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Antiknock Marketing And Sales Agreement

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Sectors: Chemicals
Governing Law: Virginia , View Virginia State Laws
Effective Date: October 01, 1998
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ANTIKNOCK MARKETING AND SALES AGREEMENT


THIS AGREEMENT is made as of this 1st day of October 1998, by and between The Associated Octel Company Limited a corporation organized under the laws of England, acting on behalf of itself and its Affiliates (collectively, "Octel") and Ethyl Corporation, a corporation organized under the laws of the Commonwealth of Virginia, USA, acting on behalf of itself and its Affiliates (collectively, "Ethyl") and supercedes the Antiknock Marketing and Sales Agreement between the aforementioned parties dated as of September 29, 1998.


WHEREAS, governmental authorities in countries around the world have promulgated laws and regulations which have effectively banned or severely limited the amount of lead antiknock compounds which can be used in motor fuels for health, safety and environmental reasons.


WHEREAS, said governmental authorities have continued to take actions and plan to take additional measures in the future to further reduce or eliminate the amount of AK currently used in motor fuels.


WHEREAS, because these actions have accelerated the reduction of demand for AK, the product life of AK has been significantly reduced as a useful additive in motor fuel.


WHEREAS, as a result of these actions and other factors, it has and will continue to become increasingly more expensive and inefficient to market and to sell the ever decreasing amount of AK throughout the world as this product reaches the end of its life cycle.


WHEREAS, because of these factors, Octel and Ethyl believe that significant cost savings and efficiencies and health, safety and environmental benefits can be realized by entering into this Agreement to market and promote the sale and safe distribution of AK in certain areas of the world as the demand for AK continues to decline.


NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the parties agree as follows:


1. Definitions


As used in this Agreement, the following terms shall have the following
meanings:


Administrative, Logistics and Order Processing Services shall mean the
services provided by Octel as described in Paragraph 11 of this
Agreement.


Affiliates shall mean any entity controlling, controlled by or under
common control with that Party and any entity which succeeds to that
portion of the business or ownership of the assets of that Party to
which this Agreement pertains.


Agreement shall mean this Antiknock Marketing and Sales Agreement.


Agreement Activities shall mean all of the activities performed by the
Parties pursuant to the terms of this Agreement. It is specifically
agreed that manufacture of Product is not included in Agreement
Activities.


Agreement Proceeds shall mean the amount determined pursuant to
Schedule C of this Agreement.


Bulk Distribution Agreement shall mean the Agreement for Bulk
Transportation between The Associated Octel Company Limited and Ethyl
Corporation dated March 25, 1994, as amended.


Bulk Distribution Services shall mean bulk distribution services
provided by Ethyl described in Paragraph 9 of this Agreement.


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Change of Control shall mean:


(i) the acquisition by an independent third party(ies) of
more than fifty percent (50%) of the outstanding
voting stock of Octel Corp, the Associated Octel
Company Limited or Ethyl Corporation but excluding
the formation of a holding company so long as there
is no change in the ultimate control of the
applicable company listed above; or


(ii) the acquisition by an independent third party(ies) of
substantially all the AK business assets of Octel
Corp., the Associated Octel Company Limited or Ethyl
Corporation; or


(iii) the assignment to an independent third party(ies) by
either Party of substantially all of their rights or
obligations under this Agreement.


Notwithstanding the above, Change of Control shall not mean any
internal reorganization of Octel Corp., The Associated Octel Company
Limited or Ethyl Corporation and/or any of their respective Affiliates
including any spin off or split off of assets or businesses to the
shareholders of any of the aforementioned companies or the purchase of
stock, assets or businesses conducted by any of the aforementioned
companies by any person or group who owns twenty percent (20%) of the
voting stock of the company as the date of this Agreement.


Contract Year shall mean the period beginning on October 1, 1998 and
ending on December 31, 1998 and each calendar year thereafter during
the term of this Agreement and any extension thereof.


Council shall mean Strategic Council.


Effective Date shall be October 1, 1998.


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Embargoed Countries shall mean any country or countries that is
subject to sanctions imposed by the United States government pursuant
to the Trading With the Enemy Act (50 App. U.S.C.A. S.1) or The
International Emergency Economic Powers Act (50 U.S.C.A. S.1701).


Ethyl shall mean Ethyl Corporation and its Affiliates.


European Economic Area shall mean those countries that are from time to
time members of the European Economic Area.


North America shall mean the countries of Canada and the United States.


Octel shall mean The Associated Octel Company Limited and its
Affiliates.


Parties shall mean Ethyl & Octel.


Party Services shall mean all of the services performed by the Parties
pursuant to the terms of this Agreement.


Product shall mean lead alkyl antiknock compounds ("AK") made available
for sale, marketed and/or sold, directly or indirectly, to customers
for use in the Territory by Octel, Octel Corp. or its Affiliates which
shall include all of the AK compounds currently made available for sale
by Octel and any new or modified AK products made available for sale,
marketed and/or sold, directly or indirectly, by Octel, Octel Corp. or
its Affiliates during the term of this Agreement or any extensions
thereof.


Service Agreement shall mean the Service Agreement set forth in
Schedule D of this Agreement.


Sludge Services Agreement shall mean the Services Agreement between The
Associated Octel Company Limited and Ethyl Corporation dated June 28,
1995, as amended.


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Supply Contract shall mean the Supply of Lead Antiknock Compounds
Agreement between The Associated Octel Company Limited and Ethyl dated
December 22, 1993, as subsequently amended by the Supply of Lead
Antiknock Compounds Agreement for the U.S. dated as of January 1, 1998,
and the letter agreement between Ethyl Corporation and The Associated
Octel Company Limited dated December 22, 1997.


Technical Support, Professional Services and Residue Processing and
Disposal Services shall mean the services provided by the Parties as
described in Paragraph 12 of this Agreement.


Territory shall mean all of the countries and regions of the world,
other than, and specifically excluding North America, the European
Economic Area and Embargoed Countries.


United States shall mean the fifty states of the United States of
America, the District of Columbia and all possessions and territories
of the United States including Puerto Rico and the U.S. Virgin Islands.


Wholesale Price shall mean . The Parties acknowledge that
the price formula was negotiated at arms length and
continues to represent the wholesale fair market value of the Product.


Working Capital shall mean the working capital as determined in
accordance with Schedule G.


2. Purpose of the Agreement


The purpose of this Agreement is to establish a marketing
arrangement for sales of Product by the Parties to customers in the
Territory. Octel and Ethyl each agree, and shall cause each of their
Affiliates to agree, to exclusively market and sell Product to
customers for use in the Territory pursuant to the terms of this


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Agreement. To support this marketing arrangement, both Ethyl and Octel
will provide various goods and services to the other as more
specifically set forth in this Agreement and the Service Agreement. The
rights conferred by this Agreement are strictly contractual in nature,
it being expressly understood and agreed that neither Party shall by
reason of this Agreement be deemed to have entered a partnership or to
have acquired directly or indirectly any stock, share capital, equity
or other interest in the other Party. It is further understood and
agreed that the Agreement Activities are limited strictly and
exclusively to the Territory and shall not extend beyond the Territory.
Unless earlier terminated pursuant to this Agreement, this arrangement
shall continue so long as sales of Product in the Territory remain
economically feasible. Notwithstanding the above, should existing
supply contracts with customers for delivery of Product in the
Territory prohibit or restrict the ability of either of the Parties to
perform the obligations contained herein, each Party agrees to meet the
terms of such contracts and perform such contractual obligations until
said contracts are terminated or expire. The proceeds generated from
the sale of Product under these contracts resulting from deliveries
made to customers in the Territory on or after the Effective Date of
this Agreement shall be calculated and accounted for using the same
basis as set forth in Schedule C and shall be included in determining
Agreement Proceeds pursuant to Schedule C of this Agreement and the
deliveries of Product in the Territory shall be treated as if made
pursuant to the terms of this Agreement.


3. Territory


This Agreement and its terms shall only apply to activities within the Territory. Neither Party shall have any rights, responsibilities or obligations to the other Party under this Agreement for activities relating to the manufacture, distribution, marketing and sale of AK compounds to:
(i) customers outside the Territory;
(ii) customers inside the Territory prior to the Effective Date of this
Agreement.


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4. Operations


Each party shall independently provide its Party Services and be solely responsible for the manner in which they are carried out.


5. The Strategic Council


The Party Services will be overseen by a Strategic Council composed of six members. Three members shall be appointed at the sole discretion of each Party. The actions of the Council shall be governed as provided in Schedule A of this Agreement.


6. Party Services


Party Services provided by each Party hereunder shall be directed by a Manager who will be subject to oversight by the Strategic Council. The initial Manager shall be Errol Martin. Subsequent Managers shall be selected by Octel. Octel will consult with the Strategic Council about the selection of subsequent Managers but shall retain the ultimate right to make such selection. The Manager and the organization reporting to this position as initially set forth in Schedule B shall be responsible for directing the performance of Party Services. The staff working under the direction of the Manager shall be initially organized according to the function chart set forth in Schedule B. The employees dedicated to providing services under this paragraph of the Agreement shall remain employees of the respective Parties. The Parties shall be reimbursed in accordance with the Service Agreement for the cost associated with the compensation of such employees, including salaries, benefits, costs, expenses and, if appropriate, recruitment and severance payments for new employees specifically hired after the Effective Date to fill the vacant positions set forth in Schedule B. In addition to providing services through the employees set forth in Schedule B, the Parties shall provide upon request from the Manager and approval by the Strategic Council, consulting and other services in support of this Agreement. Octel shall also provide office facilities in the UK.


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7. Product


Except as otherwise provided herein or approved by the Council, all Product marketed pursuant to this Agreement shall be provided by Octel, which Product shall be of merchantable quality and meet the Product specifications set forth in the Supply Contract. Other than inventory referred to in Paragraph 8, Octel shall supply all of the Product requirements for sale to customers for use in the Territory during the term of or any extension of the Agreement. The Product cost shall be the applicable Wholesale Price as of the date of timely invoice to customers.


8. Ethyl Product Inventory


Ethyl will make available for purposes of conducting marketing activities under this Agreement of Product inventory. Ethyl warrants that such Product inventory is of merchantable quality and meets the Product specifications set forth in the Supply Contract. The quantities, grades and locations of such Product inventories are described in Schedule F to this Agreement. The Parties agree that the will be used to supply customers under this Marketing Agreement within after the Effective Date. It is agreed that title to the Ethyl inventory and the risk of loss will remain with Ethyl until delivery to customers in the Territory. The cost to Octel shall be the applicable Wholesale Price as of the invoice date.


9. Distribution Services


Ethyl and Octel shall jointly review the costs of distribution by bulk and non bulk with the objective of minimizing overall distribution costs within the Territory, and shall cooperate with each other to reduce the costs of bulk and non-bulk distribution (including maintenance, decontamination and disposal of distribution equipment).


a. Bulk Distribution. Octel and Ethyl agree that the Bulk
Distribution Services required to deliver Product to customers
in the Territory shall be provided under the Agreement for


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Bulk Transportation for as long as such bulk distribution
services are utilized. Except as otherwise provided in the
aforementioned agreement, all equipment used to provide these
services shall remain the property of Ethyl and Ethyl shall be
responsible for properly maintaining such equipment as well as
decontaminating and disposing of such equipment as required by
law when no longer suitable for use.


b. Non Bulk Distribution Services. Octel and Ethyl agree that
the Non Bulk Distribution Services required to deliver
Product to customers in the Territory shall be provided on
terms set forth in the Service Agreement. All equipment and
facilities used to provide these services shall remain the
property of the Party owning the equipment. Each Party shall
be responsible for decontaminating and disposing of such
equipment as required by law when no longer suitable for
use, except where such equipment is purchased or leased
after the Effective Date for exclusive use in the Territory,
in which case any required decontamination and disposal
thereof shall be provided by Octel under Schedule A, Section
I, Part 2 to the Service Agreement provided such services
are cost competitive with other decontamination services
available at that time and meet the environmental and
responsible care standards of both Parties. All equipment
shall be in good operating condition, fit for the purposes
intended and duly certified. Maintenance services for non
bulk distribution equipment and acquisition or lease of new
equipment for such use shall be pursuant to Schedules A and
B to the Service Agreement. Ethyl shall maintain the
terminals at Houston, Dordrecht and Singapore for as long as
the Ethyl Product Inventory is stored in such terminals and
during such period shall provide terminaling services at
these locations to Octel in support of Product sales upon
the terms and compensation set forth in the Service
Agreement the amount of such compensation to be pre-notified
upon request by Octel. Thereafter, Ethyl shall provide Octel
with the option of purchasing of terminaling services at
such locations upon the terms and compensation set forth in
the Service Agreement, the amount of such compensation to be
pre-notified upon request by Octel, and if Octel declines
such services at any location, then Ethyl shall have the
option of closing the said terminal. Notwithstanding the


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above, once the Ethyl Inventory is removed from an Ethyl
storage location, upon ninety (90) days prior written notice
to Octel Ethyl may discontinue providing terminaling
services to Octel at that location.


10. Marketing and Sales Services


All marketing and sales to customers in the Territory pursuant to this Agreement shall be by and in the name of Octel. Except as otherwise provided in this Agreement, all orders shall be placed with Octel and Octel shall collect all proceeds from such sales.


11. Administrative, Logistics and Order Processing Services


Octel and Ethyl agree that the Administrative, Logistics and Order Processing Services required to market and sell Product pursuant to this Agreement shall be provided by Octel on terms set forth in the Service Agreement.


12. Technical Support, Professional Services and Residue Processing and
Disposal Services


Technical support, professional services and residue processing and disposal services required to support the activities under this Agreement shall be provided by Octel and Ethyl utilizing where appropriate Octel and Ethyl personnel on terms set forth in the Service Agreement. The Parties will investigate alternative arrangements to optimize the cost-effectiveness of residue processing requirements consistent with environmental acceptability. Octel shall be responsible for providing legal and accounting services.


13. Agreement Proceeds Calculation


14. Payments


The Parties agree that cash distributions relating to Party Services shall be made within 15 days following the end of the month to which they relate and shall be calculated as provided in Schedule G.


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Ethyl agrees to submit itself to UK tax jurisdiction and pay applicable UK tax attributable to funds received pursuant to this Agreement as reportable earnings of its UK subsidiary. Ethyl will furnish Octel with written confirmation when such return is filed and payments are made. Ethyl shall also provide Octel with not less than ninety (90) days advance notice of any actions or circumstances which may have the effect of removing Ethyl from UK tax jurisdiction or which may result in an obligation on behalf of Octel to withhold taxes on behalf of Ethyl.


Octel and Ethyl believe that under current UK law Octel is not required to withhold taxes from any amounts payable to Ethyl under this Agreement and accordingly, that all such payments should be made gross of tax. However, if in the future Octel should reasonably determine that tax withholding on amounts to be paid to Ethyl is required, then Octel may, after advising Ethyl of the basis for its determination, effect withholding as appropriate. If, based on Octel's conclusion that withholding is not legally required, Octel makes payments to Ethyl without withholding taxes and it is later determined that withholding was required, Ethyl shall indemnify Octel for any liability Octel suffers from having failed to withhold such taxes.


Ethyl shall have the right, in good faith, by appropriate proceedings to contest in Octel's name any withholding taxes which Octel has reasonably determined are required by law to be made. Octel agrees to cooperate fully with Ethyl in any way Ethyl may reasonably request in connection with such contest.


Any contest conducted by Ethyl shall be conducted at Ethyl's expense and in the event of any penalties, interest or late charge with respect to taxes as a result of such taxes become payable, Ethyl shall reimburse Octel for the same.


15. Audit and Investigation Rights


Each Party providing services and/or providing Product pursuant to this Agreement shall prepare and maintain the necessary books and accounting records


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as required by good and prudent business practice and generally accepted accounting principles. Such records shall accurately reflect the cost of the services and Product provided by the Party. Octel shall cause an annual audit of the financial reports under this Agreement to be conducted and the cost of such audit shall be covered under the Service Agreement.


In addition, each Party shall have the right to have an independent auditor conduct a special examination of, or perform an agreed upon procedures review ("Audit") in connection with, such records to determine if such records accurately reflect the financial results of the activities conducted pursuant to this Agreement (including the Agreement Proceeds Calculation) and that services and Product provided by the Parties were accurately recorded and the charges for such services and Product were correct. Such Audit shall be conducted under the terms of a Confidentiality Agreement and shall be used for the sole purpose of determining whether an overcharge or undercharge has occurred. Such Audit will be conducted during normal business hours and shall be at the expense of the Party requesting the Audit. Only the final report of the auditor's conclusions will be provided to both Parties. If such Audit reveals a discrepancy in favor of the Party requesting said Audit, and upon agreement of the other Party, said discrepancy shall be promptly reimbursed. If the Parties cannot reach agreement regarding the auditor's report, either Party may exercise its rights under Paragraph 19 of this Agreement which shall constitute the sole remedy of the Parties to resolve the matter. Upon resolution of the matter, the successful Party shall be entitled to interest on the amount owed from the date such sum was due to the date such sum was paid. Interest shall be calculated at the rate of LIBOR plus three percent per annum. If the Audit determines that an overcharge of less than US$100,000 has occurred, the Parties shall divide the cost of the Audit equally between them. If, pursuant to such an Audit, it is determined that an overcharge in excess of US$100,000 has occurred to the detriment of the Party requesting the Audit, then the cost of the Audit shall be paid by the other Party.


The Parties shall cause an investigation and procedures review of the Agreement Proceeds and cash distributions for the first three (3) months after the Effective Date. This shall be conducted by PriceWaterhouseCoopers, with the cost divided equally between the Parties. If such investigation reveals that the Agreement Proceeds and payments have not been appropriately calculated and made in accordance with the terms of the Agreement, then such defects shall be immediately remedied without penalty to either Party.


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16. Term of the Agreement


This Agreement shall become effective as of the Effective Date and shall continue for an initial term of twelve Contract Years and successive Contract Years thereafter for so long as Octel, Octel Corp. or its Affiliates continues to make Product available for sale whether directly or indirectly provided neither Party invokes its rights under Paragraph 18 of this Agreement.


17. Insurance and Liabilities


a. Each Party shall obtain and maintain during the term of this
Agreement with insurers reasonably acceptable to the other
insurance coverage of the types and minimum limits as set
forth in Schedule H with regard to supplying Product and
performing Party Services pursuant to this Agreement.


b. Each party shall be solely responsible for all costs and
liabilities associated with the termination of existing agency
or distributor relationships in the Territory that are not to
be utilized for the marketing of Product under this Agreement.


c. As to claims between the Parties:


(i) In the event Product supplied by either Octel or
Ethyl for sale to customers within the Territory
fails to be of merchantable quality and meet the
Product specifications set forth in the Supply
Contract, the supplier shall be responsible at its
sole expense for the costs of returning, reprocessing
(including disposal, if necessary) and/or replacement
of such material with Product which is merchantable
and meets the Product specifications of the Supply
Contract at its sole expense.


(ii) Each Party shall perform Party Services in a safe,


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