AGREEMENT*
Effective Date: October 31, 2000
______________
Parties: Orica Nitrogen LLC
_______ 0000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
("ON")
Orica USA Inc.
0000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
("Orica")
and
LSB Chemical Corp.
Cherokee Nitrogen Company
Crystal City Nitrogen Company
00 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Recitals:
________
A. Orica, which owns 100 percent of the equity interests in ON, and
LSB Chemical Corp. ("LSB") entered into a letter agreement dated
August 23, 2000 (the "Preliminary Agreement") setting forth
certain of the terms and conditions under which LSB or an
affiliate would acquire certain assets comprising XxXxxxx
Industries Inc.'s ammonium nitrate manufacturing businesses
located in Cherokee, Alabama and Crystal City, Missouri (other
than accounts receivable, the "LSB Acquired Assets") in the event
Orica or an affiliate successfully bid for, and entered into an
agreement for the purchase of, certain of the assets (the
"Acquired Assets") of the ammonium nitrate manufacturing business
of XxXxxxx Industries Inc. ("XxXxxxx"). Cherokee Nitrogen Company
and Crystal City Nitrogen Company (collectively, "NC") are the
affiliated assignees of LSB. Orica, ON, LSB and NC are sometimes
collectively referred to herein as the "Parties".
*INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS PUBLIC
FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
B. ON was the successful bidder for the Acquired Assets, and ON
and XxXxxxx entered into an Asset Purchase Agreement dated August
28, 2000 (the "Asset Purchase Agreement"). Capitalized terms
which are not otherwise defined herein shall have the meanings
assigned them in the Asset Purchase Agreement.
C. The Asset Purchase Agreement provides that ON may designate
a third party to acquire certain of the Acquired Assets directly
from XxXxxxx and which of such Acquired Assets shall be so
acquired, and ON has designated NC as the purchasers of the LSB
Acquired Assets.
D. The Parties desire to enter into an agreement to supplement
the Preliminary Agreement, and to set forth additional terms and
conditions upon which NC will acquire the LSB Acquired Assets.
Agreements:
__________
In consideration of the foregoing recitals, and other good
and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows:
1. Ratification of Preliminary Agreement. Except as amended
hereby, the Preliminary Agreement is hereby ratified and
confirmed and shall continue in full force and effect as written.
To the extent that any term of the Preliminary Agreement is
inconsistent with this Agreement, such terms shall be deemed
superseded hereby.
2. Assignment of Asset Purchase Agreement: Payment of NC
Purchase Price. ON has transferred and assigned its rights, and
delegated its obligations, under the Asset Purchase Agreement to
NC insofar and only insofar as such rights and obligations affect
or relate to the LSB Acquired Assets (which shall include four
used gauzes belonging to the Cherokee Plant (the "Gauzes")). At
and subject to the Closing, NC shall pay XxXxxxx the sum of ***
by wire transfer of immediately available funds (being the sum of
*** (the "NC Purchase Price") less the sum of *** heretofore paid
by LSB to reimburse Orica for a portion of the Xxxxxxx Money
Deposit under the Asset Purchase Agreement) as the purchase price
for the LSB Acquired Assets.
3. ON Payment. On or before the second business day following
Closing, ON shall pay NC the sum of $760,000 by wire transfer
of immediately available funds in consideration of the purchase
of the precious metals contained in the Gauzes, which amount
shall not be subject to any offset, claim or reduction of any
kind whatsoever.
4. Deferred Payment. The Asset Purchase Agreement provides that
ON shall pay a portion of the Purchase Price in two Deferred
Payments after Closing. LSB has no obligation to pay any portion
of the Deferred Payment, and LSB acknowledges and agrees that it
shall have no rights hereunder or under the Asset Purchase
Agreement to set-off any amounts which may be owed by XxXxxxx to
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
LSB under the Asset Purchase Agreement against the Deferred
Payments.
5. Xxxxxxx Money Deposit. In the event the Asset Purchase
Agreement is terminated and the Xxxxxxx Money Deposit is returned
by XxXxxxx under Section 10.2 thereof, LSB shall be entitled to
the share of the Xxxxxxx Money Deposit paid by it, being ***,
plus interest thereon at a per annum rate equal to the prevailing
money market rate of Xxxxx Fargo Bank, N.A. from time to time
between the date of Closing and the date the Xxxxxxx Money
Deposit is returned by XxXxxxx.
6. Allocation of Liabilities Indemnities.
a. LSB shall pay, perform and discharge, and shall
protect, defend, indemnify and hold harmless ("Indemnify"), the
ON Indemnitees from and against any and all Losses resulting
from, relating to or arising out of, any Assumed Liabilities
relating to any executory contracts assigned by XxXxxxx to NC.
b. ON shall pay, perform and discharge, and shall
Indemnify LSB and NC, and its and their members, shareholders,
partners, officers, directors, employees, agents and
representatives, and any person or entity claiming through any of
them (collectively, the "LSB Indemnitees") from and against any
and all Losses resulting from, relating to or arising out of, any
Assumed Liabilities relating to any executory contracts assigned
by XxXxxxx to ON.
c. LSB shall Indemnify the ON Indemnitees from and against
any and all Losses resulting from, relating to or arising out of
(i) the ownership or operation of the LSB Acquired Assets from
and after the Closing, (ii) any breach by NC of any
representation or warranty contained in Article 5 of the Asset
Purchase Agreement or any default by NC in the performance of any
covenant contained in the Asset Purchase Agreement required to be
performed after the Closing, (iii) any claim for indemnity made
by XxXxxxx under Section 11.3(a) of the Asset Purchase Agreement
to the extent such claim relates to an act or omission of NC or
to the LSB Acquired Assets, (iv) the hiring or engagement by NC
of any of XxXxxxx'x employees, or (v) any breach by LSB or NC of
this Agreement, the Preliminary Agreement or the Asset Purchase
Agreement.
d. ON shall Indemnify the LSB Indemnitees from and against
any and all Losses resulting from, relating to or arising out of
(i) the ownership or operation of the Acquired Assets (other than
the LSB Acquired Assets and other than any Joint Assets to the
extent benefiting or used by NC) from and after the Closing, (ii)
any breach by ON of any representation or warranty contained in
Article 5 of the Asset Purchase Agreement or any default by ON in
the performance of any covenant contained in the Asset Purchase
Agreement required to be performed after the Closing, (iii) any
claim for indemnity made by XxXxxxx under Section 11.3(a) of the
Asset Purchase Agreement to the extent such claim relates to an
act or omission of ON or to the Acquired Assets (other than the
LSB Acquired Assets or other than any Joint Assets to the extent
benefiting or used by NC),
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
(iv) any breach by ON of this Agreement, the Preliminary
Agreement or the Asset Purchase Agreement, or (v) provided that
NC shall have exercised its commercially reasonable efforts to
attempt to cause, and taken all necessary actions on its part to
enable, XxXxxxx to cause such liens to be released or discharged
and provided that 90 days shall have elapsed from the date
hereof, the failure of XxXxxxx to convey title to the LSB
Acquired Assets free and clear of the liens identified on
Attachment B hereto.
e. ON and NC agree to reasonably cooperate in aggregating
claims for indemnity under Section 11.2(a) of the Asset Purchase
Agreement for Losses attributable to misrepresentations of
XxXxxxx or breaches by XxXxxxx of warranties or covenants until
such time as the aggregate amount of such claims exceeds
$200,000.
f. Without the prior written consent of ON, NC shall not
make claims for indemnity under Section 11.2(a) of the Asset
Purchase Agreement for Losses attributable to misrepresentations
of XxXxxxx or breaches by XxXxxxx of warranties or covenants
which in the aggregate exceed $132,260.
7. Costs of Cure and Default Payments. With respect to any
executory contracts of XxXxxxx which are assigned to NC, NC shall
be solely responsible for, and shall Indemnify XxXxxxx and the ON
Indemnitees from and against, any and all cure or damage amounts
payable under Section 365 of the Bankruptcy Code.
8. Proration Items. As between ON and NC, ON shall be solely
responsible for, and shall be solely entitled to payments from
XxXxxxx in respect of, Proration Items (as defined in Section
7.10 of the Asset Purchase Agreement) which relate to the
Acquired Assets (other than the LSB Acquired Assets or the Joint
Assets to the extent benefiting or used by NC), and NC shall be
solely responsible for, and shall be solely entitled to payments
from XxXxxxx in respect of, Proration Items which relate to the
LSB Acquired Assets or the Joint Assets to the extent benefiting
or used by NC.
9. Closing Obligation. The Parties acknowledge and agree that
LSB's or its subsidiaries' obligation to acquire and pay for the
LSB Acquired Assets is conditioned only upon the closing of the
acquisition by ON of the Acquired Assets other than the LSB
Acquired Assets, and that LSD or its subsidiaries are
unconditionally obligated to acquire the LSD Acquired Assets if
ON consummates its acquisition of the Acquired Assets (exclusive
of the LSD Acquired Assets).
10. Nitric Acid Plant. In the event Orica or an affiliate
exercises the option under the Preliminary Agreement to acquire
the Nitric Acid Plant, and notwithstanding such purchase, the
Parties agree that such Plant may be decommissioned and remain on
the Crystal City, Missouri plant site until such time (not to
exceed two years from the date hereof) as Orica or its affiliate
disassembles the Plant and moves it to another location. Orica or
an affiliate shall be responsible for all direct costs
attributable to storage and decommissioning of such Plant, and
the Parties shall cooperate to develop a plan for storage and
decommissioning of such Plant.
11. Employees. ON and NC shall cooperate in determining which of
XxXxxxx'x employees who are employed in connection with XxXxxxx'x
manufacturing business located in Cherokee, Alabama or Crystal
City, Missouri shall be hired by ON or by NC, it being understood
that ON is obligated to hire a certain number of XxXxxxx'x
employees under the Asset Purchase Agreement.
12. Xxxxxx Plant. NC acknowledges that an affiliate of Orica,
Xxxxxx Xxxxxxxx, LLC ("Xxxxxx"), currently leases from XxXxxxx
certain real property and a pipeline which are part of the LSB
Acquired Assets located at Cherokee, Alabama for the purpose of
operating an emulsion manufacturing plant (the "Xxxxxx Plant").
Pursuant to the Asset Purchase Agreement, NC has assumed
XxXxxxx'x obligations under such lease which continues in force
and effect. In the event NC elects to terminate operations at or
decommission the Cherokee, Alabama plant acquired from XxXxxxx,
NC will make available to Xxxxxx, by lease or sale on
commercially reasonable terms, the rail siding and ammonium
nitrate solution tank located at the Cherokee, Alabama plant in
order to permit the supply by rail of ammonium nitrate solution
to the Xxxxxx Plant by a third party producer. Pursuant to the
Asset Purchase Agreement, NC has assumed XxXxxxx'x obligations
under an ammonium nitrate solution supply contract to Xxxxxx.
Orica is the supplier of ammonium nitrate solution to Xxxxxx. NC
agrees to terminate the existing supply agreement for ammonium
nitrate solution to Xxxxxx, and to enter into a new supply
agreement which shall be based on the terms set forth in
Attachment A hereto.
13. Miscellaneous.
a. The fact and terms of this Agreement are confidential,
and shall not be disclosed by either Party to a third party
without the prior written consent of the nondisclosing Party,
except for disclosures required under applicable or compelled by
regulatory. authorities.
b. This Agreement shall be interpreted in accordance with
the laws of the State of Delaware, without regard to conflict of
law provisions. The Parties agree that venue for the resolution
of any dispute arising from this Agreement shall be proper in and
only in a court of competent subject matter jurisdiction in the
State of Delaware, and the Parties each agree to submit to the
personal jurisdiction of the courts therein.
c. This Agreement and the Preliminary Agreement, to the
extent not amended hereby, represent the entire agreement of the
Parties with respect to the subject matter hereof and thereof,
and supersede any earlier written or oral agreement or
understanding between the Parties concerning the subject matter
hereof or thereof.
d. This Agreement may not be assigned by any Party without
the prior written consent of the other Party. This Agreement is
binding on and inures to the benefit of each Party and its
successors and permitted assigns.
e. The covenants and agreements contained in this
Agreement are for the sole benefit of the Parties, and they shall
not be construed as conferring any rights on any other persons.
f. This Agreement may be executed in counterparts, each of which
shall be binding and all of which together shall constitute one
and the same instrument.
g. The Parties acknowledge that discussions regarding
their respective rights to the proceeds of any precious metals or
sludge containing precious metals, as derived from the nitric
acid plants at the Cherokee Plant and the Crystal City Plant, are
continuing and not yet concluded.
[This space left blank intentionally.]
IN WITNESS WHEREOF, each Party has caused this Agreement to
be executed on its behalf by a duly authorized officer, all as of
the Effective Date.
ORICA NITROGEN LLC LSB CHEMICAL CORP.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
__________________________ ______________________
Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Secretary President
ORICA USA INC. CHEROKEE NITROGEN COMPANY
By: /s/ Xxxx X. XxxXxxxxx By: /s/ Xxxxx X. Xxxxxx
___________________________ _______________________
Xxxx X. XxxXxxxxx Name: Xxxxx X. Xxxxxx
Vice President __________________
Title: President
_________________
CRYSTAL CITY NITROGEN COMPANY
By: /s/ Xxxxx X. Xxxxxx
___________________________
Name: Xxxxx X. Xxxxxx
______________________
Title: President
_____________________
ATTACHMENT A
to
AGREEMENT AMONG ON, ORICA, LSB and NC
Terms Sheet
Ammonium Nitrate Solution Supply Agreement
Xxxxxx Emulsion Facility at Cherokee, Alabama
_____________________________________________
Quantity: Estimated monthly requirement of 6,000 to 10,000 short
(2,000 lbs.) tons.
Delivery: Product to be shipped by pipeline.
Term: (i) Initial term of November 1, 2000 to June 30, 2001.
(ii) Parties shall review agreement on February 1, 2001
and, on the basis of such review, each party shall have a one
time opportunity to propose amendments to the supply agreement
for negotiation by the parties.
Price: The invoice price for ammonium nitrate solution shall
be based on actual plant variable costs per ton and
actual direct plant fixed costs per ton to manufacture
the ammonium nitrate, plus *** per ton, but in no event
more than *** per short ton or less than *** per short
ton of 100% basis of contained ammonium nitrate;
provided that if the cost of natural gas delivered to
NC's Cherokee, Alabama facility is less than *** per
mcf, then the invoice price will be reduced by *** per
ton for each *** decrease in natural gas cost below
***, and if such cost exceeds *** per ton, then the
invoice price will be increased by *** per ton for
each *** increase in natural gas cost above ***. Such
adjustments shall be made on a monthly basis.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
ATTACHMENT B
To
AGREEMENT AMONG ORICA, ON, LSB and NC
Liens
_____
1. $213,863.34 for 2000 Taxes due and payable November 1, 2000
(Crystal City)
2. $49,366.40 - Mechanic's Lien filed August 23, 2000 by X.
Xxxxxx Sons. Inc. (Crystal City)
3. $57,463.98 for 2000 Taxes due and payable prior to
October 1, 2000 (Cherokee)
4. $4,788.67 for 2001 Taxes not yet due and payable (Cherokee)
