EXHIBIT 10.13
AMENDMENT TO PROPYLENE FACILITY AND
PIPELINE AGREEMENT AND PROPYLENE SALES AGREEMENT
This Amendment, effective on January 1, 1995, is between HIMONT U.S.A.,
Inc. ("HIMONT") and Enterprise Products Company ("Enterprise"). HIMONT,
successor to Hercules Incorporated, and Enterprise, successor to Enterprise
Petrochemical Company, hereby agree to amend that certain Propylene Facility and
Pipeline Agreement effective December 13, 1978, as amended (the "PFP Agreement")
and the Propylene Sales Agreement attached as Exhibit A to the PFP Agreement, as
amended (the "Propylene Sales Agreement") as set forth below.
PART 1 - PROPYLENE SALES AGREEMENT
----------------------------------
A. The text of Section 4.1 of the Propylene Sales Agreement shall be
replaced with the following:
"ARTICLE IV
QUANTITY AND SCHEDULING
SECTION 4.1 - QUANTITY
----------------------
4.1 Beginning on January 1, 1995, and continuing throughout the term of
this Agreement, including any extensions or
renewals hereof, Enterprise shall sell and deliver to HIMONT,
and HIMONT shall purchase and receive from Enterprise seven
hundred million (700,000,000) pounds per year of Polymer Grade
Propylene. The actual volume sold to HIMONT each month shall be
the current month's daily rateable equivalent of the annual
volume of seven hundred million (700,000,000) pounds except for
"force majeure" conditions.
Notwithstanding anything herein to the contrary, in the event
Enterprise invokes force majeure, the volume sold to HIMONT
shall not be less than 64.81 percent of the total plant
production during the force majeure period.
SECTION 4.2 - SCHEDULING
------------------------
4.2 A. Enterprise shall provide HIMONT, at least fifteen (15)
days prior to the first (1st) day of each calendar quarter,
with an estimate of the production of Polymer Grade
Propylene at the Plant, by quarter, for the next succeeding
twelve (12) month period. It is understood that such
estimate is for the purpose of facilitating scheduling
only and is not binding on either party.
B. Enterprise shall further provide HIMONT in writing, at
lease five (5) days prior to the first (1st) day
-2-
of each calendar month, a schedule indicating the estimated
quantity of Polymer Grade Propylene produced at the Plant that
will be delivered by Enterprise to HIMONT during such month."
B. Article V of the Propylene Sales Agreement shall be replaced with
the following:
"ARTICLE V
QUALITY
5.1 Enterprise represents, warrants and covenants that Polymer Grade
Propylene sold and purchased hereunder shall meet the
specifications set forth in Schedule A attached hereto.
Enterprise is dedicated to continuous quality improvement and shall
endeavor, through training and use of statistical methods, to seek
improvements in its methods of production, delivery and quality
measurement for the purpose of minimizing variation in the quality
parameters of Polymer Grade Propylene delivered under this
Agreement as defined in Schedule A and Schedule B attached hereto.
Enterprise shall endeavor to reduce the maximum allowable levels of
impurities in Polymer Grade Propylene from that listed in Schedule
A to that listed in Schedule B. Schedule A shall be amended from
time to time by written
-3-
agreement of the parties to reflect Enterprise's improved
ability to continuously supply Polymer Grade Propylene with
maximum allowable levels of impurities below those defined in
Schedule A Enterprise shall endeavor to satisfy HIMONT's quality
requirements, as they may evolve, and as they may be defined by
joint technical effort, subject to mutual agreement on the
allocation of costs incurred by Enterprise in satisfying
HIMONT's evolving requirements."
C. The text of Article VI of the Propylene Sales Agreement, shall
be replaced with the following:
"ARTICLE VI
PRICE
SECTION 6.1 - PARTIES INTENT
----------------------------
6.1 It is the intent of HIMONT and Enterprise that this Agreement
constitute a long-term relationship for the sale and purchase of
Polymer Grade Propylene at a freely negotiated price
representative of Large Volume\Long-Term contract transactions
for pipeline deliveries of Polymer Grade Propylene on the Texas
Gulf Coast. For purposes of this Agreement Large Volume\Long-
Term contracts are defined as freely negotiated contracts
covering the sale of a minimum volume of one hundred million
(100,000,000)
-4-
pounds of Polymer Grade Propylene per year on the Texas Gulf
Coast, with all terms, including pricing provision, and contract
extensions, in effect for a minimum period of two years.
The parties acknowledge that the marketplace for Large
Volume\Long-Term contract sales of Polymer Grade Propylene by
pipeline deliveries on the Texas Gulf Coast is determined by the
application of a contractually agreed-to discount from a base
contract price or range of base contract prices established
monthly between suppliers and purchasers of propylene, and that
such base contract prices are published monthly by CMAI in
their Monomers Market Report. It is the desire of both parties
that the sale an purchase of Polymer Grade Propylene hereunder
be at a price representative of the freely negotiated Large
Volume\Long-Term contract market as defined above.
SECTION 6.2 - PRICE
-------------------
6.2 For Polymer Grade Propylene having a composition conforming with
specifications set forth in Schedule A, HIMONT shall pay
Enterprise each month the following:
Ninety-three and one-half percent (93.5%) of the final
month-end Average Contract Price for Polymer
-5-
Grade Propylene in the United States as published by CMAI in
their Monomers Market Report or otherwise reported to Enterprise
and HIMONT by CMAI.
The Average Contract Price shall be defined as the average of the three
closest posted monthly prices among five polymer grade propylene sellers
which shall be mutually agreed to by HIMONT and Enterprise.
Enterprise and HIMONT mutually agree that effective January 1, 1997, and
each twenty four (24) months thereafter, either party can request a
Contract Price reopener, on ninety (90) days written notice, if either
party can reasonably demonstrate that the Price herein set forth is not
representative of the Large Volume/Long-Term contract market."
SECTION 6.3 - ALTERNATE PRICING MEDIUM
--------------------------------------
6.3 In the event CMAI discontinues, suspends or fails to report a
final month-end average Contract Price for Polymer Grade
Propylene in the Gulf Coast United States, Enterprise and HIMONT
agree they will promptly and in good faith adopt a price basis
on an alternate pricing medium."
-6-
D. The last sentence of Article VIII of the Propylene Sales
Agreement shall be rewritten in its entirety as follows:
"Nothing contained herein shall affect HIMONT's right to terminate this
Agreement because of the inability or refusal of Enterprise, after
notification as provided for in Section 14.1 hereof, to correct any
existing failure to deliver Polymer Grade Propylene meeting the
specifications set forth in Schedule A attached hereto; HOWEVER
ENTERPRISE'S ONLY LIABILITY UNDER THIS AGREEMENT WITH REGARD TO NON-
CONFIRMING PRODUCT SHALL BE LIMITED TO REPLACEMENT FOR ANY ON-CONFORMING
POLYMER GRADE PROPYLENE DELIVERED BY ENTERPRISE HEREUNDER AND FOR ANY
PRODUCT IN HIMONT'S ABOVE GROUND STORAGE AND PIPELINES THAT IS
CONTAMINATED DUE TO COMMINGLING WITH SUCH NON-CONFORMING PRODUCT.
ENTERPRISE SHALL NOT BE LIABLE TO HIMONT FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR EXEMPLARY DAMAGES WITH RESPECT THERETO, NOR SHALL
ENTERPRISE BE LIABLE TO ANY THIRD PARTIES WITH WHICH HIMONT MAY ENTER
INTO AGREEMENTS CONCERNING THE POLYMER GRADE PROPYLENE OR THE PRODUCTS
MADE THEREFROM."
E. The text of Article X of the Propylene Sales Agreement shall be
replaced with the following:
-7-
"ARTICLE X
BILLING AND PAYMENT
SECTION 10.1 - BILLING AND PAYMENT
----------------------------------
10.1 Enterprise shall forward to HIMONT, no more often that once during
each calendar month, an invoice for Polymer Grade Propylene sold
and delivered hereunder and for Polymer Grade Propylene delivered
under Article XVI, (determined by passage of title) during the
preceding calendar month. Such invoices, with supporting
documentation, shall be dispatched promptly by Enterprise and in
such manner so as to be received by HIMONT, within five (5) days
of the date of invoice, at the following address:
HIMONT U.S.A., Inc.
0000 Xxxxxxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000-0000
Attention: Vice President
Strategic Raw Materials
or to such other address as HIMONT may hereinafter designate in
writing to Enterprise. Payment by HIMONT shall be made to
Enterprise net thirty (30) days from date of invoice, via wire
transfer to:
-8-
Chemical Bank
New York, New York
ABA 000000000
Account of: Enterprise Products Company
Account #000-0-00000
or to such other address or bank as Enterprise may hereinafter
designate in writing to HIMONT.
If the payment date for an invoice falls on a Saturday, then the
invoice shall be due and payable on the immediately preceding
Friday. If the payment date for an invoice falls on a Sunday,
then the invoice shall be due and payable on the next following
Monday. If the payment date for an invoice falls on a Statutory
Holiday, then the invoice shall be due and payable on the
nearest preceding business day."
F. Article XVI - Toll Processing shall be added as follows:
"ARTICLE XVI
TOLL PROCESSING
Beginning on February 1, 1995 and continuing through December 31, 1996,
Enterprise shall toll process Propane/Propylene mix conforming to the
specifications shown on Schedule C attached
-9-
hereto (Propane/Propylene Mix) supplied by Himont under the following
terms:
SECTION 16.1 - VOLUME
---------------------
16.1 The total volume of plant capacity available for use by Himont
to toll process Propane/Propylene Mix, shall be the difference
between the actual plant capacity and the capacity used each
month to produce Himont's committed ratable purchase of seven
hundred million (700,000,000) pounds per year of Polymer
Grade Propylene and Lyondell's committed tolling capacity
estimated at three hundred million (300,000,000) pounds per
year. Himont's tolling capacity each month shall be the lesser
of the uncommitted plant capacity described above when nominated
for as provided for in clause 16.3, or the volume of
Propane/Propylene Mix which Himont has nominated for, as
provided for in Clause 16.3, and has available at Enterprise
facilities each month on a ratable basis.
SECTION 16.2 - TOLLING FEES
---------------------------
16.2 Tolling fee shall be fixed at 2.6 cents per pound of Contained
Propylene in the Propane/Propylene Mix toll processed for a term
of 23 months, ending on December 31, 1996. All taxes, including
Superfund Tax, which are assessed on the Propylene production
shall be added to this fee.
-10-
SECTION 16.3 - NOMINATION PROCEDURES
------------------------------------
16.3 Himont shall nominate to Enterprise in writing, at least 45 days
prior to each calendar quarter, the quantity of available plant
capacity, as described in Clause 16.1, Himont wishes to use for
toll processing during the following quarter. Any toll capacity
HIMONT does not nominate for on a quarterly basis, shall be
available for Enterprise's use during that quarter. If Himont
does not use at least sixty percent (60%) of the nominated
capacity on a ratable basis during any calendar quarter, then
such unused capacity shall be available for Enterprise's use
during the current calendar quarter and the following quarter,
the process Propane/Propylene Mix for Enterprise's own account
for subsequent sale to others or to toll process for third
parties, provided however, that in the event Enterprise elects
to toll process for its own account and offer the resultant
Propylene for sale, Himont shall have the first right of refusal
to purchase such Propylene from Enterprise at the then current
market price.
SECTION 16.4 - SUPPLY OF PROPANE/PROPYLENE MIX FOR TOLLING
----------------------------------------------------------
16.4 HIMONT shall be entitled to deliver to Enterprise's underground
storage facility at Mont Belvieu, Texas a volume of
Propane/Propylene Mix equal to the volume of
-11-
plant capacity that Himont has nominated for toll processing by
Enterprise. The Propane/Propylene Mix shall be delivered to
Enterprise, by Himont, or on behalf of HIMONT, at least 5 days
prior to the date on which it is to be processed. Enterprise
will accept receipt of Propane/Propylene Mix from Himont via
connected pipeline or rail tank car delivered to Enterprise's
Mont Belvieu tank car unloading terminal. Enterprise shall
arrange to analyze all Propane/Propylene Mix received for
Himont's account, and the results of such analysis shall be used
to establish the Propylene component, other hydrocarbons and
contaminates.
SECTION 16.5 - TANK CAR HANDLING
--------------------------------
16.5 Enterprise shall be responsible for gauging and analyzing the
Propane/Propylene Mix received by Enterprise via tank car.
Enterprise will charge and Himont will pay a tank car unloading
fee of three quarters of one cent per gallon ($0.0075 per
gallon) for all Propane/Propylene Mix unloaded or Himont's
account. Enterprise shall deduct a two percent heel credit from
the gauged volume in determining the volume of Propane/Propylene
Mix unloaded and received from Himont.
-12-
SECTION 16.6 - PURCHASE OF PROPANE AND OTHER NON-PROPYLENE HYDROCARBON
COMPONENTS AND RETURN OR PROPYLENE COMPONENT
------------------------------------------------------
(a) Enterprise shall purchase from Himont all the Propane and
other Non-Propylene hydrocarbon components contained in the
Propane/Propylene Mix toll processed for Himont each month.
All Non-Propylene hydrocarbon components shall be deemed to
be Propane and shall be purchased by Enterprise at the
monthly average high-low posting for Non-TET Propane at Mont
Belvieu, as published by Oil Price Information Service
(OPIS).
(b) One hundred percent of the Propylene component contained in
the Propane/Propylene Mix processed each month shall be
returned to Himont as Polymer Grade Propylene, at the outlet
of the Plant."
16.7 HIMONT shall forward to Enterprise, no more often that once
during each calendar month, an invoice for Propane sold
hereunder during the preceding calendar month. Such invoices,
with supporting documentation, shall be dispatched promptly
by HIMONT and in such manner so as to be received by
Enterprise, within five (5) days of the date of invoice, at
the following address:
-13-
Enterprise Products Company
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: X.X. Xxxx
or to such other address as Enterprise may hereinafter designate in
writing to HIMONT. Payment by Enterprise shall be made to HIMONT net
thirty (30) days from date of invoice, via wire transfer to:
HIMONT U.S.A., INC.
or to such other address or bank as HIMONT may hereinafter designate in
writing to Enterprise.
If the payment date for an invoice falls on a Saturday, then the invoice
shall be due and payable on the immediately preceding Friday. If the
payment date for an invoice falls on a Sunday, then the invoice shall be
due and payable on the next following Monday. If the payment date for an
invoice falls on a Statutory Holiday, then the invoice shall be due and
payable on the nearest preceding business day.
PART 2 - PFP AGREEMENT
----------------------
A. The text of Section 2.5 B of the PFP Agreement shall be replaced with
the following:
-14-
"SECTION 2.5 - TERM OF LEASE AND RENTAL PAYMENT
-----------------------------------------------
B. Enterprise shall pay Himont, without previous demand therefor
and without deduction or setoff (including deductions or setoffs
due or alleged to be due by reason of any past, present or
future claims of Enterprise against Himont under this Agreement
or under the Propylene Sales Agreement, or otherwise), as rent
for use of the leasehold estate created in Section 2.4, a sum
which equals 3.5 cents per gallon for 50% of all Polymer Grade
Propylene produced at the Plant; provided, however, that
(a) During the period commencing January 1, 1981, and ending
November 30, 1990, the sum payable as rent during each
month of this period shall equal 4 cents per gallon for 50%
of all Polymer Grade Propylene produced at the Plant.
(b) During the period commencing December 1, 1990, and ending
December 31, 1992, the sum payable as rent during each
month of this period shall equal 4 cents per gallon on 50%
of the rateable monthly production of a fixed annual
production volume of nine hundred eighty million
(980,000,000) pounds per year of Polymer Grade Propylene
(hereinafter the "Fixed Volume").
-15-
(c) Commencing on January 1, 1993, the sum payable as rent
during each month thereafter shall equal the lesser of:
(i) 3.50 cents per gallon on fifty percent (50%) of the
current month's Fixed Volume, or (ii) 3.50 cents per
gallon on fifty percent (50%) of the current month's Fixed
Volume multiplied by the actual volume in pounds of
Polymer Grade Propylene purchased by HIMONT hereunder the
current month divided by the current month's daily
rateable equivalent of seven hundred million (700,000,000)
pounds per year providing, however, that during any month
that force majeure conditions are not invoked by
Enterprise and Enterprise, at its sole discretion, elects
to reduce the volume of Polymer Grade Propylene sold to
HIMONT to less than the current month's daily rateable
equivalent of seven hundred million (700,000,000) pounds
per year, then the provisions of this Section 2.5 B (c)
(ii) shall not apply.
Within 15 days after the end of each month during the Lease
Term, Enterprise shall furnish to HIMONT a statement, certified
as true and correct by Enterprise, setting forth the number of
gallons of Polymer Grade Propylene produced at the Plant during
the preceding month."
-16-
C. Effective on January 1, 1993, Section 2.5 D of the PFP Agreement
shall be deleted in its entirety.
"SECTION 2.8 - DISPOSITION AND STORAGE OF PRODUCT
-------------------------------------------------
A. All propylene, propane, light ends, heavy fractions and waste
produced at the Plant shall be disposed of as follows:
B. Effective January 1, 1995, Section 2.8A(1) shall be restated in its
entirety as follows:
(1) HIMONT shall take Polymer Grade Propylene produced at the Plant
as follows:
During 1979 and 1980, Enterprise shall sell and delivery to
HIMONT, and HIMONT shall purchase from Enterprise, a total of 50
and 150 million pounds, respectively, each year of Polymer Grade
Propylene. Beginning in 1981, and continuing through 1992,
Enterprise shall sell and deliver to HIMONT, and HIMONT will
purchase from Enterprise, the full output of the Plant of
Polymer Grade Propylene, which is estimated to be 315 million
pounds at 99.5% purity in 1981 and 380 million pounds at 98%
purity in 1982 and thereafter. Beginning on January 1, 1993,
and continuing through 1994, Enterprise shall sell and deliver
to HIMONT, and
-17-
HIMONT shall purchase and receive from Enterprise, the full
output capacity of Polymer Grade Propylene from the Plant,
estimated to be one billion eighty million (1,080,000,000)
pounds per year, less the agreed upon tolling volumes of three
hundred and eighty four million (384,000,000) pounds per year.
Beginning on January 1, 1995, and continuing throughout the term
of this Agreement, including any extensions or renewals hereof,
Enterprise shall sell and deliver to HIMONT, and HIMONT shall
purchase and receive from Enterprise, on a monthly rateable
basis, seven hundred million (700,000,000) pounds of Polymer
Grade Propylene. The actual volume of Polymer Grade Propylene
which HIMONT shall purchase each month shall be determined as
provided for under Section 4.1 of the Propylene Sales Agreement.
All such Polymer Grade Propylene shall be sold by Enterprise to
HIMONT under the terms set forth in the Propylene Sales
Agreement, which Enterprise and HIMONT shall enter into
concurrently herewith."
PART 3 - EXTENSION OF TERM
--------------------------
This Amendment shall extend the term of the PFP Agreement and the
Propylene Sales Agreement for the first option of twelve (12) years, as
provided for in Section 11.1 of the PFP
-18-
Agreement, and shall remain in full force and effect as amended until
December 31, 2004. All other terms and conditions of Article XI of the
PFP Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, HIMONT and Enterprise, by their duly authorized
representatives, have executed this Amendment effective as of January 1, 1995.
HIMONT U.S.A., INC. ENTERPRISE PRODUCTS COMPANY
By: /s/ [Name Illegible] By: /s/ X.X. Xxxx
----------------------------- ----------------------------
President Montell
Title: North America Inc. Title: Executive Vice President
-------------------------- -------------------------
Date: January 5, 1996 Date: November 16, 1995
--------------------------- --------------------------
-19-
