GROUND WATER PROCESSING REMEDIATION AGREEMENT
This Agreement is made and entered into this 22nd day of April, 1994
by and between Petrowax Pa, Inc., a Delaware corporation, debtor and debtor-in-
possession ("Petrowax") and Quaker State Corporation, a Delaware corporation
("Quaker State").
BACKGROUND
Petrowax and Quaker State entered into an Asset Purchase and Sale
Agreement dated as of March 30, 1990 ("Asset Agreement"). The Asset Agreement,
among other things, transferred ownership from Quaker State to Petrowax of a
manufacturing facility known as the Emlenton Wax Plant located in Emlenton,
Pennsylvania (the "Emlenton Wax Plant") and a manufacturing plant known as the
McKean Plant located in Xxxxxx'x Valley, Pennsylvania (the "McKean Plant").
On September 20, 1990, Petrowax received ground water sampling results
which indicated the presence of petroleum in the ground water beneath the
Emlenton Wax Plant. These results were reported to the Pennsylvania Department
of Environmental Resources ("DER") in accordance with Pennsylvania law and to
Quaker State, pursuant to Sections 10.2(h)(iv) and 12.1 of the Asset Agreement.
Quaker State subsequently hired consultants to perform hydrogeologic
investigations at the Emlenton Wax Plant and XxXxxx Plant. The consultants
prepared reports for submission to the DER, proposing a ground water recovery
and treatment project for the ground water beneath the Emlenton Plant and the
XxXxxx Plant (collectively, the "Ground Water Project").
Quaker State has proposed to Petrowax to use the Emlenton Wax Plant's
and the XxXxxx Plant's on-site waste water treatment systems as part of the
Ground Water Project.
Petrowax and Quaker State wish to enter into an agreement regarding
the terms and conditions under which Quaker State may use the Emlenton Wax
Plant's and XxXxxx Plant's on-site waste water treatment systems for the Ground
Water Project.
This Agreement is entered into pursuant to a certain Amendment,
Agreement and Joint Release dated April 22, 1994 between Petrowax and Quaker
State ("Amendment").
In consideration of the mutual covenants and agreements contained
herein, the parties agree as follows:
1. USE OF WASTE WATER TREATMENT SYSTEM. During the term of this
Agreement and subject to the terms and conditions hereof, Petrowax agrees that
Quaker State may utilize the waste water treatment systems at the Emlenton Wax
Plant and XxXxxx Plant (collectively, the "Plants") to treat ground water
recovered as part of the Ground Water Project, provided such use is consistent
with the respective plants' National Pollutant Discharge and Elimination System
("NPDES") Permits and Pennsylvania Industrial Waste Water Permits and complies
with applicable federal and state laws, regulations, permits, orders and local
ordinances. Based on the foregoing and on the terms and conditions of this
Agreement, Petrowax agrees to process up to forty (40) gallons per minute of
contaminated ground water delivered to its waste water treatment system at the
Emlenton Wax Plant and up to eighty (80) gallons per minute of
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contaminated ground water delivered to its waste water treatment system at the
McKean Plant. Quaker State shall not be obligated to utilize waste water
treatment processing of Petrowax, but in that event shall receive no
consideration from Petrowax.
2. INSTALLATION OF A RECOVERY SYSTEM. Quaker State shall, at its
expense, install a ground water recovery system, including all associated
equipment necessary to operate such system and to deliver waste water for
treatment to the entry port at the Plants' waste water treatment systems. Quaker
State shall also install a meter or meters to monitor the flow of waste water
directly to the waste water treatment systems at the Plants. Quaker State will
be responsible for any permitting costs, and all electricity and other costs in
connection with pumping contaminated ground water up to the entry port at
Petrowax's waste water treatment facilities, including maintenance of equipment,
and should Petrowax pay for any of the foregoing, Quaker State agrees to
promptly reimburse Petrowax upon presentation of third party invoices or other
appropriate documentation. Quaker State shall retain liability for any Disposal
(as defined in the Asset Agreement) occurring up to the entry port.
3. INCREASED COSTS. Quaker State shall bear the Increased Costs of
treating ground water recovered as part of the Ground Water Project. "Increased
Costs" shall mean any additional capital costs over and above those that would
be incurred by Petrowax in its operation of the wastewater treatment plant
(whether required by present or future regulation or law, requirements of any
governmental authority, or otherwise,) to modify or upgrade the wastewater
treatment plant in order to process the
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delivered ground water, or any increase in operating costs attributable to the
treatment of the ground water. If, because of the treatment of the ground water,
any sludge or solids from the wastewater treatment are rendered hazardous or
require treatment or disposal which results in increased costs to Petrowax,
those costs shall be paid by Quaker State upon written notice of the amount
thereof.
For increased capital costs, Quaker State shall have the option of
performing the work, or authorizing Petrowax to perform the work. All such
authorizations shall be in writing, except as provided in the following
paragraph. If Quaker State elects not to perform the work it shall pay the
invoices of Petrowax's contractor or supplier directly upon presentation of
invoice. For increased operating costs, Quaker State shall pay those costs
within thirty (30) days of invoicing by Petrowax.
Failure of Quaker State to respond to Petrowax in writing within
thirty (30) days after Petrowax gives Quaker State written notice of anticipated
Increased Costs in the nature of capital costs shall constitute authorization to
Petrowax to perform the work. Should Quaker State notify Petrowax in writing
within such thirty (30) day period that it disputes that increased capital costs
are Increased Costs hereunder, or notifies Petrowax within thirty (30) days of
invoice of operating costs claimed by Petrowax to be Increased Costs hereunder
that Quaker State disputes that such operating costs are Increased Costs, either
party may submit such dispute to binding arbitration by a neutral single
arbitrator satisfactory to the parties selected from the list of company
environmental attorneys maintained by the American Petroleum Institute ("API")
as possible third party
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neutrals. Should the parties be unable to agree upon an arbitrator within 30
days after a party has requested arbitration, either party may request the API
to select the arbitrator. The arbitration shall be conducted under the rules of
the American Arbitration Association, with each side bearing its own costs
except the cost of the arbitrator, which shall be shared equally. Discovery
shall be controlled by the arbitrator and shall be permitted to the extent set
out in this Section. Each party may submit in writing to a party, and that party
shall so respond, to a maximum of any combination of thirty-five (35) (none of
which may have subparts) of the following: interrogatories, demands to produce
documents and requests for admission. Each party is also entitled to take the
oral deposition of one (1) individual of another party. Additional discovery may
be permitted upon mutual agreement of the parties. The arbitrator shall control
the scheduling so as to process the matter expeditiously. The parties may submit
written briefs. The arbitrator shall rule on the dispute by issuing a written
opinion within thirty (30) days after the close of hearings. The times specified
in this Section may be extended upon mutual agreement of the parties or by the
arbitrator upon a showing of good cause.
4. STORAGE AND DISPOSAL OF HYDROCARBON PRODUCT RECOVERED. Quaker State
shall be responsible at its sole cost for storing, treating, recycling and
disposing of all non-dissolved hydrocarbon product recovered during the Ground
Water Project in accordance with all applicable federal, state and local laws,
regulations, permits and approvals, including but not limited to the Spill
Prevention Control and Countermeasure Plan. Quaker State shall provide all
storage tanks required to store the
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recovered hydrocarbon product. Quaker State shall provide for the timely removal
of all recovered hydrocarbon product from the Emlenton Wax Plant and the XxXxxx
Plant. At Petrowax's request, Quaker State shall provide to Petrowax copies of
all shipping documents and/or disposal manifests relating thereto as required by
applicable law.
5. OPERATING FEES. (a) Except for Earned processing (as hereinafter
defined), Quaker State shall pay Petrowax the following for processing
furnished, plus any Increased Costs:
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Period through 5/2/96 - 5/2/97 - 5/2/98 -
------ 5/1/96 5/1/97 5/1/98 and
thereafter
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Charge per $30.00 $25.00 $20.00 $10.00
1,000
gallons
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All payments shall be due within ten (10) days after invoicing.
(b) Except for early termination as provided in Section 5(c),
processing shall be Earned for such number of years as is equal to (i) two times
the number of years (prorated for partial years) beginning May 1, 1995 that
Quaker State continues to supply Products to Petrowax or its permitted assignees
under the Slack Wax and Petrolatum Sales Agreement dated the date hereof and
executed pursuant to the Amendment ("1994 Slack Wax Agreement ") plus (ii) one
year for each year (prorated for partial years) after the end of the term of the
1994 Slack Wax Agreement that Quaker State continues to supply Petrowax or its
permitted assignees with Products at
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the Wind-down Period prices. The terms "Products" and "wind-down Period" shall
have the meanings ascribed to them in the 1994 Slack Wax Agreement.
(c) Notwithstanding that processing cannot be Earned by Quaker State
except be supplying Products after May 1, 1995, Quaker State shall be entitled
to receive processing at no cost (other than Increased Costs) under this
Agreement beginning on the date the Amendment is approved by the Bankruptcy
Court, in anticipation of its supplying of Products after May 1, 1995 under the
1994 Slack Wax Agreement. If Quaker State ceases supply of Products under either
the Slack Wax and Petrolatum Agreement dated April 30, 1990 (the "1990 Slack Wax
Agreement") or the 1994 Slack Wax Agreement (collectively, the Slack Wax
Agreements) prior to the end of the Wind-down Period for more than thirty (30)
days for reasons other than default under this Agreement by Petrowax or either
of the Slack Wax Agreements by Petrowax or its permitted assignees or the
temporary existence of a Force Majeure Event (as defined in Section 7) of either
of the Slack Wax Agreements affecting Quaker State or Petrowax or its permitted
assignees, then the Earned period, if any, shall end, water treatment processing
provided under this Agreement for periods thereafter shall be subject to charge
as set forth in Section 5(a) above, and Quaker State shall pay Petrowax at the
rates set forth in Section 5(a) for processing previously furnished but not
Earned (as defined in Section 5(b) above). (For the purpose of clarity, it is
agreed that if Quaker State supplies Products to Petrowax or its permitted
assignees under the 1990 Slack Wax Agreement through its expiration and under
the 1994 Slack Wax Agreement through May 1, 1996, all processing hereunder
through May 1, 1996 shall have been Earned.)
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6. TERM. The term of this Agreement shall begin on the date the
Amendment is approved by the Bankruptcy Court and shall continue for the period
for which processing is Earned and thereafter so long as Quaker State continues
to request and pay for processing in connection with the Ground Water Project,
provided, however, that in no event shall Petrowax be required to provide
processing under this Agreement after May 1, 2014.
7. FORCE MAJEURE. In no event shall Petrowax be liable to Quaker State
or be deemed in default or in breach of any of its obligations under this
Agreement for delay or failure to provide processing hereunder if such delay or
failure is due to war, fire, explosion, flood, accident, strike, riot, act of
governmental authority, act of God, labor interruption or strike, interruption
in power supply, or any other contingency beyond the reasonable control of
Petrowax ("Force Majeure Event"). In the event of the occurrence of a Force
Majeure Event, the performance of Petrowax under this Agreement shall be excused
for the period of the disability. Petrowax shall use reasonable efforts,
promptly after it has actual knowledge of the beginning of a Force Majeure
Event, to notify Quaker State of the delay, of the reason therefor, and of the
probable duration and the consequences thereof. Petrowax shall also use
reasonable efforts to eliminate the Force Majeure Event and to resume
performance with the least possible delay.
8. DEFAULT. (a) A party shall be in default hereunder (other than by
reason of a Force Majeure Event) in the event that such party shall default in
the
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performance of any of its obligations hereunder, which default remains uncured
forty-five (45) days following receipt of notice specifying the nature of the
default from the non-defaulting party, unless the cure would require more than
45 days, in which case the party shall not be deemed in default if it has
promptly commenced diligent efforts to cure the default following notice and
continues such efforts until such default is cured. In the event of any such
default, the non-defaulting party may at its option terminate this Agreement by
written notice. Any termination by Petrowax by reason of Quaker State's default
hereunder shall not limit Petrowax's rights to payment of any fee due hereunder
for prior processing. Any termination by Quaker State by reason of Petrowax's
default hereunder shall entitle Quaker State to terminate delivery of Products
under the Slack Wax Agreements, but in the event of any such termination Quaker
State shall be entitled to any processing Earned but not utilized prior to
termination.
(b) In the event that (i) either or both of the Plants ceases to
operate for more than sixty (60) days (other than temporarily by reason of a
Force Majeure Event) and (ii) Petrowax or its assignees notify Quaker State in
writing that no further purchases of Products shall be made under the Slack Wax
Agreements, then provided that Quaker State continues to be given access to the
nonoperating Plant or Plants for the purpose of processing wastewater at Quaker
State's own cost, Quaker State shall have no claim for damages against Petrowax
under or arising out of this Agreement for the failure of Petrowax to furnish
waste water processing at that Plant or Plants. In the event that prior to the
confirmation of a plan of reorganization for Petrowax in its Chapter 11
proceeding Quaker State is neither furnished processing at a Plant by Petrowax
pursuant
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to this Agreement nor is Quaker State provided access to the Plant for
performing processing itself, and provided that the reason for such
nonperformance and unavailability of access is other than a Force Majeure Event,
then Quaker State shall be entitled to damages for breach of this Agreement to
compensate it for processing Earned but not utilized, but such damages shall not
exceed an amount equal to the price per 1,000 gallons set forth in the table in
Section 5(a) hereof multiplied by the number of 1,000 gallons for which Quaker
State reasonably would have requested and been able to obtain processing at that
Plant for a time period equal to the remaining period for which processing has
been Earned but not utilized.
9. EFFECTS OF GROUND WATER PROJECT. If at any time Petrowax reasonably
determines that any work on the Ground Water Project is causing or threatening
to cause (1) any disruption, breakdown or malfunction of the on-site treatment
plant or (2) the violation of any federal, state or local law or the terms and
conditions of any applicable federal, state or local permits (including, without
limitation, the NPDES or Pennsylvania Industrial Waste Water Permits at the
Emlenton Wax Plant or the McKean Plant), Petrowax may shut down the delivery of
services hereunder. Any penalties assessed as a result of actions by Quaker
State shall be paid by Quaker State.
10. PRECONDITION TO EFFECTIVENESS. This Agreement shall not become
effective, and neither party shall incur any liabilities or obligations to the
other party in respect hereof, unless and until this Agreement is approved by
the U.S. Bankruptcy Court having jurisdiction over the chapter 11 proceeding of
Petrowax.
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11. ASSIGNMENT. This Agreement may not be assigned or transferred by
either party without the prior written consent of the other party, except that
Petrowax may assign this Agreement to any owner of the Emlenton Wax Plant or the
XxXxxx Plant, which assumes all of Petrowax' obligations under this Agreement.
12. MISCELLANEOUS. (a) This Agreement shall constitute the entire
agreement between the parties with respect to the subject matter hereof.
(b) This Agreement may be amended or supplemented only by written
agreement of the parties hereto.
13. GOVERNING LAW, PARTIES IN INTEREST. This Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania and shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assignees. For the purpose of clarity, it is agreed
that this Agreement shall not be binding upon Sanwa Business Credit or any other
lender of Petrowax or upon any purchasers, assignees or other transferees of
such assets from or through such lenders or directly from Petrowax, unless a
party expressly assumes this Agreement in writing; provided that, if Sanwa
Business Credit or such other lender or any purchaser of such assets from or
through such lenders or directly from Petrowax shall not, within sixty (60) days
after a sale or foreclosure, permit Quaker State to process and continue
processing wastewater at the Plants, at a cost to Quaker State not exceeding
that provided for in this Agreement, then the Slack Wax Agreements shall
terminate. Petrowax and Quaker State agree that no obligations under this
Agreement, express or implied, shall be
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imposed upon any such asset purchaser unless such asset purchaser agrees to
assume such obligations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their respective names as of the date and year first above
written.
PETROWAX PA, INC., Debtor and
Debtor in Possession
By: /s/ Xxxxx X. Suave
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Title: Sr. Vice President
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QUAKER STATE CORPORATION
By: /s/ [ILLEGIBLE]
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Title: Chairman and CEO
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