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 XXXXXXXX CHEMICAL COMPANY, a division of
Xxxxxxxx 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 (***) 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 Xxxx. Xxxxxx Inspectors of Petroleum, Inc., or X. X. Xxxxxxx 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.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 770024312
Attn: Director-Commercial
Telefax: (000)-000-0000
SELLER: Xxxxxxxx Chemical Company,
a division of Xxxxxxxx
Petroleum Company
0 Xxxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Ethylene Director
Telefax: (000)-000-0000
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.
XXXXXXXX CHEMICAL COMPANY,
A DIVISION OF
XXXXXXXX PETROLEUM COMPANY
By: /s/ Xxx Xxxxxxxxxx
(Xxx Xxxxxxxxxx)
Title: Sr. V.P.
KGK mpH/sterconU April 3,1995
STERLING CHEMICAL. INC.
BY: /s/ Xxxxxx X. Xxxxx
(Xxxxxx X. Xxxxx)
Title: Executive V.P. and Chief Operating Officer
EXHIBIT A
XXXXXXXX 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 "Xxxxxxxx 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.
