Exhibit 10.4
Execution Version
PLANT OPERATING AGREEMENT
Franklin, Virginia
This Plant Operating Agreement ("Agreement") is made effective as of May
31, 2001 by and between HERCULES INCORPORATED, a corporation organized under the
laws of the State of Delaware, with its principal offices at Hercules Plaza,
0000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Operator") and GEO SPECIALTY
CHEMICALS, INC., a corporation organized under the laws of Ohio, with its
principal offices at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxx 00000
("Buyer"). Hercules and Buyer are sometimes referred to herein as a "Party" and
collectively as the "Parties" to this Agreement.
WHEREAS, Operator and Buyer are parties to a Sale and Purchase Agreement
dated as of March 27, 2001 (the "Sale Agreement") pursuant to which Operator as
of the date hereof (the "Closing Date") sold to Buyer certain assets and rights,
and Buyer assumed certain liabilities, primarily associated with Hercules'
Peroxides strategic business unit and products (the "Peroxides Business") on the
terms set forth in the Sale Agreement; and
WHEREAS, Operator's employees are skilled and experienced in the operation
and maintenance of the Peroxy Area Facility, as more fully described in the
Lease Agreement between the parties dated as of the date hereof (the "Peroxy
Area Facility"), located at Operator's Franklin, Virginia Facility (the
"Franklin Facility"), and Buyer desires Operator to provide substantially all
labor services in connection with the operation and maintenance thereof and
certain other services described herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Parties, intending to be legally bound, hereby agree as
follows:
1. OPERATION OF PLANT - SCOPE OF WORK
1.01 Operator hereby agrees to operate and maintain the Peroxy Area
Facility on behalf of Buyer in accordance with the terms and conditions of this
Agreement. The Peroxy Area Facility is located on land leased by Buyer
comprising part of the Franklin Facility.
1.02 The scope of work and services to be performed by Operator under this
Agreement is described and more fully provided for in Exhibit A attached hereto
and incorporated by reference. Exhibit B attached hereto and incorporated herein
by reference lists the direct charges ("Direct Charges"), allocated charges
("Allocated Charges"), and fixed cost charges ("Fixed Charges") that will be
paid by Buyer in accordance with the terms of this Agreement, and lists the
charges allocated to the Peroxides Business prior to
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the Closing Date that will not be allocated to Buyer under this Agreement.
Attached hereto as Exhibit C, for illustrative purposes, is a summary of the
charges comprising the fixed fee for the Fixed Charges set forth in Section
8.01, which is based on the forecast for such charges for 2001.
1.03 All services supplied under this Agreement shall be performed under
the direct supervision of Operator's personnel.
2. TERM AND TERMINATION
The term of this Agreement shall commence on the date first written above
and shall continue for a period of three (3) years, and thereafter shall be
automatically renewed for two additional one (1) year periods unless either
party provides the other party with advance written notice at least six (6)
months prior to the end of the then-current term of its election to not renew
the Agreement.
3. OBLIGATIONS OF BUYER
In addition to the other obligations of Buyer contained in this Agreement,
Buyer undertakes the following obligations:
3.01 Buyer shall designate a representative ("Buyer's Representative") who
shall be Buyer's employee. The Buyer's Representative shall act as the point of
contact for Operator on matters concerning this Agreement. The Buyer's
Representative shall primarily work at the Peroxy Area Facility. The Buyer's
Representative shall leave standing instructions for the Peroxy Area Facility's
shift supervisor for each shift during which the Buyer's Representative will not
be present ("Buyer's Standing Instructions"). If Buyer desires to make any
changes to such standing instructions for any particular shift, the Buyer's
Representative shall communicate the changes to the applicable shift supervisor
prior to the beginning of the shift. Buyer may designate an alternate Buyer's
Representative or change the Buyer's Representative at any time upon advance
written notice to Operator.
3.02 Buyer shall prepare annually a sales and production forecast
("Production Forecast"), which shall forecast the products and corresponding
production levels and budgetary requirements anticipated for the forthcoming
calendar year. A Production Forecast shall be issued to Operator at least one
hundred and twenty (120) days prior to the beginning of each calendar year.
Buyer shall give Operator advance notice when any significant deviations from
the Production Forecast are required to be implemented during any calendar year,
which notice must be sufficient to permit Operator to make any operational
adjustments required to meet such deviations.
3.03 Buyer shall determine product formulations, operating procedures,
product specifications and product quality analysis procedures which it shall
provide to Operator in operating instructions ("Operating Instructions") issued
from time to time. It is the intent of the parties that Buyer shall initially
adopt the specifications and quality analysis
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and inspection procedures which were used in the Peroxy Area Facility as of the
Closing Date, to the extent consistent with the past practice of the Peroxides
Business.
3.04 All raw materials used by the Peroxy Area Facility, all goods-in-
process at the Peroxy Area Facility, and all products manufactured at the Peroxy
Area Facility shall be the property of Buyer. Buyer shall be fully responsible
for, and shall assume all title to and liability and risk of loss arising out of
the production, presence, use, storage or sale of such raw materials, goods-in-
process or products. Operator may, upon Buyer's request, provide Buyer with
technical advice and assistance; provided, however, that in no event will the
rendering of such advice and assistance cause Operator to be liable to Buyer for
any claims, damage or loss arising out of the production, presence, use or sale
or such raw materials, goods-in-process or products, except as provided in
Section 12.
3.05 Buyer shall provide Operator with instructions for the shipment of
product ("Shipping Instructions"). The Shipping Instructions shall specify
customers' names, specific destination, special customer requirements (such as
packaging or labeling) and terms of shipment. In the event any Shipping
Instruction is ambiguous or incomplete, Operator shall not ship against it until
Operator has obtained all necessary information from a representative of Buyer,
which Operator shall promptly seek to obtain.
3.06 Operator shall operate the Peroxy Area Facility in compliance with,
and Buyer shall comply with, Buyer's environmental and safety rules and site
regulations as they currently exist or may be revised by Buyer from time to time
("Safety Rules"). It is the intent of the parties that Buyer shall initially
adopt the environmental and safety rules and site regulations which were used in
the Peroxy Area Facility as of the Closing Date.
4 OBLIGATIONS OF OPERATOR
In addition to the other obligations of Operator contained in this
Agreement, Operator undertakes the following obligations:
4.01 Operator shall designate a supervisory employee (herein
"Superintendent") to act as the primary point of contact for Buyer's
Representative with respect to Operator's performance under this Agreement.
Operator shall also designate an alternate to be contacted in the absence of the
Superintendent.
4.02 In performing the work provided in this Agreement, Operator shall
operate, supervise and maintain the Plant as reasonably directed by Buyer in
accordance with Buyer's Production Forecast, Operating Instructions and Shipping
Instructions, subject to the provisions of Section 4.06. Operator shall follow
and employ those operating procedures, quality analysis and inspection
procedures and product specifications until Operator receives notice of changes
thereto.
4.03 Within sixty (60) days of receipt of Buyer's Production Forecast,
Operator shall prepare and deliver to Buyer an operating budget ("Operating
Budget") for the forthcoming year. The Operating Budget shall include forecasts
of the Direct Charges,
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Allocated Charges and Fixed Charges detailed in Exhibit B hereto, consumption of
raw materials and packaging materials, energy and utilities costs, capital
spending and raw materials and finished products inventories, all subject to the
approval of Buyer. The contents and format of such Operating Budget shall be
developed by the Parties. The parties shall use reasonable best efforts to agree
upon the final form of each Operating Budget; provided that if the parties are
unable to reach agreement, then the Operating Budget for the prior calendar year
shall apply and be followed until such time as the parties reach agreement on a
new Operating Budget.
4.04 Operator shall not make capital expenditures for the Peroxy Area
Facility on behalf of Buyer without Buyer's prior written consent. In the event
capital expenditure is desirable as a result of maintenance, expansion or other
production requirements, Operator shall, upon request by Buyer, prepare
appropriate papers for Buyer's consideration in evaluating such proposed
expenditure.
4.05 Operator shall record production and maintenance data as before the
sale of the Peroxides Business unless otherwise instructed by Buyer, except that
such production and maintenance data will not longer be recorded in SAP.
4.06 Operator reserves the right to refuse to perform any obligations or
service under this Agreement, or refuse to modify any process or procedure, if,
in Operator's reasonable judgment, such performance would present an
unacceptable risk to the Franklin Facility or personnel safety or would be
reasonably likely to violate any Applicable Law (as defined in the Sale
Agreement), including any Environmental Law (as defined in the Environmental
Annex to the Sale Agreement) and any employee health or safety law or
regulation, in which case Operator will notify Buyer immediately. Upon any such
notice, Operator and Buyer shall cooperate in attempting to develop a method of
completing the applicable objective in a mutually acceptable manner.
5 IMPROVEMENTS
5.01 Direct Improvements. Buyer may, in its sole discretion, choose to
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make capital expenditures for the maintenance, expansion or improvement of the
Peroxy Area Facility ("Direct Improvements"), and Operator shall either make
such Direct Improvements or arrange, or permit Buyer to arrange, for the
completion of such Direct Improvements by a third party contractor. Buyer shall
pay for such Direct Improvements, either by reimbursing Operator or paying the
third party contractor directly, if applicable.
5.02 Common Area Improvements and Maintenance. Operator shall (a) make all
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necessary capital expenditures for the maintenance of the common areas and
facilities shared by Buyer and the Franklin Facility as a whole ("Common Area
Maintenance"), and (b) make capital expenditures to expand or improve such
common areas and facilities which are ordinary or routine in nature and
consistent with the historic operation of the Franklin Facility (collectively
"Common Area Improvements"). Buyer shall pay an annual fixed fee to Operator for
all Common Area Maintenance, which Buyer shall pay in twelve (12) equal monthly
installments in arrears. The annual fee for Common Area
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Maintenance shall initially be $75,000, and shall be adjusted annually in
accordance with the method described in Section 8.03. Buyer shall pay an annual
fixed fee to Operator for all Common Area Improvements, which Buyer shall pay in
twelve (12) equal monthly installments in arrears. The annual fee for Common
Area Improvements shall initially be $67,000, and shall be adjusted annually in
accordance with the method described in Section 8.03.
5.03 Special Improvements. For productivity and cost reduction
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capital investment or other improvements not covered by Section 5.01 or 5.02,
Operator may, from time to time, propose capital investment opportunities
constituting an improvement, upgrade or enhancement ("Special Improvements") to
the Facility, and thereafter shall make the capital investment. Operator will,
by written notice to Buyer, clearly and in detail describe the Special
Improvement, identify the source (base cost or variable cost efficiency) of the
expected savings from the project, why the Special Improvements are desirable,
the cost of the Special Improvements, how the Special Improvements will affect
and benefit the operations of both the Parties, and the proposed allocation of
the cost of the Special Improvements. Buyer may elect to opt-in to any Special
Improvement on terms to be agreed to between the parties. Buyer shall not pay
any portion of any Special Improvement except to the extent it opts-in to such
Special Improvement and agrees to pay a portion of the cost. As a general
principle, Buyer shall not receive the benefit of any Special Improvement to
which it does not opt-in; provided that Buyer shall not be denied the right to
use any facility, common area, service or utility that it is otherwise entitled
to use pursuant to this Agreement or any other agreement with Operator or
pursuant to Applicable Law.
5.04 Capacity; Expansion Activities. Operator is not required to supply
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services or work beyond the capacity level consistent with recent past practice
of the Business, subject to the reasonable growth of the Peroxides Business as
agreed to in the Operating Budgets, or as contemplated by the strategic plan
relating to the Peroxides Business provided by Operator to Buyer prior to the
Closing Date, with respect to both production increases and new products
(subject to Buyer's payment of capital expenditures required to sustain the
growth contemplated by such strategic plan).
6. MAINTENANCE
6.01 Obligations to Maintain. Except as otherwise specifically stated
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herein, Operator shall have the obligation to maintain in good working order and
perform maintenance upon all facilities, lines and service systems which are
jointly used by the Parties. The cost of maintenance to dedicated facilities or
lines shall be borne solely by the Party owning or using the dedicated line or
facility. Operator shall maintain in good working order and perform maintenance
upon Franklin Facility and to the extent necessary so as not to adversely affect
Buyer's occupation or use of the Peroxy Area Facility or the operation of the
Peroxides Business.
6.02 Failure to Maintain. In the event that Operator fails to complete in
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a timely manner any maintenance required to be performed by it, Buyer shall have
the right to
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perform the necessary maintenance or engage a third party contractor to complete
the applicable services.
7. SHUTDOWNS
7.01 Buyer Shutdowns. If Buyer elects to undertake a shutdown of the
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Peroxy Area Facility, whether a partial or full shutdown, for any reason and for
any period of time, other than routine shutdowns included in a Production
Forecast (a "Buyer Shutdown"), Buyer shall provide Operator with as much advance
notice of any such Buyer Shutdown as is practicable under the circumstances,
provided that Buyer shall use best efforts to provide at least ninety (90) days
advance notice to Operator. Buyer shall pay all direct costs incurred in
connection with implementing the Buyer Shutdown, and will continue to pay,
during the continuance of such Buyer Shutdown, all Direct Charges for a period
of four (4) months after the effective date of such Buyer Shutdown and all
Allocated Charges and Fixed Charges for a period of fifteen (15) months after
the effective date of such Buyer Shutdown; provided that (a) Operator shall use
best efforts, commencing as of the date Buyer provides notice to Operator of the
Buyer Shutdown, to mitigate and reduce all such Direct Charges, Allocated
Charges and Fixed Charges during such periods, and (b) Buyer's payment of Fixed
Charges during such fifteen (15) month period shall not in any month exceed
eighty-five percent (85%) of the then-applicable monthly Fixed Charge fee. Buyer
shall pay all expenses and bear all costs reasonably necessary to commence
operations after a Buyer Shutdown, including but not limited to all hiring,
severance, retraining and other applicable expenses mandated by (i) Operator's
collective bargaining agreement which then applies to the employees at the
Peroxy Area Facility or (ii) Operator's then-existing standard severance policy;
provided that Operator shall use best efforts to mitigate and reduce all such
expenses. Buyer and Operator shall cooperate in the coordination of all Buyer
Shutdowns.
7.02 Operator Shutdowns. Operator shall not be permitted to cease
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providing services during the term of this Agreement, pursuant to a full or
partial shutdown of the Franklin Facility or otherwise, for any reason or for
any period of time (exclusive of (a), (b) and (c) below, an "Operator
Shutdown"), except for (a) short-term shutdowns undertaken with the written
consent of Buyer or provided for in an Operating Forecast or Operating Budget,
and carried out in accordance with such agreement, Operating Forecast or
Operating Budget, as applicable; (b) short-term shutdowns, arising out of
accidents or other unexpected events, for which Operator has obtained the
consent of Buyer's Representative or other representative of Buyer designated in
Buyer's Standing Instructions, which shall include contact information for
Buyer's Representative and two additional representatives of Buyer to be
contacted in the case of any such accident or event; or (c) the cessation of
services or shutdown during the subsistence of a Force Majeure Event. During the
pendency of any Operator Shutdown, Buyer shall not make any payments under this
Agreement for any services not received, including for Direct Charges, Allocated
Charges and Fixed Charges, and Operator shall be liable to Buyer for all direct
losses suffered by Buyer.
8. COMPENSATION OF OPERATOR; PAYMENT
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8.01 Buyer shall make the following payments to Operator during the term
of this Agreement: (a) for Direct Charges invoiced to Buyer in accordance with
the applicable Operating Budget and Exhibit B, as the same may be modified by
the parties from to time in a written document signed by each party; (b) for the
Fixed Charges, in the amount of $360,000 per year, payable in twelve (12) equal
monthly installments; (c) for the Allocated Charges, in the amount of $185,000
per year, payable in twelve (12) equal monthly installments; and (d) for Common
Area Maintenance, Common Area Improvements and Special Improvements (in
accordance with and to the extent provided by Section 5).
8.02 Operator shall invoice to Buyer, and Buyer shall remit to Operator,
on a monthly basis, in arrears, the amount to be reimbursed by Buyer to Operator
pursuant to Section 8.01 above. Payment for the monthly amounts due which are so
invoiced shall be due thirty (30) days from the date of invoice. Interest shall
accrue on late payments from the due date at the rate of eight percent (8%) per
annum.
8.03 The fees payable by Buyer to Hercules pursuant to this Agreement for
(a) Fixed Charges, (b) Allocated Charges, (c) Common Area Maintenance, and (d)
Common Area Improvements will be adjusted: (i) at the beginning of each year of
this Agreement by the percentage of change from the preceding and current Fourth
Quarter Producer Price Index for Chemicals and Allied Products; and (ii) in the
event of a change in any Environmental Law (as defined in the Environmental
Annex to the Sale Agreement) after the date of this Agreement which requires
capital expenditures that would benefit the Peroxy Area Facility, in an amount
equal to an allocation to Buyer in accordance with Exhibit A.
8.04 Operator's computations of Direct Charges and/or applicable Special
Improvements and the books and records of Operator underlying such computations
may be reviewed, on an annual basis during normal business hours and upon
reasonable notice, by Buyer's auditors, at Buyer's cost and to the extent
necessary to verify Operator's computation of such charges; provided that such
auditors shall be permitted to share the information gleaned from such books and
records only to the extent required for such auditors to perform their functions
in accordance with GAAP and Applicable Law, including without limitation all
applicable rules and regulations of the Securities and Exchange Commission.
9. PLANT PERSONNEL AND COLLECTIVE BARGAINING AGREEMENTS
9.01 Personnel provided by Operator to perform services under this
Agreement shall at all times remain employees of Operator. Operator shall have
the right to determine the job qualifications and the identity of employees who
perform services under this Agreement; provided that Operator shall to the
extent permitted under its collective bargaining agreement generally maintain as
employees at the Peroxy Area Facility the employees located at such facility
prior to the Closing Date. Operator, exercising commercially reasonable
discretion, reserves the exclusive right to determine the selection, salaries,
wages, benefits, promotion, discipline, discharge and supervision
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of Operator's employees employed at the Peroxy Area Facility. The provision of
employee services under this Agreement is subject to any collective bargaining
agreement which may be now or in the future binding upon Operator. Operator,
exercising commercially reasonable discretion, also reserves the exclusive right
to negotiate, resolve grievances and otherwise deal with the employees and their
collective bargaining representatives. It is the intent of the Parties hereto
that Operator's discretion in dealing with its employees and any of their
collective bargaining representatives shall be unimpaired by Buyer. Operator
shall not be required to perform any obligation under this Agreement where such
performance would be reasonably likely to directly result in a violation of
Operator's collective bargaining agreement then in effect. In the course of
negotiating any applicable collective bargaining agreement or any amendment of
any collective bargaining agreement during the term of this Agreement or any
renewal period, Operator shall have due regard to the provisions of this
Agreement and the intent of the parties to operate the Peroxy Area Facility in
the manner provided herein.
9.02 Operator's employees employed at the Peroxy Area Facility shall
be, in the good faith judgment of Operator, qualified and competent to perform
the tasks for which they were engaged. Operator shall use its best efforts to
ensure that all services supplied by Operator shall be provided in accordance
with good engineering and/or industry practices used by persons knowledgeable
about that particular service or industry.
9.03 Throughout the term of this Agreement, Buyer shall report to Operator
on a periodic basis the quality of services being provided by Operator's
employees assigned to the Peroxy Area Facility. In the event that Buyer raises
concerns or issues about the quality of labor, personnel problems or other labor
issues, Operator shall take all actions reasonably available to it to resolve
the concerns or issues so raised. If Buyer proposes in any Production Forecast
to increase the number of employees employed at the Peroxy Area Facility,
Operator shall cooperate with Buyer in hiring additional personnel or assigning
additional personnel to the Peroxy Area Facility. Operator shall provide prompt
notice to Buyer of any labor issues that would be reasonably expected to affect
the Peroxides Business, including any increase in labor costs or discussions or
agreements with any labor union or actions taken or proposed to be taken by any
labor union.
10. BOOKS AND RECORDS
Each party shall keep and make available to the other Party and its
representatives records and accounts of all transactions pertaining to the
obligations hereunder and shall preserve them for a period of three (3) years
following the end of the fiscal year to which they pertain except for such
records as may have a longer retention period under applicable statute,
regulation or other authority. The Parties may review these books and records
upon reasonable notice during normal business hours.
11. COMPLIANCE WITH LAWS AND REGULATIONS
Both parties hereto shall comply with all applicable federal, state and
local laws, regulations, ordinances, rules and orders in the performance of
their respective rights and
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obligations under this Agreement. The Parties, in their respective capacities as
owner and operator of the Peroxy Area Facility, shall maintain and file any
records and notices, and obtain all licenses and permits, pertaining to the
operation of the Peroxy Area Facility as may be lawfully required by any
federal, state or local government agency or office. Each party shall cooperate
with the other in such compliance efforts.
12. INDEMNIFICATION
12.01 Buyer shall defend, indemnify and save Operator, its officers,
directors, employees, agents and servants (hereinafter for the purposes of this
Section referred to as "Operator") harmless from and against all liabilities,
losses, obligations, expenses, damage or penalties of any kind or nature
(including without limitation, reasonable attorneys' and experts' fees and
expenses) for any suit, claim, settlement, award, penalty, fine, judgment,
judicial order or consent order (hereinafter collectively referred to as
"Claims") (a) arising out of the production, presence, sale or use of any
product manufactured or of any raw material used at or waste or by-products
produced by the Peroxy Area Facility or arising out of the operation of the
Peroxy Area Facility under this Agreement (including, without limitation,
products liability claims); (b) because of personal injury (including death at
any time resulting therefrom) or loss of or damage to property sustained by any
person or persons (including third parties, and Operator's or Buyer's officers,
directors, employees, agents or servants), to the extent arising out of,
resulting from or in consequence of the performance of the services under this
Agreement, (c) because of contamination of, adverse effects on, or damage to the
environment, (including, but not limited to, (i) releases of contaminants into
or onto the air, water or land; (ii) violations of or cost of compliance with
any obligations imposed by any federal, state, or other environmental statute,
law, regulation or other legal requirement or duty; (iii) penalties for such
violations; (iv) natural resource damage), sustained or brought by any person or
persons (including government agencies, third parties, or Operator's or Buyer's
officers, directors, employees, agents or servants), to the extent arising out
of, resulting from or in consequence of the performance of the services under
this Agreement, or (d) arising out of any Claim which is asserted by any
Operator employee for injury or alleged injury to the extent related to his or
her employment with Operator related to the operation or maintenance of the
Peroxy Area Facility, including Workers' Compensation claims. Operator agrees to
use commercially reasonable efforts to defend questionable or inappropriate
claims, and Buyer agrees that the cost of such defense shall be reimbursed to
Operator. Operator shall mitigate any losses for which it may claim
indemnification hereunder. Buyer shall reimburse Operator on a quarterly basis
for actual costs properly paid by Operator for all Workers' Compensation
benefits, voluntary compensation benefits, medical and hospital expenses and
other related industrial injury expenses for those employees injured or alleging
injuries incurred during the term of this Agreement to the extent arising out
of, resulting from or in consequence of the performance of the services under
this Agreement. Such quarterly reimbursements shall not be limited by the term
of this Agreement.
12.02 Operator shall not be entitled to indemnification hereunder to the
extent that Claims arise out of (a) the acts or omissions of Operator at the
Franklin Facility
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unrelated to its performance of services under this Agreement; (b) gross
negligence or deliberate misconduct on the part of Operator; or (c) matters
subject to indemnification claims by Buyer pursuant to Section 12.03. Operator
may not recover amounts pursuant to Section 12.01 which have already been
absorbed by Buyer, whether as Direct Charges, Allocated Charges or Fixed Charges
or otherwise.
12.03 Operator shall defend, indemnify and save Buyer, its officers,
directors, employees, agents and servants (hereinafter for the purposes of this
Section referred to as "Buyer") harmless from and against all Claims (a) arising
out of any matter described in Section 12.02(a) or (b) above; (b) arising out of
Operator's failure to comply with the provisions of any applicable collective
bargaining agreement or Applicable Law (other than Claims which could be made by
Buyer against Operator under the Environmental Annex (as defined in the Sale
Agreement)); (c) arising out of actions by Operator in the performance of the
services which are taken in disregard of specific lawful and commercially
reasonable instructions given by Buyer's Representative to Operator's
Superintendent; (d) arising out of a breach by Operator of any provision of this
Agreement; or (e) any direct action taken or claim made against Buyer by any
employee of Operator arising out of such employee's employment at the Peroxy
Area Facility, other than actions or claims based primarily on the actions of
Buyer's Representative (subject to Buyer's obligation to reimburse Operator for
the expenses set forth in the penultimate sentence of Section 12.01). Buyer
shall mitigate any losses for which it may claim indemnification hereunder.
12.04 Buyer shall not be entitled to indemnification hereunder to the
extent that Claims arise out of (a) the gross negligence or deliberate
misconduct on the part of Buyer, or (b) matters subject to indemnification
claims by Operator pursuant to Section 12.01.
12.05 An indemnifying Party shall, upon request by the indemnified Party,
permit the indemnified Party to participate in the defense or settlement of any
Claim against the indemnified Party which is subject to the provisions of this
Section.
13 INSURANCE
13.01 Buyer shall, until the expiration or termination of this Agreement,
procure and maintain insurance of the type and with the minimum limits
hereinafter set forth:
a) Worker's Compensation - Including coverage for Occupational
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Disease
Minimum Limits
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Worker's Compensation Statutory Benefits
Employer's Liability $100,000 each occurrence
b) Comprehensive General Liability - Including coverage for
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Contractual Liability assumed by Buyer under Section 12
(Indemnity), Premises - Operations, Products - Completed
Operations, Independent
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Contractors and explosion, collapse and underground property
damage hazards (otherwise known as "XCU").
Minimum Limits
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Bodily Injury $500,000 each occurrence
$500,000 annual aggregate
Property Damage $500,000 each occurrence
$500,000 annual aggregate
The above policy(ies) shall include Operator as a named insured with respect to
any claims arising out of, resulting from or in consequence of the performance
of work under this Agreement.
c) Comprehensive Automobile Liability - Including coverage for
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Owned, Hired andNon-owned Automobiles.
Minimum Limits
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Bodily Injury $500,000 each person
$500,000 each accident
Property Damage $500,000 each accident
Umbrella Liability - Providing limits which, in addition to the
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primary limits described in subparagraphs (b) and (c) above, shall total, for
each such coverage respectively, a minimum of Two Million Dollars ($2,000,000)
annual aggregate. This coverage may be subject to a retained limit of Ten
Thousand Dollars ($10,000) per occurrence for those losses it covers which are
not covered by the policies obtained in accordance with subparagraphs (b) and
(c) above. The above policy(ies) shall include Operator as a named insured with
respect to any claims arising out of, resulting from or in consequence of the
performance of work under this Agreement.
13.02 Coverage. The coverages referred to above are set forth in full in
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the respective policy forms, and the foregoing descriptions of such policies are
not intended to be complete.
13.03 Certificate of Insurance. Buyer shall furnish, before commencing any
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work under this Agreement, Certificates of Insurance indicating (1) types and
amounts of insurance as required by the above; (2) insurance company or
companies carrying said coverage; (3) effective and expiration dates of
policies; (4) that Operator is a named insured under the Comprehensive General
Liability and Umbrella Liability policies with respect to any claims arising out
of, resulting from or in consequence of the performance of work under this
Agreement; and (5) that thirty (30) days advance written notice will be given to
Operator of any material change or cancellation. Throughout the course of work
under this Agreement, Operator shall supplement such Certificate as needed and
provide current Certificates of Insurance which certify that the insurance
required by this Section is being renewed seasonably and maintained in force.
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14 CONFIDENTIALITY
14.01 For purposes hereof, "Confidential Information" means any and all
information of either Party that might reasonably be considered confidential,
secret, sensitive, proprietary or private. To the extent practical, Confidential
Information shall be marked "proprietary" or "confidential". Confidential
Information shall include the following:
(1) data, know-how, formulae, processes, designs, sketches,
photographs, plans, drawings, specifications, samples, reports, lists, financial
information, studies, findings, inventions and ideas, or proprietary information
relating to either party or the methods or techniques used by either party;
(2) data, documents or proprietary information employed in connection
with the marketing and implementation of each party's products, including cost
information, business policies and procedures, revenues and markets, distributor
and customer lists, and similar items of information;
(3) any other data or information obtained by either party during the
term of this Agreement which is not generally known to and not readily
ascertainable by proper means by third persons who could obtain economic value
from its use or disclosure;
14.02 Operator shall treat as confidential all Confidential Information of
Buyer that comes to Operator's knowledge through this Agreement. Operator shall
take such steps to prevent disclosure of such Confidential Information to any
third person as it would take in protecting its own proprietary or confidential
information and shall not use any portion of such Confidential Information for
any purpose not authorized herein.
14.03 Operator shall not be under any obligations with respect to any
Confidential Information:
(1) which is, at the time of disclosure, available to the
general public;
(2) which becomes at a later date available to the general
public through no fault on its part and then only after said
later date;
(3) which it can demonstrate was in its possession before
receipt from Buyer (except by virtue of Operator's ownership
of the Peroxides Business prior to the Closing Date);
(4) which is disclosed to it without restriction on disclosure
by a third party who has the lawful right to disclose such
information; or
(5) after the date that is three (3) years after the date of
termination of this Agreement for any reason.
14.04 SUBJECT TO SECTION 14.03, THE CONFIDENTIALITY AND NON-DISCLOSURE
OBLIGATIONS OF THIS ARTICLE SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS
AGREEMENT.
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15 FORCE MAJEURE
15.01 Force Majeure Event. Neither Party shall be liable for any loss or
-------------------
damage for delay or non-performance of any obligations under this Agreement to
the extent such delay or non-performance is caused by (a) the operation of any
applicable law, rule, ordinance or regulation of any governmental entity or
regulatory agency, (b) any requirement or intervention of civil, naval or
military authorities or other agencies of the government, or (c) any other
causes whatsoever not reasonably within the control of such Party, including,
but not limited to, acts of God, war, riot, insurrection, civil violence or
disobedience, blockages, embargoes, sabotage, epidemics, fire, strikes, lock-
outs or other industrial or labor disturbances, lightening, hurricanes, floods,
explosions and delay of carriers (for purposes of this Agreement, a "Force
Majeure Event").
15.02 Notice of Force Majeure Event and Obligation to Recommence Service.
------------------------------------------------------------------
In the event of either Party being rendered unable by a Force Majeure Event to
carry out its obligations under this Agreement such Party shall give notice to
the other Party with full particulars including the expected duration of such
Force Majeure Event, promptly after (but no later than seventy-two (72) hours
after) becoming aware of the occurrence of the cause relied on, and upon the
giving of such notice the obligations of the Party giving such notice, so far as
they are affected by such Force Majeure Event shall be suspended during the
continuance of any inability so caused. The party giving notice shall exert best
efforts to overcome such Force Majeure Event and to resume performance under
this Agreement; provided, however, that the settlement of strikes, lock-outs and
other industrial or labor disturbances shall be entirely within the reasonable
discretion of Operator, and Operator shall not be required to settle any strike,
lock-out or other industrial labor dispute by acceding to any opposing third
party's demands which Operator reasonably determines to not be in the business
interests of Operator. Upon the cessation of the cause or causes for any such
failure or delay, performance hereof shall be resumed, but such delay shall not,
except by mutual agreement, operate to extend the term of this Agreement.
15.03 In the event of a Force Majeure Event, Buyer shall continue to pay
all Direct Charges, Allocated Charges and Fixed Charges; provided that Operator
shall use reasonable efforts to mitigate and reduce all such Direct Charges,
Allocated Charges and Fixed Charges. If any Force Majeure Event prevents
Operator from performing any of its obligations under this Agreement, Buyer may
to the extent practicable obtain replacement services from a third party during
the subsistence of Force Majeure Event and cease making payments to Operator for
the applicable Direct Charges, Allocated Charges and Fixed Charges, and Operator
shall provide all such assistance as is reasonably required by Buyer to obtain
and utilize such third party services.
15.04 Allocation in Event of Shortage. In the event of a Force Majeure
-------------------------------
Event in which there are shortages of particular services such that all
requirements of the Peroxides Business and other operating businesses at the
Franklin Facility cannot be met, the Parties will allocate the affected
service(s) or resources as follows:
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(a) first, so as to avoid danger or injury to human health or safety or
the environment to the maximum extent possible under the
circumstances, then any excess of the services or resources thereover,
(b) so as to avoid damage to tangible property, real or personal of both
Parties to the maximum extent possible under the circumstances, then
any excess of the services or resources thereover,
(c) in proportion to the then-current average annual anticipated usage
among the Parties and other third persons also carrying on business at
the Franklin Facility for the services or resources affected, then any
excess thereover,
(d) as mutually agreed.
16. [intentionally omitted]
17. [intentionally omitted]
18. DISPOSITION OF PERSONNEL UPON TERMINATION
On expiration or earlier termination of this Agreement, Buyer may offer
employment to such Operator personnel as have been providing labor to the Peroxy
Area Facility pursuant to this Agreement. In the event, however, that such
personnel are not offered employment with Buyer and become redundant to
Operator, Buyer agrees to reimburse Operator for all severance and other
applicable expenses mandated by (a) Operator's collective bargaining agreement
which then applies to the employees at the Peroxy Area Facility or (b)
Operator's then-existing standard severance policy.
19. NOTICES
All notices given by either Party shall be in writing and shall be
delivered by courier, hand, mail (postage prepaid) or by facsimile promptly
confirmed by letter to the addresses set forth below, or to such other addresses
as either party shall have designated by notice:
If to Buyer: If to Operator:
----------- --------------
GEO Specialty Chemicals, Inc. Hercules Incorporated
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000 0000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000 Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, President Attention: General Counsel
And with a copy to: And with a copy to:
Xxxxxxxx Xxxx LLP Hercules Incorporated
3900 Key Center 00000 Xxxxx Xxxxx Xxxxx
000 Xxxxxx Xxxxxx Xxxxxxxxx, XX 00000
Xxxxxxxxx, Xxxx 00000 Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxxx Attention: Plant Manager
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20. INDEPENDENT CONTRACTOR
Operator is and shall remain at all times an independent contractor in the
performance of this Agreement. Neither Operator nor anyone employed by Operator
shall be deemed a partner, joint venturer, agent, representative, employee or
servant of Buyer by virtue of this Agreement. All persons employed by Operator
to perform the work hereunder shall be and remain employees solely of Operator
and subject to the supervision of Operator's supervisory personnel. Operator
shall pay all wages, salaries and benefits and all social security, employment
and similar taxes and contributions applicable to wages and salaries of all
persons employed by Operator.
21. LIMITED WARRANTY & DISPUTE RESOLUTION
21.01 In General. The services and work to be performed under this
----------
Agreement shall be subject to the provisions of the exhibits hereto, the
Operating Instructions, the Shipping Instructions and the Safety Rules.
21.02 Quality of Service. Buyer is generally entitled to a quality of
------------------
service equal to that which was being enjoyed by the Peroxides Business prior to
the date of this Agreement. In the event of documented service quality
deterioration, Operator will use best efforts to resolve the issue.
21.03 In the event of any dispute between the Parties under this
Agreement, the Parties shall in good faith attempt to resolve such dispute
between themselves and, should the parties fail to so resolve such dispute
within seven (7) days, shall follow the procedure set forth in Article 13
(Resolution of Disputes) of the Sale Agreement.
21.04 In no event under this Agreement or in connection with the
activities contemplated by this Agreement shall either party be liable to the
other party for any special, incidental or consequential damages.
22. MISCELLANEOUS
22.01 This Agreement (which incorporates certain provisions of the Sale
Agreement) constitutes the entire understanding, and is intended as a final
expression of the agreement between the Parties with respect to the subject
matter hereof. This Agreement may not be changed, altered, modified or amended
except in writing signed by the Parties.
22.02 The terms and conditions of this Agreement will inure to the benefit
of, and be binding upon the respective successors and assigns of the Parties
hereto. Except as provided below, this Agreement may not be assigned, in whole,
in material part or otherwise by either Party without the prior written consent
of the other Party.
15
(1) Notwithstanding the foregoing, each Party to this Agreement
will be entitled to assign all or any part of its rights and obligations under
this Agreement to one or more of its Affiliates which, in the reasonable opinion
of the relevant assignor, is capable of discharging the liabilities or
obligations so assigned, and any or all rights and interests under this
Agreement to: (i) any purchaser or acquirer of the Party or to any purchaser or
acquirer of a Party's assets or business to which this Agreement relates, and to
any successors or assigns thereof, (ii) as a matter of applicable law, the
surviving entity in any merger, consolidation, equity exchange or reorganization
involving the Party or any of its successors or assigns, and (iii) any lender,
lenders or agent therefore as collateral security.
(2) Nothing in this Agreement, express or implied, is intended to
confer any rights or remedies hereunder on any Person other than Buyer or
Operator and their respective Affiliates or any of their respective successors
and permitted assigns.
22.03 Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall be ineffective to the extent of such prohibition or
unenforceability without affecting, impairing or invalidating the remaining
provisions hereof or the enforceability hereof. To the extent legally
permissible, the Parties shall negotiate in good faith such amendment of this
Agreement as may be necessary to fairly and equitably achieve in a legally
permissible manner the substance of the provision which was so prohibited or
unenforceable.
22.04 This Agreement may be executed in one (1) or more counterparts, each
of which shall be deemed to be an original and all of which shall constitute one
and the same instrument.
22.05 The captions in this Agreement are for convenience and reference
only and shall not limit in any way or otherwise affect any of the terms or
provisions hereof.
22.06 The failure of either Party to demand strict performance of the
terms hereof, or to exercise any right conferred herein shall not be construed
as a waiver or relinquishment of its right to assert or rely on any such term or
right in the future. Waiver by either party of any term, provision or condition
of this Agreement shall not be construed to be a waiver of any other term,
provision or condition nor shall such waiver be deemed to be a waiver of a
subsequent breach of the same term, provision or condition. Failure of delay by
either Party to require performance of any provision of this Agreement will not
affect or impair such Party's right to require full performance with such
provision at any time thereafter.
22.07 This Agreement shall be construed under and governed by the laws of
Virginia, and the venue of all actions hereunder shall be in the State of
Virginia.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the day and year first above written.
GEO SPECIALTY CHEMICALS, INC. HERCULES INCORPORATED
By: __________________________ By: _____________________________
Name Printed: Xxxxxx X. Xxxxxx Name Printed: Xxxxxxxx X. XxXxxxx
Title: President & Chief Executive Officer Title: Executive Vice President
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