SLACK WAX AND
PETROLATUM SALES AGREEMENT
This Agreement is made this 22nd day of April, 1994, by and between Quaker
State Corporation, a Delaware corporation, hereinafter referred to as "Seller",
and Petrowax PA Inc., a Delaware corporation, debtor and debtor-in-possession,
hereinafter referred to as "Buyer".
WHEREAS, 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").
WHEREAS, pursuant to the Asset Agreement, Petrowax and Quaker State entered
into a slack wax and petrolatum sales agreement dated April 30, 1990 (the "1990
Slack Wax Agreement") providing for the sale of Quaker State's entire output of
slack wax and petrolatum produced at Quaker State's Congo refinery at Newell,
West Xxxxxxxx, through May 1, 1995.
WHEREAS, on February 25, 1992 (the "Petition Date"), Petrowax filed a
petition in the United States Bankruptcy Court for the District of Delaware (the
"Court") under Chapter 11 of Title 11 United States Code (the "Code") (case
number 92-210). Since the Petition Date, Petrowax has been operating as Debtor
in Possession pursuant to Section 1107.
WHEREAS, pursuant to a certain Amendment, Agreement and Joint Release dated
April 22, 1994 ("Amendment"), the parties have agreed to execute this Agreement
in order to provide for Buyer's purchase and Seller's sale of Seller's entire
output of slack wax and petrolatum (the "Products") produced at Seller's Congo
Refinery at Newell, West Xxxxxxxx (hereinafter called the "Facility") following
expiration of the 1990 Slack Wax Agreement, and provided that no event of
default as defined in the 1990 Slack Wax Agreement has occurred following the
date of the Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties agree as follows:
1. TERM. Unless earlier terminated as provided herein, the primary term of
this Agreement ("Primary Term") shall be a period commencing on May 2, 1995 and
ending on May 1, 1999. On or before November 1, 1998, either party may provide
written notice requesting that negotiations for an extension of the Primary Term
take place, whereupon Buyer and Seller shall negotiate in good faith during the
six month period preceding the expiration date of the Primary term to negotiate
an extension satisfactory to each of the parties, provided that neither party
shall have any obligation to agree to any extension of the Primary Term. In the
event no extension of the Primary Term of the Agreement on the terms contained
therein is reached, Seller shall remain obligated to sell Products to Buyer for
an additional twelve months from the termination date of the Primary Term
("Wind-down Period") on all of the terms and conditions of the Agreement and at
the current pricing applicable to the Wind-down
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Period under Section 5(a). As used in this Agreement, "term" shall mean both the
Primary Term (as it may be extended) and the Wind-down Period.
2. QUANTITY. During the term of this Agreement, Seller agrees to sell and
Buyer agrees to purchase the Products produced at the Facility.
Seller shall, at least thirty (30) days prior to the first day of each
month, provide to Buyer an estimate of Seller's output of Products for such
month and a proposed delivery schedule. Buyer shall within ten (10) days of
receipt of Seller's notification, confirm that the delivery schedule is
acceptable to Buyer or propose an alternate schedule. Seller shall reply within
ten (10) days of receipt of any alternate schedule proposed by Buyer whether
such schedule is acceptable to Seller. Failure by party to reply within the
above time periods shall be deemed acceptance of the other party's proposed
schedule.
Deliveries within each month shall be scheduled in approximately equal
weekly amounts. Should Buyer be unable to accept such quantities at any time,
Seller shall have the right to sell any quantities of Products not accepted by
Buyer to parties other than Buyer.
3. QUALITY. The Products sold hereunder shall meet the specifications set
forth on Exhibit A hereto. In the event Seller's source of crude oil to the
Facility should change, Seller and Buyer shall negotiate in good faith revised
specifications corresponding to the new crude oil source.
Upon receipt of Products, Buyer shall be responsible for any testing
deemed necessary by Buyer. Should Buyer believe that any Products delivered fail
to
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meet the required specifications, Buyer shall make any claim in writing to
Seller together with a copy of the results of Buyer's testing. Any claim not
made to Seller by the earlier of (a) three (3) days after receipt of the Product
or (b) processing or mixing of the Product with other material, shall be
conclusively deemed to be waived.
4. DELIVERY. All Products sold by Seller to Buyer will be sold F.O.B. the
Facility. Title to the Products and risk of loss shall pass from Seller to Buyer
when loaded into the carriers provided by Buyer at the Facility. All carriers
for the Products sold hereunder shall be provided by the Buyer.
The amount of Products delivered to Buyer shall be determined by
Seller on the basis of Seller's measurement at the Facility at the time of
loading into the carriers provided by Buyer.
5. PRICE. Pricing for each Product sold under this Agreement in any month
shall be equal to the results of the following calculation, on a weighted
average price basis using applicable pricing data at the Facility for the month
of delivery:
a. The price for slack wax sold under this Agreement shall be
computed as follows:
Price per gallon = "S" Coefficient x (0.667 x Congo rack unleaded
gasoline posted price + 0.333 x Congo posted price for number 2
fuel oil - 0.024 per gallon)
b. The price for petrolatum sold under this Agreement shall be
computed as follows:
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Price per gallon = "P" Coefficient x (0.667 x Congo rack unleaded
gasoline posted price + 0.333 x Congo posted price for number 2
fuel oil - 0.024 per gallon)
The above pricing is based upon average oil content for slack wax
of 14.75 percent and for petrolatum of 18.89 percent, using 1993 ASTM test
procedure 3235, "Solvent Extractables in Petroleum Waxes."
The "S" Coefficient and "P" Coefficient under Paragraphs (a) and
(b) above shall be as follows (adjusted on May 1 of the designated year):
S P
----- -----
1995 .85 .90
1996 .90 .95
1997 .90 .95
1998 and beyond 1.25 1.95
References to "rack" prices of gasoline and number 2 fuel oil above
shall exclude taxes applicable to sales of gasoline and number 2 fuel oil
generally but Petrowax shall be responsible for payment of taxes specifically
levied on Products sold under this Agreement (which may be added to invoices for
Products sold).
c. Seller shall certify to Buyer prior to each delivery of the
Product that the the Product delivered meets the specifications therefor set
forth in Exhibit A hereto. Seller's certificates shall be based upon an up and
down representative sample, and sampling shall be performed only when the entire
content of the shipping tank is in a liquid state. All such samples shall be
tested by the ASTM method set forth in Exhibit A hereto. Seller shall deliver
test results to Buyer at the time of delivery of the Product. Should Buyer
dispute such results, Buyer shall so notify Seller within three (3)
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business days of receipt of Seller's analysis and in any event prior to mixing
of such Product with other material, including with the notice the results of
Buyer's testing of its sample of such delivery. In the event Seller's and
Buyer's results differ by 5% or less, the average of Buyer's and Seller's
results shall be used to determine whether any premium or penalty pursuant to
paragraph 5(d) hereof applies. Should Buyer's and Seller's results differ by
more than 5%, a sample of such delivery shall be sent to a mutually agreed
independent laboratory, whose final testing results shall be conclusive for
purposes of this Agreement. The cost of any independent testing shall be borne
equally by Seller and Buyer.
Should Buyer not provide notice to Seller of a disputed test result
within the time provided above, the results of Seller's testing on such delivery
shall be deemed conclusive.
d. The above prices shall be subject to adjustment, upward or
downward, as follows:
i. As a quality premium, upward by $0.007 per gallon for each
1% below 18.89% oil content for petrolatum or below 14.75% oil content
for slack wax.
ii. As a quality penalty, downward by $0.007 per gallon for each
1% above 18.89% oil content for petrolatum or above 14.75% oil content
for slack wax. The maximum oil content for any products acceptable to
Buyer is 25% and Buyer shall not be obligated to purchase any Products
with oil content in excess of 25%.
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iii. Penalties or premiums applicable to Products delivered in
any month shall be accumulated and netted at the end of such month.
Any net premium or penalty shall be paid by Buyer or Seller on or
before the 15th day of the month succeeding the month of delivery.
e. Seller shall receive a payment of 1% of Buyer's realized net
price for finished waxes derived from the respective Products. The term
"realized net price" shall mean Buyer's sales price less applicable commissions
for the respective finished waxes.
6. BILLING AND PAYMENT. Buyer shall remit payment to Seller for all
products sold hereunder on the 15th day of the month following the month in
which such products were delivered. Any amount not paid when due shall bear
interest at the rate of 1.25% per month until paid in full.
In no event shall Seller be obligated to extend more than $150,000 of
credit to Buyer (increased to $300,000 upon confirmation of Buyer's plan of
reorganization in its Chapter 11 bankruptcy proceeding). If Buyer exceeds the
applicable credit limit, Seller shall not be obligated to ship Products to Buyer
unless such shipments are paid for by wire transfer immediately prior to
shipment or amounts owing in excess of the credit limit have been paid in full.
In addition, Seller reserves the right to require payment in advance of
shipment, or other security satisfactory to Seller, in the event Buyer should
fail to make timely payment for Products delivered hereunder.
7. TAXES. Buyer shall reimburse Seller for any sales, use or excise taxes
imposed on Seller with respect to the sale to Buyer of the Products delivered
hereunder
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by any local, state or federal governmental body, whether such tax is presently
in effect or is imposed after the execution of this Agreement.
8. WARRANTY. Seller warrants that it has and will have good and
marketable title to all Products delivered and sold hereunder and that the
Products will meet the specifications therefor set forth in Exhibit A hereto.
Other than the specifications set forth on Exhibit A, Seller makes no
representation or warranty whatsoever, express or implied with respect to the
Products and Seller specifically DISCLAIMS AND EXCLUDES FROM THIS AGREEMENT THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE.
9. REMEDY. Buyer's sole and exclusive remedy in the event of delivery of
Products that do not conform to oil content specifications set forth in Exhibit
A hereto shall be a price adjustment for such Products pursuant to paragraph
5(c); provided, however, that Buyer shall have the option to reject delivery of
Products the oil content of which exceeds 25% based upon the results of testing
by a mutually agreed independent laboratory as provided in paragraph 5(c)
hereof. Buyer's sole and exclusive remedy in the event of delivery of Products
that do not conform to the specifications, other than oil content, set forth on
Exhibit A or in the event oil content exceeds 25% based upon the results of
testing by a mutually agreed independent laboratory as provided in paragraph
5(c) hereof shall be a refund of the price paid and transportation costs
incurred by Buyer for such Products upon return thereof to Seller. Seller shall
have the right to sell Products rejected by Buyer to parties other than Buyer.
In the
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event Buyer should wrongly reject any delivery of Products, Buyer shall be
responsible for all transportation costs incurred for such Products.
In no event shall Seller have any liability to Buyer for indirect,
incidental or consequential damages or for lost profits or business, even if
advised of the possibility that such damages may be incurred.
10. FORCE MAJEURE. Neither party shall be liable for any failure to
perform hereunder due to any cause beyond its reasonable control, including, but
not limited to, acts of God, fires, floods, wars, sabotage, accidents, strikes,
lockouts, or other labor disputes, shortages of labor, materials, or crude oil,
governmental law, ordinances, rules and regulations, whether valid or invalid
(including, but not limited to, priorities, requisitions, allocations and price
adjustment restrictions), inability to obtain material, equipment or
transportation, and any other circumstance or circumstances of a similar or
different nature. The party whose performance is prevented by any such
contingency shall have the right during the period of such contingency to
exclude such portion of the quantity deliverable during such period as is
prevented by such contingency from being delivered, whereupon the total quantity
deliverable under this Agreement shall be reduced by the quantity so excluded.
In the event a party's ability to perform hereunder is affected only in part by
force majeure as defined above, such party shall continue to perform its
obligations hereunder to the extent not affected by such force majeure.
A party affected by force majeure shall promptly notify the other
party of the existence thereof and the anticipated duration and effect upon its
ability to perform hereunder. Such party shall thereafter exercise its
reasonable best efforts to eliminate
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the force majeure as quickly as possible; provided that, neither party shall be
required to resolve labor disputes or disputes with suppliers of raw materials
except in such party's sole discretion in accordance with its judgment as to its
best interest. The party declaring force majeure shall promptly notify the other
party when such force majeure no longer affects its ability to perform
hereunder.
11. NOTICES. Notices under this Agreement may be given by personal
delivery, mail or by fax. Any notice required or permitted to be given hereunder
shall be deemed received when received by U.S. mail, postage prepaid, registered
or certified; notices shall be deemed received when sent if sent by fax. All
notices shall be sent as follows:
To Seller, to:
Quaker State Corporation
000 Xxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Vice President/Manufacturing
FAX: (000) 000-0000
To Buyer, to:
Petrowax PA Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
FAX: (000) 000-0000
Attention: President, copy to
Xxx Xxxxxx
12. DEFAULT. A party shall be in default hereunder in the event of the
occurrence of any of the following:
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a. Such party should default in the performance of any of its
obligations hereunder, which default remains uncured thirty (30) days following
receipt of notice specifying the nature of the default from the non-defaulting
party; or
b. If any decree or order is entered by a court adjudicating such
party a bankrupt or insolvent or approving as properly filed a petition seeking
reorganization of such party under the federal Bankruptcy Code, or any other
similar federal or state law, and such decree or order shall have continued
undischarged or unstayed for a period of thirty (30) days; or a decree or order
of a court for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of such party or a substantial part of its
property, or for the winding up or liquidation of its affairs shall have been
entered and such decree or order shall have remained in force undischarged or
unstayed for a period of thirty (30) days; or
c. Such party shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy petition
against it, or shall file a petition or answer or consent seeking reorganization
under the federal Bankruptcy Code or any other similar federal or state law, or
shall consent to the filing of any such petition, or shall consent to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or a substantial part of its assets, or shall make an
assignment for the benefit of creditors (other than as contemplated by this
Agreement), or shall admit in writing its inability to pay its debts generally
as they become due, or corporate action shall be taken by such party in
furtherance of any of the foregoing actions; or
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d. Buyer shall be in default of its obligations under that certain
Ground Water Processing Remediation Agreement dated April 22, 1994 between Buyer
and Seller, after giving effect to the expiration of all cure periods contained
therein.
e. Buyer shall be in default of its obligations under that certain
Amendment, Agreement and Joint Release dated April 22, 1994 between Buyer and
Seller (the "Amendment").
In the event of any such default, the non-defaulting party may at its
option terminate this Agreement by written notice, without prejudice to any
other rights or remedies available to the non-defaulting party by reason of such
default.
13. 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, if any event of default as defined in the 1990
Slack Wax Agreement has occurred after the date of the Amendment which results
in a termination of that Agreement.
14. GOVERNING LAW. This Agreement shall be deemed a contract under and
shall be construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania.
15. INTEGRATED AGREEMENT. This Agreement together with the Asset Agreement
as amended by the the Amendment, the Amendment and the other agreements
contemplated thereby constitute the complete and final agreement of the parties
related to the subject matter hereof, and no statements or agreements, oral or
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written, made prior to or at the execution hereof shall vary or modify the
terms, conditions or provisions hereof.
16. NO WAIVER. No waiver by either party of one or more rights of
termination or defaults by the other party in the performance of this Agreement
shall operate or be construed as a waiver of any future or continuing rights,
options or defaults, whether of a like or different character.
17. ASSIGNMENT. This Agreement shall inure to and be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that neither Seller nor Buyer shall assign this Agreement or any interest herein
without the prior written consent of the other party. Prior to May 1, 1997,
notwithstanding the foregoing, Buyer shall have the right to assign this
Agreement as security to a lender, a group of lenders, or other persons or
entities which provide financing to Buyer, if such lenders so require and Seller
shall, following any foreclosure by such lenders, sell Products to such lenders
or their assignees in accordance with the terms hereof, provided that this
Agreement shall terminate if within sixty (60) days after a foreclosure, the
lenders (or their assignees pursuant to foreclosure) fail to permit or allow
Seller to process and continue processing waste water at the Emlenton Wax Plant
or XxXxxx Plant or both such facilities at a cost to Seller not exceeding that
provided for in that certain Ground Water Processing Remediation Agreement dated
April 22, 1994 between Seller and Buyer ("Processing Agreement"). Buyer may also
assign this Agreement, at any time to any entity which is controlled by,
controls, or is under control with, Buyer and may also assign this Agreement at
any time to any one owner of one or both of the
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Emlenton Wax Plant and XxXxxx Plant so long as such assignee continues to
operate one or both of such facilities and the Products are being used as charge
stock to such facility or facilities and further provided that such assignee
assumes all of Buyer's obligations under the Asset Agreement and Buyer's
obligations to process waste water at such facility under the Processing
Agreement, and further provided that such assignee's credit worthiness has been
approved by Quaker State, which approval shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers the day and year first above set forth.
QUAKER STATE CORPORATION
By: /s/ illegible
-------------------------------------
Title: Chairman and CEO
----------------------------------
PETROWAX PA INC., debtor and
debtor-in-possession
By: /s/ illegible
-------------------------------------
Title: Sr. Vice President
----------------------------------
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