Preview of our top selling Exclusive Supply Agreement
Sterling Chemicals - Agreement For The Exclusive Supply of Styrene
Exhibit 10.20
*** indicates confidential portions have been redacted and submitted separately pursuant to confidentiality request with the Commission
AGREEMENT FOR THE EXCLUSIVE SUPPLY OF STYRENE
TEXAS CITY - TEXAS
Dated September 17, 2007
By and between
STERLING CHEMICALS, INC.
and
NOVA CHEMICALS INC.
This Agreement for the Exclusive Supply of Styrene dated September 17, 2007 is made and entered into between Sterling Chemicals, Inc., a Delaware corporation (" Producer" ) , and NOVA Chemicals Inc., a Delaware corporation (" Customer" ) .
In consideration of the mutual undertakings herein contained, the Parties hereto agree as follows:
1. Definitions and Interpretation
1.1 Definitions
In this Agreement, except to the extent that the context requires otherwise:
" AAA" means the American Arbitration Association.
" AAA Rules" has the meaning set forth in Clause 21.2.1.
" Acquisition Transaction" has the meaning set forth in Clause 19.1 (Styrene Monomer Business) .
" Affected Party" has the meaning set forth in Clause 8.1 (Event of Force Majeure) .
" Affiliate" means, in relation to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such specified Person. Reference to " control" of a Person by another means that the other (whether alone or acting in concert with others, whether directly or indirectly and whether by the ownership of share capital, the possession of voting power, contract or otherwise) has the power to appoint and/or remove all or the majority of the members of the board of directors or other governing body of that Person or of any other person which controls that Person or otherwise controls or has the power to control the affairs and policies of that Person or of any other Person which controls that Person (and " controlled" and " controlling" shall be construed accordingly).
" Agreement" means this Agreement for the Exclusive Supply of Styrene and its Schedules.
" Applicable Law" means any applicable Law, permit, approval, concession, grant, franchise, license, agreement or requirement of any Governmental Entity having jurisdiction over the matter or matters in question, and in each case existing to the extent having force of law at the time in question.
" Assigned Contracts" has the meaning set forth in Clause 17 (Other Matters) .
" Authorization" means an authorization, consent, approval, resolution, certificate, license, exemption, permit, filing or registration required under Applicable Law.
" Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in New York.
" Claims" means any and all rights, claims, counterclaims, complaints, demands and causes of action of any nature or kind, whatsoever and howsoever arising, whether known or unknown, whether in law or in equity or pursuant to statute, and whether in any court of law or equity or before any arbitrator or other body, board or tribunal.
" Confidential Information" means:
(i) information regarding the terms and conditions of this Agreement; and
(ii) all communications between the Parties or their respective Affiliates and all information and other material supplied to, or received by, either Party or its Affiliates from the other Party or its Affiliates in connection with this Agreement (or in connection with Product provided pursuant to this Agreement) which is either marked " confidential" or by its nature is intended to be for the knowledge of the recipient and/or any other Person within Clause 15.2 (Permitted Disclosure) alone.
" Consequential Loss" means any indirect, consequential, incidental or special damage or loss, loss of production, loss of profit, loss of margin, loss of revenue, loss of contract, loss of goodwill, or punitive damages; provided , however , that in no event shall all or any portion of the non-refundable capacity reservation charge be deemed or considered a Consequential Loss.
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" Contract" means all agreements, arrangements, contracts, purchase orders or other commitments in any way relating to the sale, distribution or marketing of styrene from the Texas City Styrene Plant, whether written or oral, including, without limitation, customer contracts, distributor contracts, sales orders and storage contracts.
" Customer" has the meaning set forth in the preamble hereto.
" Customer Indemnified Person" has the meaning set forth in Clause 13.1 (Indemnification of Customer) .
" Defaulting Party" has the meaning set forth in Clause 10.1 (Losses) .
" Default Rate" means, with respect to any day, the rate per annum which is the lesser of (i) two percent (2%) above the rate of interest in effect for such day as most recently publicly announced or established by The Chase Manhattan Bank (National Association) in New York, New York as its " prime rate" and (ii) the maximum non-usurious rate of interest which may charged under laws applicable to the party to whom such interest is payable.
" Dispute" means any dispute or difference of whatsoever nature arising under, out of, in connection with or in relation (in any manner whatsoever) to this Agreement, including (i) any dispute or difference concerning the initial or continuing existence of this Agreement or any provision thereof or as to whether this Agreement or any provision thereof is invalid, illegal or unenforceable (whether initially or otherwise) or (ii) any dispute or claim which is ancillary or connected, in each case in any manner whatsoever, to the foregoing.
" Dispute Notice" has the meaning set forth in Clause 21.1 (Amicable Settlement) .
" Effective Date" has the meaning set forth in Clause 11 (Conditions)
" EFT" has the meaning set forth in Clause 7.1.1 (Invoicing) .
" Environmental Damages" means all demands, claims, suits, proceedings, actions, or causes of action, assessments, losses, damages (including but not limited to, personal injury, injury to property and natural resource damages) liabilities (including, without limitation, strict liability), judgments, remedies, settlement amounts, deficiencies, fines and penalties, costs and expenses, including interest, penalties and reasonable attorney, accountant, consultant, contractor, laboratory and expert fees, disbursements and expenses, oversight, response, investigative and remediation costs (and reimbursement to Governmental Entities for same), costs and expenses of investigation or defense of any claim, and any moneys paid in settlement thereof, past, present and future, relating to or arising from or in connection with (i) Environmental Laws applicable to, arising with respect to, or otherwise relating to, the Texas City Styrene Plant or any other adjacent or nearby property owned by Producer or any of Producer' s Affiliates; (ii) the presence or alleged presence on the Texas City Styrene Plant or any other adjacent or nearby property owned by Producer or any of Producer' s Affiliates, or the migration or alleged migration to or from any such properties, of Hazardous Materials, regardless of when such Hazardous Materials came to be located on such properties and regardless of who caused them to be present thereon; (iii) claims (including, without limitation, bodily injury and property damage claims) relating to toxic torts or exposure to Hazardous Materials except to the extent that such toxic tort or exposure pertains to any Product at any time after title or risk of loss to such Product has transferred to Customer; (iv) any and all violations or alleged violations of Environmental Laws, whether occurring before or after the Effective Date, except to the extent that such violation or alleged violation pertains to any Product at any time after title or risk of loss to such Product has transferred to Customer; and (v) liability to any third party or Governmental Entity to indemnify or provide contribution to such third party or Governmental Entity; except to the extent that such liability pertains to any Product at any time after title or risk of loss to such Product has transferred to Customer. For purposes of this definition of Environmental Damages only, the term " Product" means (a) Product and (b) styrene monomer that does not meet the specifications set forth in Schedule A attached hereto to the extent, but only to the extent, that such failure to meet the specifications set forth in Schedule A attached hereto does not cause or exacerbate the relevant claim, violation or alleged violation of Environmental Laws or liability to any third party or Governmental Entity to indemnify or provide contribution to such third party or Governmental Entity.
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" Environmental Law" means any Law relating to pollution, the protection of human health, safety or the environment, or the storage, management, treatment, disposal, release, or threat of a release of Hazardous Materials in the environment, process and product safety or occupational health and safety in effect as of the Effective Date.
" Events of Force Majeure" has the meaning set forth in Clause 8.1 (Events of Force Majeure) .
" Force Majeure" has the meaning set forth in Clause 8.2 (Force Majeure) .
" FTC" has the meaning set forth in Clause 11 (Conditions) .
" Governmental Entity" means any federal, state, county, regional, municipal or local government, any subdivision, court, administrative agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority having jurisdiction over either of the Parties, the Texas City Styrene Plant, their neighbors or the subject matter of this Agreement.
" Hazardous Materials" means (i) all toxic, explosive, corrosive, flammable, infectious, carcinogenic, mutagenic, radioactive or other hazardous substances or materials, wastes, pollutants and contaminants including without limitation, petroleum, petroleum distillates, derivatives and products, asbestos and asbestos containing materials, radioactive materials, and all other substances of any nature regulated in any manner pursuant to any Environmental Law; (ii) any substance or material which is or becomes defined as a " hazardous waste," " hazardous substance," " pollutant," or " contaminant" under any Environmental Laws, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. a7 9601 et seq .) and the Resource Conservation and Recovery Act (42 U.S.C. a7 6901 et seq .) and any state or local counterpart thereof; (iii) any substance or material which becomes regulated by any Governmental Entity; (iv) without limitation, any substance or material the presence or concentration of which on the Texas City Styrene Plant or any other adjacent or nearby property owned by Producer or any of Producer' s Affiliates causes or threatens to cause a nuisance on such site or to adjacent properties, or poses or threatens to pose a hazard to the health or safety of persons on, about or adjacent to the applicable site; (v) any substance or material the presence or concentration of which on adjacent properties could constitute a trespass; (vi) without limitation, any substance or material which contains polychlorinated bipheynols, asbestos, lead-based paint, radon gas, or urea formaldehyde; and (vii) any substance, material or refuse, whether solid, liquid, semisolid, or contained gaseous material, that has been discarded, abandoned or otherwise resides, remains or accumulates on or in the Texas City Styrene Plant or any other adjacent or nearby property owned by Producer or any of Producer' s Affiliates.
" HSR Act" means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all applicable regulations promulgated by any Governmental Entity related thereto.
" Indemnified Party" has the meaning set forth in Clause 13.3 (Indemnification Procedures) .
" Indemnifying Party" has the meaning set forth in Clause 13.3 (Indemnification Procedures) .
" Insolvency Event" means, in relation to any Person, that such Person:
(i) files a petition commencing a voluntary case under any chapter of the federal bankruptcy laws with respect to such Person of any substantial part of its property; or
(ii) files a petition or answer or consent seeking reorganization, arrangement, adjustment or composition under any similar applicable federal law, or consents to the filing of any such petition, answer or consent with respect to such Person of any substantial part of its property; or
(iii) appoints or consents to the appointment of a custodian, receiver, liquidator, trustee, assignee or other similar official in bankruptcy or insolvency with respect to such Person of any substantial part of its property; or
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(iv) has an order for relief against such Person entered by a court having jurisdiction in the premises under any chapter of the federal bankruptcy laws, and such order remains in force undischarged or unstayed for sixty (60) days; or
(v) has a decree or order of a court having jurisdiction in the premises for the appointment of a custodian, receiver, liquidator, trustee, assignee or other similar official in bankruptcy or insolvency of such Person or any substantial part of its property, or for the winding up or liquidation of its affairs, has been entered, and such decree or order has remained in force undischarged or unstayed for a period of sixty (60) days; or
(vi) has admitted in writing its inability to pay its debts generally as they become due or has made an assignment for the benefit of its creditors; or
(vii) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in (i) to (vi) inclusive.
For the avoidance of doubt, an Insolvency Event shall not occur in relation to a Person as a result of any proceeding, process or other administrative action taken which is vexatious, frivolous or an abuse of the process of the court.
" Inventory" means all inventories of styrene monomer, ethylene, benzene and ethylbenzene, and other raw materials and by-products, owned by Producer as of the Effective Date, including any ethylene, benzene or ethylbenzene committed to be purchased by Producer within 30 days after the Effective Date and any styrene monomer produced after the Effective Date pursuant to Section 19.1.
" Invoice" has the meaning set forth in Clause 7.1.1 (Invoicing) .
" Joint Venture" means that certain contemplated new North America-based joint venture between Customer and INEOS Group Limited.
" Law" means any federal, state, local, municipal, foreign, international or multinational statute, law, constitution, judgment, statutory case law, decree, order, regulation, ordinance, restriction or rule of any Governmental Entity.
" Loss" means any loss, liability, obligation, damage or cost (including reasonable legal costs), charge, penalty or expense, but excluding any Consequential Losses, and Losses shall be construed accordingly.
" Marine Provisions" means the standards, provisions and procedures of Producer for the handling of marine shipments at its facilities in Texas City, Texas, as such standards, provisions and procedures may be revised from time to time.
" Month" means the period beginning at 00:00 hours (Central Standard Time) on the first day in any calendar month and ending at 24:00 hours (Central Standard Time) on the last day of the same calendar month.
" Newly Imposed Tax" has the meaning set forth in Clause 7.5 (Tax) .
" Non-Affected Party" has the meaning set forth in Clause 8.2 (Notification) .
" Non-Defaulting Party" has the meaning set forth in Clause 10.1 (Losses) .
" Party" means a party to this Agreement and includes its successors in title, permitted assigns and permitted transferees.
" Person" means any individual, limited liability company, firm, corporation, unincorporated association, government, state or agency or two or more of the foregoing, or any association, trust, or partnership (general or limited) or joint venture (whether or not having a separate legal personality) or two or more of the foregoing.
" Point of Delivery" has the meaning set forth in Clause 5.2 (Title and Transfer; Point of Delivery) .
" Price" means the price charged by Producer to Customer in an Invoice under Clause 7.1 (Invoicing) .
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" Proceedings" means any and all actions, suits, proceedings, and hearings of any nature and kind in any court of law or equity or before any arbitrator or other body, board or tribunal.
" Producer" has the meaning set forth in the preamble hereto.
" Product" means styrene monomer meeting the specifications as set forth in Schedule A attached hereto.
" Release" or " Releases" means any placing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, leaching or disposal (including the abandoning or discarding of barrels, containers and other closed receptacles containing Hazardous Materials) of a substance into the environment.
" Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of them).
" Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under this Agreement.
" Term" has the meaning set forth in Clause 2.
" Termination Event" has the meaning set forth in Clause 12.1 (Termination Events) .
" Texas City Styrene Plant" means that certain styrene monomer production plant owned and operated by Producer located at 201 Bay Street South, Texas City, Texas, 77590. The term " Texas City Styrene Plant" is intended to mean solely that portion of the larger plant site in Texas City, Texas owned by Producer or any of Producer' s Affiliates that is devoted exclusively to the production of styrene monomer, and does not encompass other facilities and equipment located on such larger parcel.
" Third Party Claim" has the meaning set forth in Clause 13.3 (Indemnification Procedures) .
1.2 Interpretation
In this Agreement, except to the extent that the context requires otherwise:
1.2.1 references in the singular shall include references in the plural and vice versa; words denoting any gender shall include any other gender and words denoting natural persons shall include any other Persons;
1.2.2 headings shall be ignored in construing this Agreement;
1.2.3 in computing any period of time under this Agreement, the day of the act, event or default from which such period begins to run shall be included;
1.2.4 all notices to be given by any Party and all other communications and documentation which are in any way relevant to this Agreement or the performance, interpretation or termination of this Agreement, including any dispute resolution proceedings, shall be in the English language;
1.2.5 all references to monetary amounts herein shall be references to the lawful currency of the United States of America;
1.2.6 the words " include" and " including" are to be construed without limitation; and
1.2.7 a reference to an " official requirement" includes any rule, directive, request or guideline (whether or not having the force of law, but not being a law) of any Governmental Entity.
2. Term
This Agreement shall be in effect until December 31, 2017 (the " Term" ), unless earlier terminated in accordance with the provisions hereof. This Agreement will be automatically extended in calendar year increments thereafter, unless earlier terminated in accordance with the provisions hereof or terminated in writing by either Party upon 36 months' prior written notice.
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3. Supply of Product
3.1 Exclusivity
Except as otherwise provided in Section 19.1, Customer shall have the exclusive right to the entire production capacity of Producer' s Texas City Styrene Plant, and Producer shall be prohibited from selling styrene to any other customers (including its own Affiliates).
3.2 Quantity
Maximum quantity (the " Maximum Quantity" ) shall be the entire effective production capacity of the Producer' s Texas City Styrene Plant. The quantities of Product to be purchased and sold under this Agreement will be communicated to Producer by Customer in accordance with Clause 4 (Nomination; Shut Down or Decommission) . There shall be no minimum quantity that Customer is obligated to take pursuant to this Agreement and this Agreement shall not be interpreted as imposing " take or pay" obligations on Customer. Except as otherwise provided in Section 19.1, (a) if Customer does not take the Maximum Quantity, Producer will not sell any remaining output from the Texas City Styrene Plant to any other party, and (b) Producer agrees that it will not manufacture any styrene in excess of those quantities nominated by Customer hereunder pursuant to Clause 4.2 (Nomination) , plus or minus 5%, any excess to be held exclusively for future nominations by Customer.
3.3 Standard of Performance
In supplying and receiving the Product, respectively each of the Producer and the Customer shall act in accordance with the terms of this Agreement.
4. Nomination; Shut Down or Decommission
4.1 Outages
4.1.1 Producer hereby notifies Customer that the only planned outage at its Texas City Styrene Plant during calendar years 2007 and 2008 is a thirty-one (31) day major maintenance turn-around currently scheduled for October of 2008.
4.1.2 Beginning in calendar year 2009, Producer shall, on or before June 30 of the immediately preceding year, provide Customer, for planning purposes only, written notice of any planned outages at its facility which will affect the Producer' s ability to deliver Product to Customer during such calendar year.
4.1.3 Producer shall provide at least six (6) months' prior written notice of each scheduled turnaround of its Texas City Styrene Plant, to the extent such turnaround effects the ability of Producer to deliver Product to Customer. Producer shall provide prompt written notice to Customer of the completion of such turnaround and any changes to the commencement or duration of any such turnaround.
4.2 Nomination
4.2.1 On or before five days after the Effective Date, Customer shall provide to Producer, for planning purposes only, written notice of its estimated monthly take of Product in each month remaining in 2007 and for each month in 2008. At least ninety (90) days prior to the commencement of each calendar year thereafter, Customer shall provide to Producer, for planning purposes only, written notice of its estimated monthly take of Product in each month of such calendar year.
4.2.2 If any notice from Customer under Clause 4.2.1 indicates that Customer will take no Product for any calendar year (for this purpose the remaining days in 2007 after the Effective Date until the beginning of the next calendar year being deemed a calendar year), Producer may at its sole option and its sole cost permanently shut down and decommission the Texas City Styrene Plant, by providing Customer no less than five (5) days' prior written notice of same. For greater certainty, (i) if Customer nominates no Product for any calendar year, it shall have no financial obligation to Producer for that calendar year, and (ii) if Producer elects to permanently shut down and decommission the Texas City Styrene Plant, Customer shall not be entitled to any refund of all or any portion of the non-refundable capacity reservation charge paid by Producer pursuant to Clause 6.1.
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4.2.3 On or before five days after the Effective Date, Customer shall provide Producer with written notice of its Product requirement for the remaining months in that calendar quarter and for the upcoming calendar quarter. At least forty-five (45) days prior to the commencement of each calendar quarter thereafter, Customer shall provide Producer with written notice of its Product requirement for the upcoming calendar quarter (which shall not exceed 24% of effective annual capacity at that time, after taking into account any planned outages and re-commissioning time if Customer nominated no Product in the immediately preceding quarter). The nomination shall, subject to Force Majeure, be considered firm and binding. Producer shall have no obligation to deliver in excess of the nominated quantity for any calendar quarter. For greater clarity, it is understood that Customer may nominate any quantity in a calendar quarter in its sole discretion, including no quantity at all but not, in any event, exceeding 24% of the effective annual capacity of Producer' s Texas City Styrene Plant at that time. There shall be no requirement that Customer be obligated to take any minimum quantity of Product from the Producer' s Texas City Styrene Plant but, to the extent that Customer elects to nominate any quantity greater than zero (0), in its sole discretion, such quantity must be at least the minimum quantity needed to operate the Texas City Styrene Plant from a mechanical standpoint.
4.2.4 If any notice from Customer under Clause 4.2.3 indicates that Customer will take no Product for any calendar quarter (for this purpose the remaining days after the Effective Date until the beginning of the next calendar quarter being deemed a calendar quarter), Producer may at its sole option and its sole cost permanently shut down and decommission the Texas City Styrene Plant.
4.2.5 Any determination by Producer to permanently shut down the Texas City Styrene Plant pursuant to Clause 4.2.2 or Clause 4.2.4 shall result in the termination of this Agreement, such termination to be effective upon the receipt by Customer of written notice from Producer of its election to permanently shutdown the Texas City Styrene Plant and the cessation of production at the Texas City Styrene Plant.
5. Delivery, measurement and testing
5.1 Delivery Rate
Producer shall endeavor to deliver, and Customer shall endeavor to take, Product in accordance with a delivery schedule upon which the Parties shall mutually agree within five (5) Business Days of the binding notification referred to in Clause 4.2.3 of this Agreement.
5.2 Title and Title Transfer; Point of Delivery
All Product delivered under this Agreement shall be delivered F.O.B. (Incoterms 2000) Producer' s Texas City Styrene Plant via tank car, tank truck, ship, barge or other inland water or marine vessel. All shipments of Product by ship, barge or other inland water or marine vessel shall be made in conformance with the Marine Provisions, it being understood that to the extent the Marine Provisions conflict with any provisions of this Agreement, the provisions of this Agreement shall control. Unless Producer otherwise consents in writing, Customer shall supply all tank cars, tank trucks, ships, barges and other inland water and marine vessels required for all shipments of Product purchased and sold under this Agreement. The point of delivery (the " Point of Delivery" ) of any Product purchased and sold under this Agreement shall be the point of transfer of custody of such Product from Producer to Customer and shall be (a) for deliveries by tank car or tank truck, the point at which such tank car or tank truck is no longer on premises owned by Producer or any of Producer' s Affiliates by crossing the perimeter boundary thereof, and (b) for deliveries by ship, barge or other inland water or marine vessel, the first inlet flange of the ship, barge or other inland water or marine vessel onto which such Product is loaded at Producer' s Texas City Styrene Plant. Title and risk of loss shall pass to Customer at the Point of Delivery, irrespective of whether Customer or Producer owns or has provided any tank car, tank truck, ship, barge or other inland water or marine vessel onto which such Product is loaded. As between Producer and Customer, (a) Producer shall be in control and possession of all Product purchased and sold under this Agreement and responsible for and shall indemnify and hold harmless Customer for any damage or injury caused thereby or thereto until risk of loss with respect thereto has passed to Customer, and (b) Customer shall be in control and possession of all Product purchased and sold under this Agreement and responsible for any damage or injury caused thereby or thereto after risk of loss with respect thereto has passed to Customer.
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5.3 Measurement, Sampling and Analysis
5.3.1 Confirmatory tests of the quantity of Product shipments shall be performed prior to delivery to Customer by an independent surveyor mutually acceptable to the Parties. All costs and expenses of such surveyor shall be paid by Customer. Confirmatory tests of the quality of Product shipments shall be performed prior to delivery to Customer by Producer' s PPQ lab. Quality of each shipment of Product shall be tested by taking representative samples (a) in the case of deliveries by tank car or tank truck, from Producer' s loading tanks prior to Producer loading the relevant tank car or tank truck, or (b) in the case of deliveries by ship, barge or other inland water or marine vessel, from the intake flange of the ship, barge or other inland water or marine vessel (and from the tanks thereof where appropriate) onto which such Product is loaded. Producer shall retain such samples for not less than three (3) months and shall provide Customer with access to such samples and all records maintained by Producer with respect thereto. Quantity of each shipment of Product shall be determined (i) in the case of deliveries by tank car or tank truck, by weighing such Product on certified scales at Producer' s Texas City Styrene Plant, or (ii) in the case of deliveries by ship, barge or other inland water or marine vessel, by taking the opening and closing inventory of Producer' s properly calibrated static shore tanks before and after each shipment is lifted. All quantities determined in this manner shall be conclusive for purposes of this Agreement unless proven to be in error by more than 0.5%. Customer' s sole remedy with respect to Customer' s loss on any Product delivered under this Agreement which does not conform with the Specifications shall be to require Producer to either (at Producer' s option) (i) reprocess such Product or (ii) refund the purchase price paid by Customer for the non-conforming Product.
6. Non-Refundable Capacity Reservation Charge; Product Price
6.1 Capacity Reservation Charge
As consideration for this Agreement, including but not limited to the reservation of the full production capacity of the Texas City Styrene Plant for the entire duration of the Term and the terms of Clause 19 hereof (Covenant not to Compete) , Customer shall pay Producer a non-refundable capacity reservation charge equal to $58 million. The capacity reservation charge shall be paid by Customer to Producer within ten (10) Business Days after the Effective Date. All amounts due shall be payable by wire transfer of immediately available U.S. funds.
6.2 Product Price
The Price for all Product to be delivered under this Agreement shall be *** For greater clarity, *** Such Price does not include any applicable Taxes that may apply to the sale of Product, all of which will be added to the applicable invoice and paid by Customer.
7. Payment and Invoicing
7.1 Invoicing
7.1.1 On or about the fifth (5th) Business Day of each Month, Producer will send Customer a consolidated invoice for all Product delivered during the preceding Month pursuant to this Agreement (the " Invoice" ). The Customer will pay for all supplied Product hereunder in U.S. dollars via electronic fund transfer (" EFT" ), such that the funds are available to Producer no later than the thirtieth (30th) day of the Month following the Month in which Producer supplied the Product, regardless of whether such thirtieth (30th) day is a Business Day or a non-Business Day, terms net cash. Notwithstanding that the Price in the Invoice may be a provisional price, pursuant to Clause 7.1.2, Customer will pay the Invoice in full.
7.1.2 If any component required to calculate the Price is not final at the time an Invoice is to be issued under Clause 7.1.1 and such component is taken from a publicly available source, Producer will use the most recently available value for that component to compute a provisional price for invoicing. When all of the pricing components have been finalized, Producer will calculate the final Price and the appropriate debit or credit due, as compared to the provisional price, and will apply such debit or credit on the next Invoice, which Invoice will include notice of such debit or credit and all related calculations.
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7.2 Payment Procedure
Unless otherwise agreed in writing by the Parties, Customer will pay each Invoice by EFT. Each entry initiated by Customer will be accompanied by Producer' s Invoice number. Any sums payable by Producer to Customer under this Agreement will also be made by EFT. Each entry initiated by Producer will be accompanied by a form of identification. Producer and Customer will, from time to time, provide the other information necessary to effect payments via EFT.
7.3 Disputed Payments
7.3.1 Customer may, in good faith, dispute and withhold any amount specified in an Invoice by providing written notice of such dispute to Producer within ten (10) Business Days of receipt of such Invoice. Any undisputed amounts shall be paid on or before the due date. Neither a failure to dispute any amount specified in an Invoice within such period nor settlement of an Invoice shall prejudice Customer' s rights to subsequently bring a claim in respect of such Invoice; provided that any such claim must be brought within two (2) years from the date of the Invoice to which the claim relates.
7.3.2 The Parties shall seek to settle the disputed amount in good faith as soon as reasonably practicable and any payment adjustment required to be made in accordance with the resolution of a Dispute shall be made within five (5) Business Days of the date of that resolution. Any amount subsequently determined to have been wrongly withheld shall incur interest under Clause 7.6 (Late Payment) from and including the date when the amount should have been paid if the Dispute had not occurred until but excluding the date payment of such amount, including accrued interest, is made in full.
7.3.3 A Dispute as to any amount payable under this Agreement shall not relieve the payor of its obligations to make any other payment required by this Agreement when due and payable.
7.4 No Deductions
All sums payable by Customer to Producer under this Agreement shall be made without any Tax Deduction or other deduction, withholding, set-off or counterclaim save only as may be required by Applicable Law or expressly provided for in this Agreement. Subject to compliance with Applicable Law, the Parties shall use commercially reasonable efforts to minimize the requirement for any such withholding.
7.5 Tax
Any Tax (other than on income or on gross receipts or measured by income or gross receipts) hereafter imposed on the manufacture, sale, delivery or use of Product to or by Customer pursuant to this Agreement (or on Producer, or required to be paid or collected by Producer, by reason of the manufacture, sale, delivery or use of such Product) (a " Newly Imposed Tax" ) shall be paid by Customer in addition to the Product Price. Customer shall be entitled to any Tax credit, refund or reduction in Tax charge that may be available to Customer with respect to the Taxes paid on delivery, manufacture, sale or use of such Product, and Producer shall cooperate with Customer if necessary to secure such credit, refund or tax reduction.
7.6 Late Payment
Any amount due and payable under this Agreement shall, if not paid when due, bear interest (after as well as before any judgment) at the Default Rate, which interest shall be payable on demand and shall accrue from day to day from and including the date such amount was due and payable until (but excluding) the date of actual payment in full of such amount and such interest.
7.7 Suspension of Supply of Product for Non-Payment
If any amount exceeding $250,000 due to Producer in respect of Product delivered by Producer to Customer is not the subject of a bona fide Dispute and is not paid when due, Producer may provide written notice referencing this Clause 7.7 (Suspension of Supply of Product for Non-Payment) to Customer that the amount is due and unpaid. If Customer has not paid the unpaid amount in full by the date falling ten (10) Business Days from the date of receipt
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of Customer' s written notice, Producer may, without prejudice to its rights under Clause 10 (Default) and Clause 12 (Termination) , immediately suspend further deliveries of Product until payment of such outstanding amount is received by Producer.
8. Force Majeure
8.1 Event of Force Majeure
If a Party fails to observe or perform any of the covenants or obligations imposed upon it by this Agreement and such failure shall have been occasioned by or in consequence of Force Majeure, such failure shall be deemed not to be a breach of such covenants or obligations, provided, however, that lack of finances or other financial cause for whatever reason shall in no event be Force Majeure. Force Majeure shall mean, among other events customarily considered force majeure, any event beyond the reasonable control of a Party for which that Party (the " Affected Party" ) has elected to declare an event of Force Majeure. Force Majeure shall include, without limitation, acts of God, the inability to obtain or curtailment of supplies of feedstock, or of electrical power, water, fuel or other utilities or services necessary to operate Producer' s or Customer' s facility, and inability to deliver or receive Product due to transportation or storage problems for which the transporter or storage operator has declared Force Majeure (all of which are referred to as " Events of Force Majeure" ).
For the avoidance of doubt a change of economic, monetary or fiscal circumstances which renders this Agreement uneconomic for either of the Parties shall ...
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