EXHIBIT 10.1
Xxxxxxxxxx, 00 Xxxxx 0000
translation Mu/kb/2926jer
Agreement
between
Xxxxxxxxxx Xxxxxx XxxX
Xxxxxxxxxxxxxxxxx 0
00000 Xxxxxxxx-Xxxxxxx
and
KRONOS TITAN-GMBH
Xxxxxxxxxxxx 0
00000 Xxxxxxxxxx
- hereinafter referred to as KRONOS
- 2 -
Contents
Art. 1 Definitions
Art. 2 Project Description
Art. 3 Construction and Operation of the Waste Acid Reprocessing Plant and
the Filter Salt Decomposition Plant
Art. 4 Time Schedule for the Construction of the Waste Acid Reprocessing
Plant
Art. 5 Reprocessing of Leverkusen Waste Acid / Take-over of 70
% H2SO4 Acid
Art. 6 Decomposition of Filter Salts from Leverkusen
Waste Acid / Dumping of
Cinders / Supply of Fresh Acid
Art. 7 Capital Charges for the Waste Acid Reprocessing and Filter Salt
Decomposition Plants
Art. 8 Operating Costs for the Waste Acid Reprocessing Plant
Art. 9 Costs for the Decomposition of the Leverkusen Filter Salts
Art. 10 Lump-sum Remuneration
Art. 11 Decomposition of Nordenham Filter Salts / Supply of Fresh Acid
Art. 12 Supply of Burner Discharge
Art. 13 Warranty / Liability
Art. 14 Force Majeure
Art. 15 Hardship Clause
Art. 16 Adjustment of the Agreement
Art. 17 Secrecy
Art. 18 Right of Auditing
Art. 19 Transfer of Agreement / Participation of Third Parties
Art. 20 Successor Clause
Art. 21 Taking Effect / Period of the Agreement
Art. 22 Reservations
Art. 23 Other Cooperation
Art. 24 Termination of the Provisional Agreement
Art. 25 Arbitration Clause
Art. 26 Clause on Partial Invaliditiy
Art. 27 Written-Form Clause
- 3 -
WHEREAS,
KRONOS and Xxxxxxxxxx, on 18 July 1986 concluded a provisional agreement. This
provisional agreement essentially covers stipulations for the reprocessing of
the waste acid generated in the production of titanium dioxide in the Leverkusen
and Xxxxxxx plants, for the decomposition of the filter salts derived from this
waste acid and of further filter salts sent from Nordenham and for the supply of
burner discharge.
THEREFORE, in view of this provisional agreement, the parties now conclude the
following main agreement:
Art. 1 - Definitions
1. Waste Acid
Waste acid shall mean the original waste acid as obtained in the form of
filtrate after Xxxxx filtration in a sulphate process plant. This acid
contains about 22 per cent sulphuric acid and salts in a range between 5
and 16 per cent as is customary at Xxxxxxx or Leverkusen. An analysis of
the Xxxxxxx and Leverkusen waste acids is shown in Exhibit 1 to this
Agreement. Potential changes in composition and their effects on the
reprocessing process, on the filter salt decomposition and on the supply
of burner discharge shall be agreed on by the parties.
- 4 -
2. Filter Salts
2.1 Filter salts derived from Xxxxxxx or Leverkusen waste acid shall be the
residues separated from the waste acid reconcentrated to about 70 per
cent. They contain varying amounts of adhering acid, depending on the
process of separation.
2.2 Filter salts from Nordenham are understood to be the centrifuged solids
from concentrated waste acid (in accordance with the analysis shown in
Exhibit 2). Potential changes in composition shall be agreed on by the
parties.
3. 70 % H2SO4 Acid
After concentration and curing of the waste acid and subsequent separation
of the filter salts from the filtrate, an acid is obtained that contains
about 70 per cent H2SO4. It corresponds to the typical analysis shown in
Exhibit 3 to this Agreement. After start-up of the waste acid reprocessing
plant this typical analysis will be replaced by a final analysis.
4. Fresh Acid
Fresh acid shall mean the sulphuric acid produced in the Xxxxxxx sulphuric
acid plant.
5. Cinders
Cinders shall mean the solid residues resulting from the filter salt
decomposition plant at Xxxxxxx. They are generated from pyrites, filter
salts, coal for the decomposition and/or other additives.
- 5 -
6. Burner Discharge
Burner discharge shall mean the product obtained in the oxidation of
titanium tetrachloride after wet milling in the form of a slurry. The
normal product made and processed at present by KRONOS in Leverkusen shall
be the initial material. Potential changes in composition shall be agreed
by the parties to this Agreement.
7. Waste Acid Reprocessing Plant
The waste acid reprocessing plant shall comprise an evaporation plant to
concentrate the waste acid to about 70 % H2SO4, a curing station, a filter
salt separating unit, a coal-fired steam boiler, an oil-fired standby
boiler as well as all auxiliary equipment required including the necessary
extension of the infrastructure.
8. Filter Salt Decomposition Plant
The filter salt decomposition plant shall mean the Xxxxxxx sulphuric acid
plant converted to decompose filter salt.
9. Investments
Investments shall mean all expenditures incurred by Xxxxxxxxxx directly in
the construction of the waste acid reprocessing plant and the conversion
of the sulphuric acid unit for decomposing the filter salts and moreover
the expenditures liable to be capitalized for the waste acid reprocessing
plant during the period of the Agreement.
- 6 -
10. Capital Charges
Capital charges shall mean all depreciations incurred by Xxxxxxxxxx on the
investments made.
11. Start-up Costs
Start-up costs shall mean all costs incurred by Xxxxxxxxxx until the waste
acid reprocessing plant starts up operation, which costs do not fall under
capital charges.
12. Operating Costs
Operating costs shall mean all costs incurred by Xxxxxxxxxx necessary for
the operation of the waste acid reprocessing plant or immediately
resulting from its operation. Breakdown of overheads shall follow the
principles commonly applied by Xxxxxxxxxx.
13. Filter Salt Quantities
13.1 Basic Quantities
The term basic quantities - derived from planning data - shall mean the
quantities resulting from the multiplication of 242 kg filter salt/m.t.
waste acid multiplied by waste acid quantity.
1000 kg filter salt weighed as a filter cake after discharge from the
separating facilities contain:
600 kg MESO4 (anhydrous)
210 kg H2SO4 (100 %) and
190 kg H2O
- 7 -
As the percentage of adhering acid and water may vary as a function of the
separating machinery and the composition of the filter salts, resulting in
different quantities of filter salts, the 'basic quantity' shall be
calculated from the waste acid analysis. For the purpose of this
calculation, a content of 145 kg MESO4 (anhydrous) per metric ton of waste
acid is equated with 242 kg filter salt tel quel.
13.2 Additional Quantities
The Nordenham filter salts and all quantities exceeding 13.1 shall mean
additional quantities. For Nordenham filter salt, the incoming quantities
weighed shall be applicable. Additional quantities of Leverkusen waste
acid may be involved if the analysed content of anhydrous salts exceeds
145 kg MESO4/m.t. waste acid. This additional quantity shall be determined
by multiplying the difference between actual content of anhydrous salts
per kg/t and 145 kg/t waste acid at first by factor 1.67 and then by the
quantity of waste acid. The content of anhydrous salt required for the
calculation shall be determined in accordance with Exhibit 4, "Analyses".
14. Terms of Delivery
All deliveries provided for in this Agreement shall be distributed evenly
over the year.
Logistics in detail shall be agreed on by the parties, taking into account
the interests of both parties as well as the requirements of the supplying
plants.
The terms of delivery for each individual product are stipulated in
Exhibit 5 to this Agreement.
- 8 -
15. Waste Disposal / Dumping
Waste disposal and/or dumping shall mean the transportation (including
loading and unloading) of cinders, potential interim storage or cinders
(once or several times) and the final depositing of the cinders.
16. Subsidies / Allowances
Subsidies and allowances shall mean nonrepayable government grants in the
form of monies for the construction of the waste acid reprocessing plant
or for the conversion of the sulphuric acid plant to decompose filter
salts.
Art. 2 - Project Description
1. Xxxxxxxxxx shall build and operate a waste acid reprocessing plant to
reprocess the waste acid generated in the production of titanium dioxide
by the sulphate route. Xxxxxxxxxx and KRONOS agree to dimension the
capacity of this plant such to permit Xxxxxxxxxx to perform the work
assumed in Paragraph 2:
2. Xxxxxxxxxx undertakes to concentrate the waste acid generated in the
Leverkusen plant of KRONOS together with Xxxxxxxxxx'x own waste acid, to
roast and decompose the filter salts by-produced in this concentration as
well as the filter salts by-produced in the Nordenham plant, and to
deposit the resulting cinders or to utilize them in another way.
- 9 -
KRONOS shall take the resulting 70 % H2SO4 acid free of charge and shall
buy from Xxxxxxxxxx the sulphur content of the filter salts (Leverkusen
and Nordenham) in the form of fresh acid.
3. KRONOS shall sell Xxxxxxxxxx burner discharge.
Art. 3 - Construction and Operation of the Waste Acid Reprocessing Plant and
the Filter Salt Decomposition Plant
1. Engineering and construction of the waste acid reprocessing and the filter
salt decomposition plant shall be incumbent on Xxxxxxxxxx. Furthermore,
Xxxxxxxxxx shall be solely responsible for operating these plants after
completion in accordance with its customary rules of operation. KRONOS
shall support Xxxxxxxxxx in the engineering, construction and operation of
these plants and, on request, shall make available to Xxxxxxxxxx its
knowledge and experiences in the reprocessing of waste acid as far as
agreements with third parties do not prevent KRONOS from passing such
knowledge and experiences.
2. In accordance with the stipulations of this Agreement, KRONOS shall make
payments to Xxxxxxxxxx that are determined from the capital charges,
start-up and operating costs. The start-up and operating costs to be borne
by KRONOS shall be paid by KRONOS after they have been incurred and
calculated monthly by Xxxxxxxxxx. KRONOS shall pay Xxxxxxxxxx advances on
the capital charges to be borne by KRONOS and shall make these advances
available to Xxxxxxxxxx on Xxxxxxxxxx'x request with progressing
construction. These advances shall be independent of the period of the
Agreement and not repayable.
- 10 -
Moreover, KRONOS shall pay Xxxxxxxxxx a lump-sum remuneration in
compliance with the stipulations of this Agreement.
Art. 4 - Time Schedule for the Construction of the Waste Acid Reprocessing
Plant
Xxxxxxxxxx and KRONOS both have to comply with conditions imposed by the
authorities according to which ocean dumping of waste acid must be ceased
by the end of 1989. Xxxxxxxxxx shall therefore take all reasonable steps -
also in its own interest - to complete construction and start up operation
of the waste acid reprocessing plant possibly by 31 December 1988, however
without guaranteeing completion by this date.
Art. 5 - Reprocessing of Leverkusen Waste Acid / Take-over of 70 % H2SO4 Acid
1. After completion of the waste acid reprocessing plant, Xxxxxxxxxx shall
reprocess in it the waste acid obtained at the KRONOS plant in Leverkusen
in the TiO2-production by the sulphate route, the quantity amounting to
about 220,000 t + 10,000 t annually. In case Xxxxxxxxxx is not able to
handle these quantities, Xxxxxxxxxx shall inform KRONOS immediately in
order that acceptable technical steps can be taken to solve the problem.
2. KRONOS shall take from the Xxxxxxx plant, without charge, 80 % of the free
acid contained in the waste acid delivered, in the form of 70 % H2SO4
acid. The content of free acid in the waste acid, which is required for
the calculation, shall be determined according to Exhibit 4 "Analyses".
- 11 -
In addition, Xxxxxxxxxx is ready to supply KRONOS with up to 6,000 TPY 70
% H2SO4 acid at a special price.
In case Xxxxxxxxxx is not able to concentrate the acid to 70 % according
to the typical analysis of Exhibit 3, Xxxxxxxxxx shall inform KRONOS
immediately in order that acceptable technical steps can be taken to solve
the problem.
3. The parties agree that KRONOS is co-owner of the waste acid stored at
Xxxxxxxxxx, of the 70 % H2SO4 acid and of any intermediate product
generated within the scope of the transformation. The rights and
obligations resulting from its rate of ownership/co-ownership shall be
independent of the obligations assumed by Xxxxxxxxxx under this Agreement.
The percentage of KRONOS' ownership is calculated from the ratio between
the waste acid supplied by KRONOS and that of Xxxxxxxxxx and of potential
third parties. KRONOS shall share liabilities and risks for the products
mentioned at the ratio of its co-ownership beyond the termination of this
Agreement.
Art. 6 - Decomposition of Filter Salts from Leverkusen Waste Acid / Dumping of
Cinders / Supply of Fresh Acid
1. In its filter salt decomposition plant, Xxxxxxxxxx shall decompose for
KRONOS the filter salts obtained in reprocessing the Leverkusen waste acid
together with its own filter salts and filter salts supplied by KRONOS.
Xxxxxxxxxx shall use pyrite and/or coal in this decomposition and shall
dump the cinders by-produced as far as possible under reasonable
conditions.
- 12-
2. The parties agree that KRONOS shall obtain a co-ownership in the cinders
by-produced according to Art. 6, Para 1 viz. at a ratio of the filter salt
quantities decomposed for KRONOS to the filter salt quantities decomposed
for Xxxxxxxxxx. The rights and obligations resulting from the ownership
co-ownership shall be independent of the obligations assumed by Xxxxxxxxxx
under this Agreement. KRONOS shall share liabilities and risks for the
cinders generated at the ratio of its co-ownership beyond the termination
of this Agreement.
3. The costs (status mid-1985) incurred in dumping the cinders are included
in the cost formula for basic and additional quantities. Xxxxxxxxxx
assumes all cinders can be dumped in the same way as at present.
KRONOS, however, knows that intermediate storage of the cinders may become
necessary in future.
Costs for further intermediate storage or final depositing will be shared
by KRONOS and Xxxxxxxxxx at the ratio of their originally agreed
ownerships in the cinders. KRONOS shall pay its share in the costs
immediately after they have been incurred and calculated as far as these
costs were not yet settled according to the formula for basic and
additional quantities.
KRONOS's cost sharing for cinder disposal shall not be affected by a
potential termination of the Agreement.
Xxxxxxxxxx shall inform KRONOS about essential developments regarding
dumping of the cinders.
- 13 -
Art. 7 - Capital Charges for the Waste Acid Reprocessing and Filter Salt
Decomposition Plants
1. KRONOS shall share the capital charges for the waste acid reprocessing
plant. They are calculated from the total capacity of the waste acid
reprocessing plant of about 780,000 TPY split up between KRONOS and
Xxxxxxxxxx within the scope of "quantities reserved". The term "quantities
reserved" shall mean that about 230,000 TPY are apportioned to KRONOS and
about 550,000 TPY to Xxxxxxxxxx. The capital charges for the waste acid
reprocessing plant shall therefore be borne by the parties at a ratio of
30 % KRONOS and 70 % Xxxxxxxxxx.
2. The capital charges for the modification of the filter salt decomposition
plant shall likewise be shared by the parties at a ratio of 30 % KRONOS
and 70 % Xxxxxxxxxx.
3. The level of investments for the construction of the waste acid
reprocessing plant and for the filter salt decomposition plant is
estimated by both parties to be about DM 125 million (price basis and
state of knowledge mid-1985). This amount comprises a high-concentration
plant for concentrating the 70 % acid to 78 % H2SO4 acid, this plant being
utilized by Xxxxxxxxxx alone. Expenditures for this unit were estimated to
amount to DM 5 million (price basis and state of knowledge mid-1985).
According to the estimate of mid-1985, about DM 120 million less expected
subsidies / allowances of 15 per cent thus have to be shared by the
parties at a ratio of 30 % KRONOS to 70 % Xxxxxxxxxx. According to the
1985 estimate, KRONOS would have to bear capital charges of DM 30.6
million.
- 14 -
4. All investments shall be laid open.
5. In case one of the parties obtains further subsidies for the investments
during the period of the Agreement, these subsidies shall also be made
available for this project.
6. In case subsidies or allowances granted to Xxxxxxxxxx during the period of
the Agreement are partly or wholly reclaimed, KRONOS shall immediately pay
Xxxxxxxxxx 30 % of the amount reclaimed taking into account the principles
outlined under Paragraph 7.
7. In case only one party benefits from investments solely or at a ratio of
utilization other than 30 : 70 (for example the high-concentration plant
of which only Xxxxxxxxxx takes advantages or the waste acid unloading
station from which only KRONOS derives benefit), the resulting capital
charges shall be borne by the respective party either alone or in
proportion to the ratio of utilization.
8. In case the initial expenditures as estimated under 3. above are exceeded
by more than 15 per cent in the more precise investment estimate (planned
capital expenditures prior to beginning building), both parties shall
newly discuss the situation with the objective not to exceed the planned
net expenditures. In case the parties do not come to an agreement on these
expenditures, each party shall have the right to withdraw from the
contract to the extent that the waste acid reprocessing plant is
concerned. In this case, the expenditures made till then shall be
apportioned and refunded to the parties in accordance with this Agreement.
- 15 -
Art. 8 - Operating Costs for the Waste Acid Reprocessing Plant
1. Like the capital charges, the fixed costs for the operation of the waste
acid reprocessing plant shall be split up among the parties at a ratio of
30 % KRONOS and 70 % Xxxxxxxxxx. The variable operating costs shall be
apportioned in proportion to the waste acid quantities reprocessed. The
fixed and variable operating costs as well as the modes of payment and
accounting are explained in more detail in Exhibit 6.
2. The fixed costs shall be borne for the total period of the Agreement and
also in case of force majeure. In case KRONOS is no longer able to supply
waste acid, Xxxxxxxxxx shall try to reduce the fixed costs. KRONOS shall
be authorised to pay-off the fixed costs in a one-time payment provided
the parties agree on a pay-off amount.
3. The operating costs, excluding depreciations and interest for fixed
assets, were estimated to total DM 22 million/year (price basis and state
of knowledge mid-1985).
Based on the above estimate, the share in operating costs to be paid by
KRONOS would be (assuming KRONOS takes its share of 70 % H2SO4 acid free
of charge):
a) Performance cost (fixed operating cost) per year DM 3.5 million
b) Labour cost (variable operating cost) DM 3 million based on an
estimated tonnage price of DM 13/t of waste acid and a supply of
230,000 TPY waste acid per year
- 15 -
4. In case the operating costs as estimated before the beginning of
construction exceed the operating costs as estimated under 3. by more than
20 per cent, the parties shall come to an agreement on the new situation
before starting construction, with the objective not to exceed the planned
operating costs. In case the parties do not come to an agreement on these
costs, each party shall have the right to withdraw from this Agreement as
far as the waste acid reprocessing plant is concerned. In this case, the
non-operating costs incurred so far shall be apportioned and refunded to
the parties pursuant to this Agreement.
5. The start-up costs incurred during the construction of the waste acid
reprocessing plant shall likewise be borne by the parties at a ratio of 30
% KRONOS and 70 % Xxxxxxxxxx. They shall be laid open and settled when
incurred.
Art. 9 - Cost for the Decomposition of the Leverkusen Filter Salts
1. The costs of decomposing the filter salts derived from the Leverkusen
waste acid shall be calculated from the following equation for the basic
quantities:
PFSB = F + 2.82 x PP + 2.32 x PA - 4.58 x PS - 1.77 x PE
(DM/t filter salt)
F = FO (0.3 L/LO + 0.7)
- 17 -
Wherein:
PFSB = Price charged for basic quantities of filter salt (DM/t)
PP = Xxxxxxxxxx cost price for pyrite, 48 % S (DM/t)
PA = Costs for dumping of cinders (DM/t)
PS = Proceeds from sale ex works of acid to third parties (DM/t)
PE = Price to be charged for waste heat from roasting (DM/t)
F = Basic charge (DM/t filter salt)
L = Wages according to Xxxxxxxxxx'x wage statistics
Lo = Wages according to Xxxxxxxxxx'x wage statistics.
Status: monthly average of July 1985
In mid-1985, the value for PFSB was zero.
As far as PFSB will rise by DM 50/t in comparison with the basis
(mid-1985: PFSB = 0), both parties shall take reasonable steps to reduce
PFSB.
- 18 -
2. For additional quantities, the costs for decomposing filter salts derived
from the Leverkusen waste acid shall be calculated as follows:
PFSZ = G + 1.52 x PC + 0.4 x PA - 0.55 x PS - 0.51 x PE
(DM/t filter salt)
G = GO (0.3 L/LO + 0.7)
Wherein:
PFSZ = Price charged for additional quantities of filter salt (DM/t)
G = Basic charge (DM/t filter salt)
PC = Cost price for coal for the decomposition (DM/Gcal)
PA = Costs form cumping of cinders (DM/t)
PS = Proceeds for sale ex works of acid to third parties (DM/t)
PE = Credit for waste heat from roasting/decomposition (DM/Gcal)
L = Wages according to Xxxxxxxxxx'x wage statistics
Lo = Wages according to Xxxxxxxxxx'x wage statistics.
Status: monthly average of July 1985
- 19 -
In mid-1985, the value for PFSZ was DM 90/t filter salt free pyrite
warehouse of the Xxxxxxx sulphuric acid plant.
3. All technical factors of the cost formulas given under Paragraphs 1 and 2
above shall be adjusted currently when operating data are available.
In case the cost-of-living index pursuant to Art. 10, Paragraph 2
essentially deviates from the average of 1985, the parties shall discuss
an adjustment of the non-indexed portion of the price formulas listed in
Art. 9, Paragraphs 1 and 2.
4. The prices to be charged for the filter salt quantities pursuant to Art.
9, Paragraphs 1 and 2 will be calculated monthly. The figures applicable
for the month of delivery are those of the previous month. Accounting is
done monthly.
5. The prices calculated by Xxxxxxxxxx may be checked by KRONOS in compliance
with Art. 18.
Art. 10 - Lump-sum Remuneration
1. In addition to the share in capital charges and operating costs, KRONOS
shall pay Xxxxxxxxxx an annual lump-sum of DM 3 million, payable in
monthly installments beginning at the start-up of the waste acid
reprocessing plant, for the reprocessing of the waste acid and the
decomposition of the Leverkusen filter salts.
- 20 -
2. In case the cost-of-living index (the price index for the cost of living
of all private households, series 17, line 7), as officially ascertained
for the entire Federal Republic of Germany by the Statistical Federal
Offices in Wiesbaden, goes up or down in comparison with the 1985 average
(= 121.0 on the basis of 1980 = 100), the lump sum payment shall change
accordingly on a percentage basis beginning with the month that follows
the month of publication for the period until the next index is published,
as a rule for one year.
Art. 11 - Decomposition of Nordenham Filter Salts / Supply of Fresh Acid
1. At the Nordenham plant of KRONOS, filter salts are obtained in the
concentration of waste acid. Xxxxxxxxxx shall decompose these filter salts
for KRONOS either solely or together with the filter salts derived from
Xxxxxxxxxx'x own waste acid and/or from the waste acid supplied by KRONOS.
For the decomposition Xxxxxxxxxx shall use pyrite and/or coal and shall
dump the cinders obtained.
2. Beginning roughly in mid-1987, KRONOS shall supply Xxxxxxxxxx with an
annual quantity of about 25,000 t filter salt. Once the Nordenham waste
acid reprocessing plant is in full operation, the quantity of filter salt
to be taken over by Xxxxxxxxxx shall be raised to 50,000 TPY.
3. The remuneration for the decomposition of these filter salts shall be
calculated by means of the formula for the additional quantities given in
Art. 9, Paragraph 2. The amount thus calculated in mid-1985 was DM 90/t
filter salt free pyrite warehouse of the Xxxxxxx sulphuric acid plant.
- 21 -
4. The costs for dumping the cinders (basis mid-1985) are included in the
formula for additional quantities. Xxxxxxxxxx assumes that all cinders can
continue to be deposited in the same way as at present. As for the rest
Art. 6, Para. 2 of this Agreement shall apply.
5. Art. 6, Paragraph 2 of this Agreement shall apply with regard to
ownership, apportionment of liability and risk.
6. Xxxxxxxxxx shall supply KRONOS with fresh acid which corresponds to the
sulphur content of the filter salts delivered by KRONOS. For each ton of
filter salt delivered, KRONOS shall take continuously 0.63 t fresh acid
(100 %) in the form of 96 % fresh acid. On 1 July 1985, the price to be
paid by KRONOS for the 96 % fresh acid was DM 85 for 100 % fresh acid ex
Xxxxxxx plant. The price will change in accordance by Xxxxxxxxxx for sales
of 96 % fresh acid to third parties ex Xxxxxxx works.
7. Since the decomposition of filter salts derived from the Nordenham plant
shall begin already prior to the start-up of the waste acid reprocessing
plant and since the conditions for this decomposition are economically
related to the construction and operation of the waste acid reprocessing
plant, both parties undertake to discuss a new the decomposition of
Nordenham filter salts in case the project of the construction and
- 22 -
operation of said plant fails. This however shall not touch upon
Xxxxxxxxxx'x obligation to decompose the filter salt from the Nordenham
plant. As far as conditions have to be newly stipulated, this shall be
done with reasonable disclosure of the changed situation in order that
Xxxxxxxxxx obtains payment for the costs incurred and an adequate
remuneration.
Art. 12 - Supply of Burner Discharge
1. In exchange for the services rendered by Xxxxxxxxxx under this Agreement,
KRONOS shall supply Xxxxxxxxxx with up to 20,000 TPY burner discharge in
compliance with the following stipulations/options.
2. From mid-1988, KRONOS shall sell Xxxxxxxxxx a quantity of 5,000 m.t.
burner discharge annually. Xxxxxxxxxx shall take over this quantity at
intervals to be agreed on.
3. Moreover, Xxxxxxxxxx shall be granted a purchase option for further
quantities up to another 5,000 m.t. per year (option quantity 1). Each
option has to be exercised by 30 June of the year preceding the year of
delivery, for the first time by 30 June 1987. Xxxxxxxxxx shall be bound to
take the quantity opted for at the intervals agreed on.
The option can be exercised for only 30 %/year of the option quantity of
5,000 m.t. The same applies if Xxxxxxxxxx desires to opt for differing
quantities in subsequent years. The opted quantities can be called off
only in steps of 30 % per year.
- 23 -
4. For the purpose of burner discharge sale and grant op the option, KRONOS
assumes that in addition to the Leverkusen plants of a capacity of 80,000
TPY, the Varennes plant in Canada will have gone on stream by the end of
1988 and will have achieved a capacity (nominal) ob 40,000 TPY. In case it
is foreseeable that these capacities will not be attained, KRONOS shall
take reasonable technical steps to attain the total capacity of 120,000
TPY. If, nevertheless, the total capacity cannot be reached by the end of
1988, KRONOS shall be authorized to reduce the sale and option quantities
of 5,000 m.t. each in percent proportionately to the total capacity
deficiency. In case KRONOS or the plant in Varennes/Canada is no longer a
member of the NL group, a potential reduction of the quantities will take
into account only the total capacity of the Leverkusen plants. The
quantity deficiencies for each subsequent year of delivery will be
determined in July after the production figures for the first half of the
calendar year are available; for the first time they will be determined in
July 1989 for the delivery year 1 July 1989 - 30 June 1990.
If, contrary to expectations, completion of the plant in Varennes is
delayed, KRONOS shall inform Xxxxxxxxxx in due course. In this case, both
parties shall come to an agreement on a new date for the beginning of
delivery.
- 24 -
5. Xxxxxxxxxx shall be granted a further purchase option for up to 10,000
m.t. burner discharge per year (option quantity 2). The condition,
however, is that additional chloride process plants of the present
standard size of 40,000 TPY (excluding substitutions for existing sulphate
process plants) be built either by KRONOS or NL Industries, Inc. or NL
Chemicals Inc.
This option can be exercised only in steps (upward or downward) of up to
40 % per year (4,000 TPY).
The conditions or making available option quantity 2 shall be stipulated
by both parties on start-up of additional plants fully owned by KRONOS, NL
Chemicals Inc. or NL Industries, Inc. If plants are built in which KRONOS
does not have a 100 % interest but only a majority interest, a decision
shall be taken in each case on whether an option can be granted and
exercised.
6. The price payable by Xxxxxxxxxx to KRONOS for the burner discharge (5,000
t and 5,000 t option quantity 1) shall be calculated as follows:
a) Manufacturing costs incurred by KRONOS for Leverkusen burner discharge
according to the key commonly used by KRONOS plus/minus
b) 50 % of the difference between the net proceeds and the manufacturing
cost incurred by KRONOS for CP pigments according to the keys commonly
used by KRONOS calculated on the basis of "ex works" Leverkusen. If
- 25 -
delivery is effected ex Langerbrugge plant, Xxxxxxxxxx shall bear 50 %
of the additional freight (at present about 50 % above freight ex
Leverkusen). Deliveries by KRONOS to associated companies shall not be
included in the calculation of net proceeds.
The price thus calculated in April 1986 for burner discharge ex
Leverkusen plant was DM 2,840 per tonne.
The sales price in DM/tonne for burner discharge ex Leverkusen plant
shall be altered according to the following formula:
Pi = Po [0.36 Ti/To + 0.20 Li/Lo
+ 0.07 Ei/EO + 0.37 x Il/Io
+ 0.5 [net proceeds - HK I- HK I ]
Wherein:
Pi sales price for burner discharge ex Leverkusen in DM/m.t. in
the period i.
Po manufacturing costs for burner discharge in Leverkusen in April
1986 (DM 2,400/m.t.).
Ti/To ratio of the prices for titaniferous raw materials in the
period i/in April 1986.
- 26 -
Li/Lo ratio of negotiated wages per hour for wage class 4, above 18
years of age, normal shift (Collective Agreement for Hourly and
Salaried Employees and Apprentices of the Chemical Industry in
the Counties Dusseldorf and Cologne) in the period i/in April
1986 (DM 13.07/h).
Ei/Eo ratio of the Dusseldorf prices (stated by the Federal
Statistical Office) for fuel oil S, normal quality, arithmetic
mean value of the three quantity scales (series 17, line 2) for
the period i/April 1986 (DM 254.34/m.t.).
Ti/To ratio of the cost-of-living index pursuant to Art. 10,
Paragraph 2 during the period i/in April 1986 (= 120.9 on the
basis of 1980).
In case the values are no longer published, the parties shall agree on
new values that come as close as possible to the old reference values.
With the exception of the wages, the prices shall be adjusted on 1
April and 1 October of each year. On 1 April, the adjustment shall be
based on the average values of the second half of the previous calendar
year; on 1 Oct, it shall be based on the average values of the first
half of the same calendar year. Statements will be made monthly.
- 27 -
Net proceeds received for sales to third parties, with freight and
commissions being deducted (= ex works).
HK I for burner discharge = 2,400
(0.36 Ti/To + ....)
XX XX for post-treatment and packaging (actual)
7. Xxxxxxxxxx shall be authorized to cancel the purchase of burner discharge
wholly or partly with a six-month notice if the sales price Xxxxxxxxxx
obtains has been below KRONOS' sales prices for burner discharge plus the
finishing costs incurred by Xxxxxxxxxx for a period of a quarter of a
calendar year. In this case, Xxxxxxxxxx shall bear the fixed operating
costs of KRONOS that can no longer be reduced or covered due to the loss
in sale of burner discharge. Xxxxxxxxxx shall have the right to redeem the
fixed costs by a one-time payment provided the parties agree on the
redemption amount.
Art. 13 - Warranty / Liability
1. Xxxxxxxxxx warrants that the waste acid used in its waste acid
reprocessing plant meets the specifications agreed on. KRONOS warrants
that the waste acid from Leverkusen and the filter salts from Nordenham
meet the specifications agreed on.
- 28-
If the specifications agreed on can be proved to have not been adhered to,
Xxxxxxxxxx shall be authorized to refuse to accept and process such
products inasmuch as it would be impossible within the scope of the valid
official permits to reprocess the waste acid, decompose the filter salts,
use the 70 % H2SO4 acid or the fresh acid and dispose of and dump the
cinders.
If one of the parties supplies products for processing that do not conform
to the specifications and if this causes damage or involves additional
costs or reduced profits in reprocessing the waste acid, decomposition of
the filter salts or utilisation of the 70 % H2SO4 acid or the fresh acid
or in disposing of and dumping the cinders, the party concerned shall be
liable to bear such damage and additional costs or reduced profits.
2. No other warranties may be claimed with regard to the reprocessing of
waste acid to 70 % H2SO4 acid, decomposition of filter salts, supply of 70
% H2SO4 acid and disposal and dumping of cinders.
3. To the extent that the fresh acid an the burner discharge do not meet the
stipulated specifications, the parties shall agree on a reasonable price
reduction. In case it is absolutely impossible for the receiving party to
use the product received because of non-compliance with the
specifications, the supplying party undertakes to take back the product
and to supply a replacement free of charge.
- 29 -
4. If for reasons for which Xxxxxxxxxx is accountable, Xxxxxxxxxx does not
meet its obligations to decompose filter salts from Nordenham, Xxxxxxxxxx,
according to its choice, shall either take the non-decomposed filter salts
from KRONOS or refund KRONOS for its expenses for the removal of the
non-decomposed filter salt quantities.
5. Further warranty claims and claims exceeding the stipulations of this
Article shall be excluded.
6. Contractual damage claims or claims in tort against the other party,
irrespective of the legal grounds, resulting from the Agreement or being
in connection with the Agreement, shall be excluded as far as and to the
extent that this Article does not contain any stipulations to the
contrary. This is also applicable for legal or other representatives or
persons employed by either party in the performance of its obligation.
This does not affect liability of a party for own intent.
Liability of a party in any case is excluded if said party has acted with
the diligence it usually employs in its own affairs.
If notwithstanding, a party is liable for damage claimed by the other
party, this liability shall be restricted to the direct damages. Damage
claims resulting from indirect damage, particularly consequential damage,
property damage or lost profit, shall be excluded.
- 30 -
7. If third parties claim damage from one of the parties to this Agreement
for damages resulting from or in connection with this Agreement,
especially for the dumping of cinders such damages shall be offset
internally by the parties to the Agreement at a ratio of the filter salt
quantities from KRONOS to the filter salt quantities originating in
Xxxxxxxxxx. This, however, shall not apply if one of the parties to the
Agreement can be proved to have caused the damage. In this case, the party
concerned shall bear the entire damage and undertake to indemnify the
other party. To the extent that at damage can be proved to have been
caused by both parties to the Agreement, Article 254 of the Federal Civil
Code shall apply with regard to internal settling between the parties.
The parties to the Agreement assume that the cinders will be dumped
together with wastes of third parties. If damages in connection with the
dumping cannot be proved to have been caused by a party to the Agreement
or by the third waste producer(s), the parties to the Agreement shall
share the damage at a ratio of the quantities they dumped to the entire
quantities dumped, the damage to be borne by the parties to the Agreement
being settled in compliance with Art. 13, Para. 7,l.
8. If one of the parties to the Agreement is claimed on by third parties,
including authorities, because of other measures that result from or are
in connection with this Agreement (as for instance the disposal of cinders
in intermediate for final deposition), the stipulations of Paragraph 7
shall apply accordingly.
- 31 -
9. The obligation for offsetting as stipulated in Paragraphs 7 and 8 shall
apply also after the termination of the Agreement.
Art. 14 - Force Majeure
1. In case of force majeure, the one party prevented from performing its
obligations arising from the Agreement shall be obliged to inform the
other party which contractual obligations cannot be performed and to what
extent, advising said other party of the reasons that prevent fulfillment
of the Agreement.
2. After the end of force majeure, the parties shall agree on reasonable
measures to be taken to catch up on the contractual obligations affected
by force majeure. In case this is not possible under acceptable conditions
and within an acceptable period of time, the contractual obligation
affected by force majeure shall be dropped either totally or with regard
to the part that cannot be caught up under acceptable conditions or within
an acceptable period of time.
3. In case of force majeure, KRONOS shall store the waste acid generated in
its production and Xxxxxxxxxx shall store the 70 % acid generated in its
own plant each party at its expense. The reprocessing capacity that may
remain in such cases shall be utilized proportionately for both parties
(at a ratio of 70 Xxxxxxxxxx : 30 KRONOS). The waste acid stored at the
parties' plants shall be reprocessed proportionately in accordance with
the technical possibilities.
- 32 -
4. In case of force majeure, KRONOS shall store filter salt in Nordenham for
a period of at most 30 days. After the ending of force majeure, Xxxxxxxxxx
shall additionally decompose at most the filter salt stored for 30 days,
within the scope of technical possibilities.
5. In the event force majeure occurs in connection with the disposal and
dumping of the cinders (intermediate and final storage), Xxxxxxxxxx shall
be authorized to refuse to accept waste acid from Leverkusen and filter
salt from Nordenham and to discontinue operation of the waste acid
reprocessing and filter salt decomposition plants for the period of force
majeure.
6. Any one party affected by force majeure shall not be held liable for the
delay or inability caused by this force majeure. Claims of resignation and
damage claims shall be excluded. Rights resulting from
ownership/co-ownership allocation shall remain unaffected.
If an event of force majeure leads to a situation at one of the parties
that constitutes an unreasonable hardship to the one party, Art. 15 shall
apply.
7. Force majeure in the sense of this stipulation shall mean all
unforeseeable events or events that are - even if foreseeable - beyond the
control of the parties and whose effects on the fulfillment of the
Agreement cannot be prevented by reasonable efforts made by the parties.
Such events cover for instance war, war-like situations; riots; revolts;
uproars; outrages; blockades; sabotage; strikes; lockouts; fire; floods;
- 33 -
natural disasters of catastrophic force; lightning; low or high tide;
total or partial failure of operating facilities; refuse of grant,
abolition, restriction or new creation of official permits or impositions;
other operating failures particularly due to directives or interventions
of authorities; inability or delay in the delivery of essential materials
necessary for the operation of the plants; refuse of grant, abolition or
new creation of official permits or impositions which, on the part of
Xxxxxxxxxx, lead to an economically unjustifiable disposal of the cinders.
Art. 15 - Hardship Clause
Upon concluding this Agreement, the parties are aware that they are not in
a position to fully cover by this Agreement all future situations,
especially so because of the waste acid reprocessing plant which still has
to be built.
If, therefore, a new situation occurs during the term of this Agreement
and if this Agreement provides no stipulations for handling this situation
and if this new situation constitutes an unreasonable hardship to one of
the parties or if this essentially changes the economical balance of this
Agreement, both parties shall undertake to agree on an adjustment to the
changed conditions, eliminating the unreasonable hardship and maintaining
the economical equilibrium.
- 34 -
Art. 16 - Adjustment of the Agreement
If an adjustment of the Agreement as provided for in the Agreement cannot
be reached amicably within six months beginning with the written request
by one of the parties to the other party, or if the negotiations,
consultations, arrangements provided for in this Agreement do not lead to
an agreeable result within this period of time, each of the parties shall
be authorized to have a court of arbitration decide whether an adjustment
of the Agreement takes place and on what conditions this can be reached.
Recourse to arbitration shall be governed by the stipulations of the
arbitration agreement.
Art. 17 - Secrecy
1. Each party undertakes to keep secret and to use only within the scope of
this Agreement any and all experience, knowledge and information obtained
directly or indirectly from the other party, especially with regard to
design, construction and operation of the waste acid reprocessing plant
and with regard to financing and accounting stipulated in this Agreement.
2. The obligation of secrecy and non-utilization shall exclude any knowledge,
experience and information that can be proved
a) to have been commonly known prior to the transfer, that means
accessible without difficulties and sacrifice to any third party or to
have become known after the transfer with no fault of the receiving
party, or
- 35 -
b) to have been prior art before the transfer or to have become state of
the art after the transfer with no fault of the receiving party, or
c) to have been known to the receiving party at the time of transfer and
to have been derived neither directly nor indirectly from the
transmitting party, or
d) to have been lawfully received by a third party that in this respect is
not obliged to secrecy towards the transmitting party.
3. The receiving party shall not be hindered in making the information,
experience, knowledge received accesible to its employees or other third
parties to the extent that this is indispensable for the construction and
operation of the waste acid reprocessing and filter salt decomposition
plants and for the verification of accounting provided all reasonable
measures have been taken to prevent employees and other third parties from
using the information and knowledge obtained either for themselves or for
others or from passing such information or knowledge to others.
4. This obligation of secrecy shall be applicable for the period of this
Agreement and for a period of ten years after termination of the
Agreement.
5. Through this Agreement, KRONOS submits to the obligation of secrecy
stipulated between Xxxxxxxxxx on the one hand and Xxxxx XX, Lurgi AG and
Rosenlew on the other and attached to this Agreement as Exhibit 7.
- 36 -
Art. 18 - Right of Auditing
Each party shall have the costs and proceeds relevant to the Agreement
confirmed by a certified auditor of its choice upon the other party's
request.
Art. 19 - Transfer of the Agreement / Participation of Third Parties
1. The transfer - wholly or in part - of the rights and obligations pursuant
to this Agreement including the stipulated supplies and services, to third
parties, shall be excluded. This shall not apply if the other one party
has consented writing to such a transfer. Consent shall be given if one of
the parties intends to transfer this Agreement wholly or individual
obligations of it to a company associated within the meaning of the German
Corporation Law and if such transfer is not expected to result in an
economic discrimination of the other one party.
2. Xxxxxxxxxx shall be entitled, however, to transfer the dumping of the
cinders to third parties or to take recourse to third parties for this
dumping. Xxxxxxxxxx shall inform KRONOS thereof in writing.
3. In case Xxxxxxxxxx and/or KRONOS desire to include third parties in all or
part of the services and supplies to the waste acid reprocessing plant or
filter salt decomposition, they shall obtain the consent of the other
party. The conditions of the transfer under which a third party may
- 37 -
participate shall likewise be subject to mutual consent. Such consent may
only be refused if the participation of a third party would mean an
economic discrimination to the party that is to consent or if waste
disposal would not be adequately warranted.
Art. 20 - Successor Clause
In the event one of the parties hereto transfers the plants it requires to
perform the services and supplies under this Agreement wholly or in part
to third parties, this party hereto undertakes to transfer the
corresponding contractual obligations to its successor in title, business
or ownership provided the other party hereto has given its consent in
writing to this transfer.
Art. 21 - Taking Effect / Period of the Agreement
1. This Agreement shall commence on being signed by both parties.
2. The following services and supplies shall begin and end as follows:
a) Reprocessing of Leverkusen waste acid including decomposition of the
filter salts derived from this waste acid and supply of 70 % H2SO4 acid
and fresh acid: start-up of the waste acid recovery plant (presumably
on 1 Apr 1989) until 31 Dec 1998.
- 38 -
b) Supply of burner discharge presumably on 1 July 1988 till 31 Dec 1998.
c) Decomposition of Nordenham filter salts presumably on 1 July 1987 till
31 Dec 1998.
3. The individual services and supplies may be terminated by a party in
writing at the end of the respective service or supply period with a three
years' notice. If no notice of termination is given, the respective
services and supplies shall continue automatically for further one-year
periods unless declared terminated by one of the parties with a three
years' notice.
4. The stipulations on secrecy and liability shall not be affected by a
potential termination of individual services or supplies or by a
termination of the Agreement. This shall also apply to other rights or
obligations as far as this Agreement assumes their continuation after the
termination of the Agreement.
Art. 22 - Reservation / Detail Stipulations
1. Xxxxxxxxxx'x obligation to build the waste acid reprocessing plant and to
convert the sulphuric acid plant for decomposing filter salts is subject
to the reservation that the expected subsidies be granted and that the
permits legally required for the construction and operation of these
plants be issued. Moreover, the possibility of removing the waste from all
plants mentioned, especially the cinders that result from the
decomposition of filter salts, shall be secured by the permits.
- 39 -
2. In case the construction or conversion of said plants fails because of
these reservations, the costs incurred till then under this Agreement
shall be split up between the parties and refunded.
Art. 23 - Other Cooperation
Xxxxxxxxxx and KRONOS declare their basic willingness beyond the present
project to cooperate also on other problems regarding environmental
protection requirements unless such cooperation is prevented by legal or
contractual obligations.
Art. 24 - Termination of the Provisional Agreement
The parties hereto agree that the provisional agreement dated 18 July 1986
shall become moot upon the signing of this Agreement.
Art. 25 - Arbitration Clause
Disputes arising from or in connection with this Agreement, which cannot
be settled amicably between the two parties, shall be settled by a court
of arbitration, ousting general jurisdiction. Details shall be settled in
the arbitration agreement concluded by the parties on 18 July 1986. The
parties agree that this arbitration agreement shall have exclusive and
unlimited validity also for this Agreement including all post-contractual
rights and obligations.
- 40 -
Art. 26 - Clause on Partial Invalidity
In the event individual stipulations of the Agreement are or become wholly
or partly ineffective, this shall not affect the validity of the remaining
part of the Agreement. The parties undertake to replace the ineffective
stipulation with an effective one that comes as close as possible to the
economic objective aimed at by the ineffective stipulation.
Art. 27 - Written-Form Clause
Alterations of or supplements to this Agreement, including the
Written-Form Clause, must be made in writing to become effective.
Duisburg-Xxxxxxx, 30 December 1986 Leverkusen, 30 December 1986
Xxxxxxxxxx Chemie GmbH KRONOS TITAN-GMBH
/s/ Xx. Xxxxxx Xx. Xxxxxxxx /s/ Xx. X. Xxxxxxxx Xx. X. Xxxxx
----------------------------------- -------------------------------------
Xx. Xxxxxx Xx. Xxxxxxxx Xx. X. Xxxxxxxx Xx. X. Xxxxx
