract Volume during the twelve months preceding each Seller's Force Majeure Event and at any time during the remainder of the Term, in order to reduce the amount that Buyer will have paid during a Seller's Force Majeure Event to zero. (d) If a Seller's Force Majeure Event causes a total shutdown of Seller's Facility for a period in excess of (***) consecutive days, Seller will use its best efforts to supply Products (other than Steam) to Buyer from a source other than Seller's Facility; provided, however, that if the cost to Seller of supplying such Products is greater than the price Buyer would have paid for such Products had they been produced in Seller's Facility, Seller shall only be required to pay the difference between the cost to Buyer of Products supplied from Seller's Facility and Products supplied from elsewhere up to a limit of (***) times the purchase price Buyer would have paid for the Products as specified in Section 8.1. If a Seller's Force Majeure Event causes a total shutdown of Seller's Facility for a period in excess of (***) consecutive days, it is acknowledged that Buyer may purchase Products (other than Steam) from third parties in order to operate the oxoalcohol, acetic acid and other units at Buyer's Plant. If Buyer so purchases any of such Products from a third party, Seller will reimburse Buyer for the amount paid by Buyer in excess of the price that would have been charged to Buyer for such Products supplied from Seller's Facility not to exceed (***) the purchase price Buyer would have paid for such Products hereof as specified in Section 8.1. Nothing herein shall be construed to prohibit or restrict Buyer, in the event that Seller is unable to supply Products at any time for any reason, from obtaining Products from third parties to replace Products that Seller has failed or is unable to deliver hereunder. Section 7.5 Buyer's Failure to Take; Buyer's Force Majeure. If after the expiration of Buyer's Annual Grace Period during any Contract Year as specified in Section 7.3(b), Buyer does not purchase at least (***) of the Carbon Monoxide Contract Volume as a result of a Force Majeure Event, Buyer shall be obligated to pay the Fixed Facility Fee and (***) of the Adjustable Facility Fee until such time as Buyer resumes purchasing at least (***) of the Carbon Monoxide Contract Volume; provided, however, that such amounts shall be credited to the account of Buyer and Buyer may apply such credit as payment for purchases of Carbon Monoxide from Seller after July 31, 2016. In order to utilize such credit against purchases of Products after July 31, 2016, Buyer shall have the right to extend this Agreement on its then existing terms and conditions for the amount of time necessary to fully utilize its credit, not to exceed (***). If Buyer has credit remaining after the end of such twelve-month extension, Seller must elect to either agree with Buyer to further extend the Agreement to allow Buyer to fully utilize its credit, or to purchase the remaining credit from Buyer. In the event Buyer discontinues its supply of any utility to Seller as provided in Section 12.6 of the Utilities Agreement, the Adjustable Facility Fee and the Feed/Fuel Fee shall be increased to offset any costs Seller may incur as a result of such discontinuance, and in the event such discontinuance causes any interruption in the operation of Seller's Facility, such interruption shall be deemed to be a Force Majeure Event of Buyer. Section 7.6 Mandatory Shut Down. In addition to the other provisions on shutdowns contained in this Agreement, Seller agrees to shut down Seller's Facility at any time that Buyer shuts down its acetic acid unit; provided, however, that if Seller's Facility does not require any maintenance at the time of such shutdown, Buyer will pay the Fixed Facility Fee and (***) of the Adjustable Facility Fee during such shutdown, unless and to the extent that the period of such shutdown is included in Buyer's Annual Grace Period. ARTICLE 8 - PRICING AND PAYMENT Section 8.1 Purchase Price for Products. The purchase price for all Products purchased hereunder shall be the sum of the following: (a) the Fixed Facility Fee; (b) the Adjustable Facility Fee; (c) the Feed/Fuel Fee; (d) the Steam Fee; (e) any charges for Supplemental Hydrogen as provided in Section 8.4; and (f) the amount of any applicable sales, use or other taxes. Section 8.2 Fixed Facility Fee. In accordance with the procedures established in Section 8.6, Buyer shall pay to Seller for each Month during the Term, beginning with the Month in which the Startup occurs, a Fixed Facility Fee in the amount of (***). The Fixed Facility Fee for the Month in which Startup occurs shall be prorated in the event Startup occurs on a date other than the first day of such Month. Except as otherwise provided in Article 7, Buyer shall be obligated to pay the Fixed Facility Fee to Seller even if Buyer has no requirements for Carbon Monoxide, Blend Gas or Hydrogen. Section 8.3 Adjustable Facility Fee; Feed/Fuel and Steam Fees. As promptly as possible after the end of each Month, Seller will read the Carbon Monoxide Totalizer, the Blend Gas Totalizer, the Hydrogen Totalizer and the Steam Totalizer to determine the volumes of Carbon Monoxide, Blend Gas, Hydrogen and Steam delivered to Buyer from Seller's Facility during such Month. Based upon such readings, Seller will invoice Buyer for and Buyer will pay to Seller in accordance with the procedure established in Section 8.6 the following fees: (i) the Adjustable Facility Fee, the Feed/Fuel Fee and the Steam Fee, calculated in the manner prescribed in Exhibit A attached hereto and made a part hereof, in each case as adjusted as provided in Exhibit A, and (ii) the amount of any applicable sales, use or other excise taxes. In the event that the readings for any Month show that the volume of Carbon Monoxide delivered to Buyer from Seller's Facility during such Month is less than or is in excess of the Carbon Monoxide Contract Volume, the Adjustable Facility Fee and the Feed/Fuel Fee shall be adjusted as provided in Exhibit A. Section 8.4 Supplemental Hydrogen. In the event Seller delivers volumes of Supplemental Hydrogen to Buyer, Buyer shall pay Seller for such volumes of Supplemental Hydrogen in accordance with the following formula: (***) where: (***). Section 8.5 Payment for Supplemental Hydrogen. As promptly as possible after the end of each Month Seller will read the Hydrogen Totalizer to determine the volume of Supplemental Hydrogen delivered to Buyer during such Month. Based upon such readings, Seller will invoice Buyer and Buyer will pay Seller for such volume a charge as provided in Section 8.6. Section 8.6 Terms of Payment. (a) Terms of payment will be (***) following Buyer's receipt of invoice. In the event Buyer is late in the making of any payment hereunder, Buyer shall pay to Seller a late payment charge against the unpaid portion of the invoiced amount equal to the lesser of (i) a rate of (***) per annum or (ii) the maximum rate permitted by law of the unpaid balance for each Month or partial Month that said invoice remains unpaid after the above-mentioned due date. Such interest shall be in addition to any other rights of Seller arising as a result of Buyer's failure to make such payment or part thereof within the time specified. Any and all payments to Seller hereunder shall be made by Buyer to a location and/or account designated in writing by Seller sufficiently in advance of the payment date to permit such payment, and Buyer shall acknowledge such notice in writing. (b) If Buyer has reason to dispute the accuracy of any invoice submitted to it by Seller, Buyer will pay the part of the invoice that is not disputed in accordance with the provisions of this Article 8 and, after such dispute has been resolved, Buyer will pay the balance due to Seller, or Seller will refund any amount due to Buyer, within (***) of the receipt of a replacement invoice. (c) Seller shall maintain business and accounting records and production data in accordance with usual and customary practices and standards in the chemical industry in respect of all matters referred to in this Agreement. Subject to the limitations contained in Section 19.4, Seller shall provide Buyer access to such records and data pursuant to the provisions of Section 19.1 and 22.2 hereof. (d) In the event that any invoice submitted by Seller to Buyer shall contain terms and conditions that are inconsistent with this Agreement, the terms of this Agreement shall control. ARTICLE 9 - TAXES If at any time during the Term, any governmental authority imposes a tax (excluding federal income tax and state franchise tax) which increases Seller's costs incurred in the production, sale or delivery of any Product to Buyer hereunder, or if, due to a rate change, or other action of a governmental authority, there is at any time during the term of this Agreement an increase in any such tax presently existing, then Buyer and Seller will agree on an appropriate adjustment to the Adjustable Facility Fee to keep Seller whole. ARTICLE 10 - FORCE MAJEURE Section 10.1 Force Majeure Events. (a) In the event either party is rendered unable, wholly or in part, by a Force Majeure Event to perform its obligations under this Agreement (other than an obligation to pay monies when due), it is agreed that on such party promptly giving notice and reasonably full particulars of such Force Majeure Event in writing in accordance with Section 10.3 to the other party, then the obligations of the party giving such notice, so far as they are affected by such Force Majeure Event, shall be suspended during the continuance of any inability so caused, but for no longer period, and such cause shall so far as possible be remedied with all reasonable dispatch. (b) The term "Force Majeure Event," as used in this Agreement, shall mean any act of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, blockades, embargoes, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms, floods, high water, washouts, arrests and restraints of government and people, civil disturbances, explosions, breakage or accident to machinery, equipment, lines of pipe or property, freezing of wells, machines, equipment, lines of pipe, or property, partial or entire extraordinary failure of any machine, equipment, lines of pipe or other property, the occurrence of any emission, discharge, release or threatened release of Hazardous Substances (as that term is defined in the Ground Lease), the inability of Seller's Facility to deliver Products (or any one of them) at 100% of Buyer's Required Rates because of any remediation required to be done in, on, about or under the Facility Site as provided in Section 5.8 of the Ground Lease (which inability shall be deemed to be a Force Majeure Event of Buyer), and any other causes, whether of the kind herein enumerated or otherwise, not reasonably within the control of the party claiming suspension. (c) Notwithstanding the provisions of this Section 10.1 the failure by either party to perform any of its obligations under this Agreement shall be deemed not to have been caused by circumstances reasonably outside its control if such failure results from breakage or accident to machinery, equipment, lines of pipe or other property or the partial or entire extraordinary failure thereof or the necessity to make repairs or alterations thereto which result from (i) normal wear and tear which would be reasonably anticipated by a reasonably prudent operator or in circumstances where a reasonably prudent operator would have standby equipment or spare parts or (ii) the lack of the proper operation, maintenance, quality control, design,engineering and/or procurement of such machinery, equipment, lines of pipe or other property. Section 10.2 Settlement of Strikes. It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the party having the difficulty, and that the above requirement that any Force Majeure Event shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of the opposing party when such course is inadvisable in the discretion of the party having the difficulty. Section 10.3 Notice of Force Majeure. As soon as practicable after occurrence of any Force Majeure Event, the party claiming force majeure shall notify the other party in writing of the occurrence and nature of such Force Majeure Event describing it in reasonable detail and, to the extent possible, inform the other party of the suspected cause and the expected duration of the Force Majeure Event and the performance to be affected by the suspension or curtailment under this Agreement. After the termination of any Force Majeure Event, as soon as practicable, the party claiming force majeure shall notify the other party in writing of the termination of such Force Majeure Event and its actual cause and duration. ARTICLE 11 - LIMITATION OF LIABILITY Section 11.1 Acknowledgement of Hazards. Each party acknowledges that there are hazards associated with the storage, use and handling of Carbon Monoxide, Blend Gas, Hydrogen and Steam and each party agrees that its personnel concerned therewith are aware of such hazards. Each party shall be responsible for complying with all relevant reporting obligations under all laws applicable thereto as the result of the presence at Buyer's Plant or at Seller's Facility, as the case may be, of Carbon Monoxide, Blend Gas, Hydrogen and Steam supplied under this Agreement, including but not limited to the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11049 ("EPCRA," also commonly known as Title III of the Superfund Amendments and Reauthorization Act of 1986, SARA Title III), as same may be amended. Each party to this Agreement shall be responsible for warning and protecting its respective employees, independent contractors and others exposed to the hazards posed by such party's storage, use and handling of Carbon Monoxide, Blend Gas, Hydrogen and Steam. As between Buyer and Seller, Buyer assumes all responsibility for the suitability and the results of using Carbon Monoxide, Blend Gas, Hydrogen and Steam delivered to Buyer hereunder alone or in combination with other articles or substances and in any manufacturing or other process or procedures. Section 11.2 No Consequential Damages. Neither party to this Agreement shall be liable to the other party to this Agreement for any incidental, consequential, indirect, or special damages. Seller will provide to Buyer copies of Seller's documents containing Seller's safety and health information pertaining to Carbon Monoxide, Blend Gas, Hydrogen and Steam delivered hereunder including, without limitation, Seller's Material Safety Data Sheet(s), and Buyer will incorporate such information into Buyer's safety program. ARTICLE 12 - SELLER'S PRODUCT WARRANTIES; DISCLAIMERS Seller represents and warrants to, and covenants and agrees with, Buyer that the Carbon Monoxide, Blend Gas, Hydrogen and Steam delivered hereunder shall conform to the specifications set forth in Exhibit C. Any Carbon Monoxide, Blend Gas, Hydrogen or Steam which does not conform to the foregoing specifications may be rejected by Buyer by providing verbal notice to Seller's Facility within two (2) hours and subsequent written confirmation within five (5) days thereafter, no charge will be made for any Carbon Monoxide, Blend Gas, Hydrogen or Steam so rejected and Buyer shall have no obligation to return any Product which does not conform to specifications. Seller shall have the right to confirm Buyer's data supporting such rejection. Since Seller will furnish Buyer with an analytical/isolation system that will be installed on Buyer's Pipelines, and will have the capability of testing whether Carbon Monoxide, Blend Gas or Hydrogen delivered hereunder meets the specifications set forth in Exhibit C, and which will be maintained, operated and monitored by Buyer, and Buyer may obtain other devices that have the capability of testing whether Carbon Monoxide, Blend Gas or Hydrogen delivered hereunder meets the specifications set forth on Exhibit C, no claim of any kind with respect to the conformance of Carbon Monoxide, Blend Gas, Hydrogen or Steam to such specifications, whether or not based on contract, warranty, negligence, indemnity, strict liability or otherwise, shall be greater than the price of the quantity of the nonconforming Product; provided, however, in the event (i) of Seller's negligence or willful misconduct or (ii) the analytical/isolation systems at Seller's Facility related to the delivery of Blend Gas, Carbon Monoxide or Hydrogen are damaged or disabled by any intentional act of Seller, and such negligence, willful misconduct or intentional act results in the delivery hereunder of Blend Gas, Carbon Monoxide or Hydrogen that fails to meet such specifications and damages any catalyst within Buyer's Plant, Seller shall be responsible to Buyer for any direct damages caused to any catalyst within Buyer's Plant, including any costs and expenses incurred by Buyer to repair or replace the damaged catalyst, to the extent such negligence, willful misconduct or intentional act of Seller causes such damages up to a maximum of (***) for each such claim; and provided further, that said (***) limitation shall be adjusted semi-annually during the Term effective as of January 1 and July 1 of each year to reflect changes in the average Monthly Producer Price Index - Industrial Commodities (where the base is 1982=100) published by the United States Department of Labor, Bureau of Labor Statistics, in accordance with the following formula: (***) Where: (***) If the Producer Price Index-Industrial Commodities index is revised and published on some base other than 1982=100, the value thereof used in the formula in this Article 12 will be adjusted to the new base in accordance with such conversion schedule or factor as may be supplied by the publisher of the index. Should the Producer Price Index-Industrial Commodities index cease to exist, Seller and Buyer shall jointly select a new index which is based on similar information. The foregoing shall constitute Buyer's exclusive remedy, and Seller's sole obligation, hereunder with respect to each such claim. THERE ARE NO EXPRESS WARRANTIES BY SELLER REGARDING THE CONFORMITY OF THE PRODUCTS TO THE SPECIFICATIONS OTHER THAN THOSE SPECIFIED IN THIS ARTICLE 12. NO WARRANTIES BY SELLER (OTHER THAN WARRANTIES OF TITLE AND AGAINST INFRINGEMENT AS PROVIDED IN THE UNIFORM COMMERCIAL CODE) SHALL BE IMPLIED OR OTHERWISE CREATED UNDER THE UNIFORM COMMERCIAL CODE WITH RESPECT TO SUCH PRODUCTS, INCLUDING BUT NOT LIMITED TO THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ARTICLE 13 - REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: Section 13.1 Organization, Good Standing and Corporate Power. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is duly qualified as a foreign corporation in the State of Texas, and has all requisite corporate power and authority to carry on its business as presently conducted, to enter into this Agreement and perform its obligations hereunder. Section 13.2 Authority Relative to Agreement. The execution, delivery and performance by Buyer of this Agreement have been duly and effectively authorized by all necessary corporate action. This Agreement has been duly executed and delivered by Buyer and is a legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except insofar as enforcement may be limited by (i) bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights generally, and (ii) general principles of equity. Section 13.3 No Conflict with Other Instruments or Proceedings. Neither the execution and delivery of this Agreement, nor the performance or compliance with the terms and conditions hereof conflict with, or will result in a breach by Buyer of, or constitute a default under, or result in the creation of any lien, charge or encumbrance upon, any asset of Buyer pursuant to any of the terms, conditions or provisions of (i) the Certificate of Incorporation or Bylaws of Buyer, (ii) any material mortgage, deed of trust, lease, contract, agreement or other instrument to which Buyer is a party or by which Buyer may be bound or affected, or (iii) any writ, order, judgment, decree, statute, ordinance, regulation or any other restriction of any kind or character, to which Buyer is subject, or by which Buyer may be bound or affected. Section 13.4 No Litigation or Proceedings. As of the date hereof, there are no actions, suits, investigations or proceedings pending or, to Buyer's knowledge, threatened against Buyer at law or in equity or before or by any federal, state, municipal or other governmental or non-governmental department, commission, board, bureau, agency or instrumentality seeking to enjoin, restrain or otherwise prevent the execution and delivery of this Agreement by Buyer. ARTICLE 14 - REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to Buyer as follows: Section 14.1 Organization, Good Standing and Corporate Power. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is duly qualified as a foreign corporation in the State of Texas, and has all requisite corporate power and authority to carry on its business as presently conducted, to enter into this Agreement and perform its obligations hereunder. Section 14.2 Authority Relative to Agreement. The execution, delivery and performance by Seller of this Agreement have been duly and effectively authorized by all necessary corporate action. This Agreement has been duly executed and delivered by Seller and is a legal, valid and binding obligation of Seller enforceable in accordance with its terms, except insofar as enforcement may be limited by (i) bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights generally, and (ii) general principles of equity. Section 14.3 No Conflict with Other Instruments or Proceedings. Neither the execution and delivery of this Agreement, nor the performance or compliance with the terms and conditions hereof conflict with, or will result in a breach by Seller of, or constitute a default under, or result in the creation of any lien, charge or encumbrance upon, any asset of Seller pursuant to any of the terms conditions or provisions of (i) the Certificate of Incorporation or Bylaws of Seller, (ii) any material mortgage, deed of trust, lease, contract, agreement or other instrument to which Seller is a party or by which Seller may be bound or affected, or (iii) any writ, order, judgment, decree, statute, ordinance, regulation or any other restriction of any kind or character, to which Buyer is subject, or by which Seller may be bound or affected. Section 14.4 No Litigation or Proceedings. As of the date hereof, there are no actions, suits, investigations or proceedings pending or, to Seller's knowledge, threatened against Seller at law or in equity or before or by any federal, state, municipal or other governmental or non-governmental department, commission, board, bureau, agency or instrumentality seeking to enjoin, restrain or otherwise prevent the execution and delivery of this Agreement by Buyer. Section 14.5 Compliance with Laws. Seller represents that Seller's Facility will be operated in compliance with all applicable laws, and that the Carbon Monoxide, Blend Gas, Hydrogen and Steam produced by Seller's Facility will be produced in compliance with all applicable laws, including without limitation the Fair Labor Standards Act of 1938, as amended. Section 14.6 Proprietary Rights. Seller has, and after Startup and throughout the Term will continue to have, full and sufficient rights to use and practice all technology, proprietary information, know-how and patented ideas, designs and inventions required for the design, construction and operation of Seller's Facility (the "Proprietary Rights"). None of the ownership, license, access to, use or practice of the Proprietary Rights by Seller at Seller's Facility do or will infringe on the rights of any third party and all Proprietary Rights are valid and enforceable. ARTICLE 15 - METERING EQUIPMENT Section 15.1 Meter Testing. Seller, at its expense, will test and calibrate the Blend Gas Totalizer, the Carbon Monoxide Totalizer, the Hydrogen Totalizer and the Steam Totalizer (hereinafter collectively called the "Metering Equipment") annually, and will perform a verification of pressure and transducer calibration semi-annually. The Metering Equipment shall be calibrated to Compressed Gas Association Standards. Seller will provide Buyer with written notice so that Buyer may have its representatives present during such calibrations and tests. Readings will be corrected to standard cubic feet measured at 60 degrees Fahrenheit and 14.696 pounds per square inch absolute pressure. At any time requested by Buyer, Seller will test the Metering Equipment in the presence of Buyer's representatives and, if the Metering Equipment is found on such test to be accurate, Buyer will pay Seller the cost and expense of such test, but, if found on such test to be inaccurate, then the cost and expense of such test and of correcting the inaccuracy in the Metering Equipment will be borne by Seller. If, on any test or calibration the Metering Equipment is found to be inaccurate, a correcting invoice will be tendered to cover the actual amount of Carbon Monoxide, Blend Gas, Hydrogen, Supplemental Hydrogen and Steam delivered to Buyer through the Metering Equipment for the thirty (30) day period prior to the date on which such calibration or test was made, or the period from the date such Metering Equipment was last tested and considered accurate, whichever period is shorter. If, on any test of the Metering Equipment, its accuracy is not in excess of two percent (2%) either fast or slow, the Metering Equipment will be considered accurate. ARTICLE 15 - Data Transmission. Seller will provide equipment, hardware and a connection to the battery limits of Seller's Facility and Buyer will provide equipment, hardware and a connection so as to permit the continuous transmission of digital data relating to Product and utility metering by Seller, and the reception thereof by Buyer. Buyer will only have access to Product and utility metering information through the connection. Such access will be limited to "read only" capability and Buyer will have no ability to control the operation of Seller's Facility. ARTICLE 16 - (***) ARTICLE 17 - EXCESS PRODUCTION In the event that excess Carbon Monoxide or Hydrogen is produced or otherwise becomes available as the result of the production requirements of Buyer's Plant or Seller's Facility, Buyer will, if it is economically feasible, use its reasonable efforts to burn the excess Carbon Monoxide or Hydrogen, as the case may be, in the off-gas fuel system of Buyer's Plant. To the extent, if any, that Buyer is successful in so burning such excess Carbon Monoxide or Hydrogen, Buyer will credit Seller for Buyer's avoided cost, if any, of fuel that Buyer would have otherwise purchased. Buyer's determination of its avoided cost shall be final and binding on Seller. During the Term Seller will not, without the prior written consent of Buyer, sell or deliver any Carbon Monoxide from Seller's Facility to any other person or entity. ARTICLE 18 - EVENTS OF DEFAULT; DISPUTE RESOLUTION Section 18.1 Events of Default. Each of the following shall be deemed an "Event of Default" by the party to whom such event is applicable under this Agreement: (a) if either party shall fail to perform or observe any of the terms, covenants, conditions, agreements or obligations of this Agreement required to be observed and performed in this Agreement by such party, and such failure shall continue for a period of thirty (30) days after notice thereof has been delivered to such party; or (b) if either party or the Guarantor shall make a general assignment for the benefit of its creditors, or shall file a voluntary petition in bankruptcy, or shall be adjudicated bankrupt or insolvent, or shall file any petition or answer seeking, consenting to, or acquiescing in reorganization, arrangement, adjustment, composition, liquidation, dissolution or similar relief under any present or future statute, law or regulation, or shall file an answer admitting or failing to deny the material allegations of a petition against it for any such relief, or shall admit in writing its inability to pay its debts as they mature; or (c) if any proceeding against either party or the Guarantor seeking any of the relief mentioned in clause (b) of this Article 18 shall have been commenced and shall not have been stayed or dismissed within ninety (90) days after commencement; or (d) if a trustee, receiver or liquidator of either party or the Guarantor or of any substantial part of the properties or assets of such party or the Guarantor shall be appointed with the consent or acquiescence of such party or the Guarantor, or if any such appointment, if not so consented to or acquiesced in, shall remain unvacated or unstayed for a period of ninety (90) days; or (e) if either party or the Guarantor shall be liquidated or dissolved, or shall begin proceedings toward such liquidation or dissolution; or (f) if any of the material representations or warranties made by either party in this Agreement proves to be untrue in any material respect; or (g) A default or Event of Default by either party occurs under the Utilities Agreement or the Ground Lease Agreement, which default or Event of Default is not cured within any applicable cure period. Section 18.2 Dispute Resolution Meeting. In the event that a party to this Agreement has reasonable grounds to believe that an Event of Default has occurred and is continuing, or that its expectation of receiving due performance under this Agreement may be impaired, such party will promptly notify the other party in writing of the substance of its belief and, as appropriate, declare that an Event of Default has occurred or demand adequate assurance of due performance. The party receiving such notice and/or demand must respond in writing within twenty (20) days of receipt of such notice and provide (i) evidence of cure of and/or its ongoing best efforts to cure the condition specified, (ii) an explanation of why it believes that its performance is in accordance with the terms and conditions of this Agreement, and/or (iii) adequate assurance of due performance, as required by the claiming party's notice. Failure to respond within said twenty (20) day period shall be deemed an admission that an Event of Default has occurred or that due performance is impaired. The responding party shall also include in its written response three (3) dates, all of which must be within thirty (30) days following the date of such response, for a meeting to resolve the dispute and/or evaluate the adequacy of the assurance of due performance. The party declaring an Event of Default or seeking adequate assurance of performance will then select one (1) of the three (3) dates, and a dispute resolution meeting will be held on such date. Either party shall have the right to demand that individuals representing each of the companies who have the authority to execute this Agreement, or amendments hereto, or waivers hereof, and to authorize or agree to curative action, be in attendance at such dispute resolution meeting. Section 18.3 Failure to Resolve Dispute; Arbitration. (a) If the parties cannot, in good faith discussions, resolve their dispute during the dispute resolution required by Section 18.2, then either party may given notice of a request for arbitration and subject to the provisions of Section 18.4 such controversy shall be referred to and resolved by arbitration under the most current version of the Commercial Arbitration Rules of the American Arbitration Association. The board of arbitrators shall be composed of three arbitrators. Each party shall choose an arbitrator and the third shall be chosen by the two so chosen. If either party to the controversy fails to choose an arbitrator within thirty (30) days after notice of commencement of arbitration, or if the two arbitrators fail to choose a third arbitrator within thirty (30) days after their appointment, the American Arbitration Association shall, upon the request of either party, appoint the arbitrator or arbitrators to constitute or complete the board. The place of arbitration shall be Houston, Texas and the arbitration shall be held within thirty (30) days after the appointment of the arbitration board. The arbitration award shall be final and binding upon the parties to such arbitration and judgment thereon may be entered in any court having jurisdiction. (b) In connection with any such arbitration proceeding, the board of arbitrators shall have the right to grant all remedies that such board deems appropriate including, without limitation, monetary damages and/or the termination of this Agreement, the Ground Lease and the Utilities Agreement. The board of arbitrators shall also have the right to require the losing party to reimburse the prevailing party for all reasonable attorneys' fees and costs incurred in connection with all such proceedings. Section 18.4 Right to Terminate Agreement. Notwithstanding the provisions of Section 18.1 and 18.2, either party may decline to pursue arbitration and elect to terminate this Agreement if any of Events of Default specified in Section 8.1(b)-(e) shall have occurred. ARTICLE 19 - ACCESS TO INFORMATION Section 19.1 Access to Information. Upon written request by Buyer from time to time, but subject to Section 19.4, Seller shall provide to Buyer, its attorneys, accountants and other representatives, at reasonable times during normal business hours, access to Seller's books, records and accounts in connection with the operation of Seller's Facility as it relates to the performance of Seller's obligations under this Agreement. Subject to the provisions of Section 19.4, Buyer shall thereupon have the right to make copies of and abstracts from such books, records and accounts, at Buyer's expense, which copies may be removed from Seller's premises and retained by Buyer. All information disclosed to Buyer pursuant to this Agreement shall be subject to the confidentiality provisions of Section 22.2 hereof. Section 19.2 Access to Seller's Facility. Subject to Section 19.4, Seller agrees to permit representatives of Buyer, at Buyer's expense, to have access to Seller's Facility at reasonable times and on reasonable notice to obtain information relating to the present or proposed operations of Seller's Facility so long as such access does not materially disrupt the operation of Seller's Facility. Buyer will pay all costs incurred by Buyer relating to Buyer's exercise of its rights under this Section 19.2. Section 19.3 Access to Seller's Personnel. Subject to Section 19.4, Seller shall make its employees and other representatives available to Buyer at reasonable times on reasonable notice to discuss the present or proposed operations of Seller's Facility so long as such availability does not materially disrupt the operation of Seller's Facility. Section 19.4 Limitations on Disclosure. Seller has represented to Buyer that certain of the Proprietary Rights relating to Seller's Facility have been provided to Seller by Texaco, Inc. pursuant to the terms of a license agreement that prohibits Seller from disclosing the information provided by Texaco, Inc. (the "Texaco Information") to Buyer. Nothing in this Agreement shall be construed as requiring Seller to provide any of the Texaco Information to Buyer. ARTICLE 20 - CAPACITY OF SELLER'S FACILITY Section 20.1 Initial Capacity. Seller represents and warrants to Buyer that, at the time of Startup, the maximum instantaneous capacity of Seller's Facility to produce Products shall be at least (***) greater than the Contract Volume of Products. Buyer acknowledges that Seller has initially configured Seller's Facility to operate efficiently at the Contract Volume of Products and has been designed to produce up to (***) of the Contract Volume of Products under certain ambient temperatures and operating conditions. Section 20.2 Capacity Expansion. Seller represents and warrants to Buyer that, at the time of Startup, the maximum instantaneous capacity of Seller's Facility to produce Products may be increased to an ultimate instantaneous capacity of at least (***) of the Contract Volume of Products. Seller agrees that, upon not less than (***) advance written notice from Buyer, Seller will at its sole cost and expense take the actions necessary to expand the maximum instantaneous capacity of Seller's Facility to at least (***) of the Contract Volume of Products (or such greater capacity as may be mutually agreed). In exchange for such increase in the maximum instantaneous capacity of Seller's Facility, Buyer agrees to increase the Fixed Fee to (***) (or such lesser amount as may be mutually agreed). The parties acknowledge that such capacity expansion will result in reductions in the usage of Natural Gas, electricity and cooling water supplied by Buyer to Seller pursuant to the Utilities Agreement at production rates above the Contract Volume of Products, and may result in increases in the usage of Natural Gas, electricity and cooling water supplied by Buyer to Seller pursuant to the Utilities Agreement at production rates below the Contract Volume of Products. ARTICLE 21 - INITIAL AND ADDITIONAL TERMS Section 21.1 Initial Term. The term of this Agreement shall be for a period commencing on the date of the execution of this Agreement and ending at midnight on July 31, 2016, unless earlier terminated as provided herein ("Initial Term"); provided, that if either or both Buyer or Seller exercises its option to extend this Agreement as provided in Section 7.5, the Initial Term shall include the period of any such extensions. Section 21.2 Additional Terms. Subject to the terms of this Section 21.2, Buyer shall have the option to extend this Agreement beyond the Initial Term for up to two (2) additional terms of five (5) years each. If this Agreement has not been terminated prior to the end of the Initial Term, the option to extend this Agreement beyond the Initial Term for an additional five (5) years shall be deemed to have been exercised by Buyer, and the Initial Term shall be automatically extended for a period of five (5) years after the end of the Initial Term (the "First Additional Term"), unless Buyer shall have given Seller notice no later than one (1) year prior to the expiration of the Initial Term that Buyer has elected not to extend the Initial Term. If this Agreement has not been terminated prior to the end of the First Additional Term, the option to extend this Agreement beyond the First Additional Term for an additional five (5) year period shall be deemed to have been exercised by Buyer, and the First Additional Term shall be automatically extended for a period of five (5) years after the end of the First Additional Term (the "Second Additional Term"), unless Buyer shall have given Seller notice no later than one (1) year prior to the expiration of the First Additional Term that Buyer has elected not to extend the First Additional Term. The Initial Term, the First Additional Term (if any) and the Second Additional Term (if any) are referred to in this Agreement as the "Term." ARTICLE 22 - MISCELLANEOUS Section 22.1 Assignment. (a) This Agreement shall inure to the benefit of and bind the respective successors and permitted assigns of the parties hereto. Except as expressly permitted hereby, neither party may assign this Agreement or its rights under this Agreement, including its rights to receive payments hereunder, to any other party without the consent of the other. (b) Either party may assign this Agreement and all of its rights and obligations hereunder to any subsidiary, Affiliate, partnership or venture, in which such party (or its parent company) holds an interest of 50% or more. (c) It is agreed that (i) the sale, transfer or conveyance by Buyer or Seller of all or substantially all of its assets, or (ii) the merger, consolidation, reorganization or recapitalization of Buyer or Seller with any third party, or (iii) the change of control of Buyer or Seller, whether effected by stock purchase, statutory share exchange, or otherwise, shall not constitute an assignment of this Agreement by Buyer or Seller, but Buyer or Seller (as the case may be) shall, as a condition precedent to the closing of any sale, transfer or conveyance referred to in clause (i) above, require the purchaser or transferee to assume all rights and obligations of Buyer or Seller (as the case may be) under this Agreement, the Ground Lease and the Utilities Agreement. In the event that Buyer sells or otherwise transfers or conveys all or substantially all of the assets constituting Buyer's Plant, such sale, transfer or conveyance shall not constitute an assignment of this Agreement by Buyer, but Buyer shall, as a condition precedent to the closing of such sale, transfer or conveyance, require the purchaser or transferee to assume all rights and obligations of Buyer under this Agreement, the Ground Lease and Utilities Agreement. In the event that Seller sells or otherwise transfers or conveys all or substantially all of the assets constituting Seller's Facility, such sale, transfer or conveyance shall not constitute an assignment of this Agreement by Seller, but Seller shall, as a condition to the closing of such sale, transfer or conveyance, require the purchaser or transferee to assume all rights and obligations of Seller under this Agreement, the Ground Lease and Utilities Agreement. (d) No assignment, transfer or conveyance of this Agreement by either party shall relieve the assigning party (or Guarantor) of any of its obligations, liabilities or duties hereunder (or under the Guaranty), unless the other party hereto shall agree otherwise. (e) Any assignment of this Agreement by either party shall be accompanied by the contemporaneous (i) assumption by the assignee of all rights and obligations of assignor hereunder, and (ii) assignment of the Ground Lease and the Utilities Agreement. Section 22.2 Confidentiality. (a) In connection with this Agreement, the parties hereto have exchanged and will continue to exchange certain nonpublic, proprietary or confidential information of a technical, business or financial nature (the "Confidential Information"). In order to facilitate discussion between Buyer and Seller relating to the design, construction, operation and maintenance of Seller's Facility and the purchase and sale of Products pursuant to this Agreement, Buyer and Seller desire to provide each other with assurances that Confidential Information will not be divulged. (b) For purposes of this Agreement, Confidential Information shall consist of this Agreement and all nonpublic, proprietary or confidential information whether obtained from observation or from materials, information or data submitted by the other party or from oral or written disclosures, and shall include, without intent to limit, all plans (including marketing plans, marketing information, sales information (including sales history and sales projections), designs, specifications, prices, processes, compositions and the like related to this Agreement, the Products, the operation of Seller's Facility or Buyer's Plant, and believed by the disclosing party to be unpublished and the disclosing party's private information at the time of its disclosure, and all memoranda, notes or other documents prepared by the receiving party which embody in whole or in part any of such information. However, the restrictions of this Section 22.2 shall apply only to written information, drawings and other tangible information and the like, as described above which are clearly marked "Confidential" or designated confidential in writing given to the receiving party orally, designated as confidential orally when revealed and confirmed in writing within thirty (30) days of disclosure as "Confidential" referencing the data and type of information disclosed. All other information whether disclosed in writing, orally or observed shall be considered as having been disclosed on a nonconfidential basis. (c) Each party agrees that it will treat the Confidential Information of the other party as confidential and will use the same care and caution that it affords its own proprietary information to protect such Confidential Information received under this Agreement from disclosure to any third party. Each party agrees to use the Confidential Information solely and exclusively for purposes of this Agreement and agrees to disclose the Confidential Information only to those individuals within its own organization who have a need to receive the information and who will be bound by nondisclosure agreements with the receiving party. (d) The restrictions of this Agreement shall not apply to any Confidential Information which (i) is now or hereafter becomes available to the public without a breach by the receiving party of the terms stated in this Agreement; (ii) is known to or in the possession of the receiving party as evidenced by documentary material in its possession before disclosure hereunder and the receiving party is not already obligated to the disclosing party to maintain it in confidence; (iii) is disclosed to the receiving party by a third party not under any obligation of secrecy or confidentiality to the disclosing party at the time of such disclosure; (iv) can be shown by substantial evidence was independently developed by employees of the receiving party who have not had access to the Confidential Information of the disclosing party; or (v) the receiving party is, in the opinion of its counsel, compelled by law to disclose; provided that in such cases the disclosure will be limited to the minimum to the extent possible without involving violation of applicable laws and the disclosing party will be given at least forty-eight (48) hours prior notice of the disclosure which is to be made. (e) Unless otherwise agreed to by the parties, each party agrees that it shall keep all Confidential Information confidential for a period which shall expire five (5) years after the termination date of this Agreement. Section 22.3 Applicable Law. This Agreement will be governed by the laws of the State of Texas. Section 22.4 Notice. Except as otherwise specifically provided in this Agreement, all notices, requests, demands, invoices, directions, and other communications under this Agreement shall be in writing signed by an authorized representative of the party issuing same and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given or if delivered by facsimile transmission, or on the second day after mailing if mailed to the party to whom notice is to be given by certified or registered mail, postage prepaid, return receipt requested, and properly addressed as follows: In the case of Seller: Praxair Hydrogen Supply, Inc. 222 Pennbright Dr., Suite 300 Houston, Texas 77090-5999 Attention: Executive Director Telecopier Number: (713) 872-2111 With a Copy to: Praxair Hydrogen Supply, Inc. 703 Sixth Street South Texas City, Texas 77590 Attention: Facility Manager Telecopier Number: (409) 943-9228 In the case of Buyer: Sterling Chemicals, Inc. 1200 Smith St., Suite 1900 Houston, Texas 77002 Attention: Business Director Telecopier Number: (713) 654-9551 With a Copy to: Sterling Chemicals, Inc. 1200 Smith St., Suite 1900 Houston, Texas 77002 Attention: General Counsel Telecopier Number: (713) 654-9551 Either party may change its address for purposes of this Section by giving the other party notice of its new address in the manner set forth above. Section 22.5 Waiver. No consent or waiver, express or implied, by a party, to or of any breach or default by the other party in the performance of its obligations hereunder, shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other party of the same or any other obligation of such party hereunder. Failure on the part of any party to complain of any act or failure to act of the other party or to declare the other party in breach or default irrespective of how long such failure, breach or default continues, shall not constitute a waiver by such party of its right hereunder. Section 22.6 Headings. The headings and titles contained in this Agreement are for convenience of reference only, and shall not affect the meaning or interpretation of any provision hereof. Section 22.7 Entire Agreement. This Agreement, the Ground Lease and the Utilities Agreement constitute the entire agreement between the parties hereto regarding the subject matter thereof and supersede any and all prior agreements regarding the same subject matter except as expressly provided herein or therein. This Agreement, the Ground Lease and the Utilities Agreement are part of a single, integrated transaction, and the provisions thereof shall be construed together in a consistent manner and any termination of the Ground Lease or the Utilities Agreement shall effect a termination of this Agreement. Other than the provisions of the Ground Lease, the Utilities Agreement and the Guaranty, there are no other promises, representations or warranties affecting this Agreement, and any other or different terms and conditions appearing in any purchase orders issued or accepted hereunder shall be deemed null and void. Section 22.8 Relationship between Parties. The relationship between Buyer and Seller created pursuant to this Agreement is an independent contractor relationship and, subject to the terms and conditions of this Agreement, Seller shall exercise the sole and exclusive right to control the ways, means and manner of providing the Products to Buyer under this Agreement. Seller shall be solely responsible for the selection, training, supervision and compensation of the personnel used by Seller to provide Products to Buyer. This Agreement shall not be construed as creating a partnership, joint venture, association or other entity or business organization, or as creating a principal-agent or other fiduciary relationship between Seller and Buyer. Section 22.9 Severability. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision, to other persons or circumstances shall not be affected thereby and shall be enforceable to the greatest extent permitted by law. Section 22.10 Amendment. This Agreement may be amended only by written amendment executed by both parties. Section 22.11 Pronouns and Plurals. Whenever the context may require any pronoun used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. Section 22.12 Section Numbers. Unless otherwise indicated, references to section numbers are to sections of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written. PRAXAIR HYDROGEN SUPPLY, INC. By: /s/ J. E. Gonzalez Name: J. E. Gonzalez Title: President STERLING CHEMICALS, INC. By: /s/ Robert W. Roten Name: Robert W. Roten Title: Chief Operating Officer EXHIBIT A FEE CALCULATIONS (***) EXHIBIT B TEXAS CITY SYNGAS PLANT STERLING CHEMICALS SITE (***) EXHIBIT C SPECIFICATIONS FOR CARBON MONOXIDE, BLEND GAS, HYDROGEN AND STEAM (***) EXHIBIT D NATURAL GAS DESIGN PROPERTIES (***) -----END PRIVACY-ENHANCED MESSAGE-----