SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
X Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended June 30, 1997 or
Transaction report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-16032
MELAMINE CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 64-0475913
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Highway 18 West, Donaldsonville, Louisiana 70346
(Address of principal executive offices) (zip code)
(504) 473-3121
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.01 par value.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates (affiliates being directors, executive officers and holders
of more than 5% of the Company's common stock) of the Registrant at
September 5, 1997 was approximately $21,427,000.
The number of shares of the Registrant's common stock, par value
one cent ($.01) per share, outstanding at October 20, 1997 was
5,627,934.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Melamine Chemicals, Inc. (the "Company") hereby amends and
supplements the following items of its Annual Report on Form 10-K for
the year ended June 30, 1997, to read in their entirety as follows:
PART II
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
(In thousands, except per share and
operating data)
-----------------------------------
Fiscal Year Ended June 30,
-----------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operations Statement Data:
Net sales $ 59,978 $ 55,619 $ 45,501 $ 39,085 $ 35,423
Cost of Sales 51,142 46,976 38,204 41,670 37,353
-------- -------- -------- -------- --------
Gross profit (loss) 8,836 8,643 7,297 (2,585) (1,930)
Selling, general and
administrative
expenses 3,512 3,293 2,994 2,820 3,285
Research and development
costs 250 229 230 182 129
-------- -------- -------- -------- --------
Operating income (loss) 5,074 5,121 4,073 (5,587) (5,344)
Other income (expense), net 17,844(1) (1,106) 205 1,168 (266)
Earnings (loss) before -------- -------- -------- -------- --------
income tax
expense (benefit) 22,918 4,015 4,278 (3,919) (5,610)
Income tax expenses (benefit) 8,176 1,285 945 (1,411) (2,019)
-------- -------- -------- -------- --------
Net earnings (loss) $ 14,742 2,730 3,333 (2,508) (3,591)
======== ======== ======== ======== ========
Earnings (loss) per common $ 2.63 0.50 0.60 (0.46) (0.66)
share ======== ======== ======== ======== ========
Dividends per common share $ 0.00 0.00 0.00 0.00 0.00
======== ======== ======== ======== ========
___________________
(1) Includes $17.4 million from sale of technology in April 1997.
</TABLE>
PART III
Item 10. Directors and Executive Officers of the Registrant
THE BOARD OF DIRECTORS
General
The common stock, $.01 par value per share, of the Company (the
"Common Stock") is the only class of voting securities of the Company
outstanding. Each share of Common Stock entitles the holder to cast one
vote with respect to matters submitted to the Company's stockholders for
their consideration or approval. As of October 20, 1997, there were
5,627,934 shares of Common Stock outstanding. Pursuant to authority
granted to it under the Company's by-laws, the Board has fixed the size
of the Board at eight members. All eight of the Company's directors
serve staggered three-year terms. Each director holds office until such
director's successor is elected and qualified or until such director's
earlier resignation or removal. Vacancies in the Board may be filled by
the Board; any director chosen to fill a vacancy will hold office until
the next election of directors for the class of directors to which he
has been allocated or until his successor is elected and qualified.
Right of Offeror to Designate Directors
On October 15, 1997, MC Merger Corp. ("Offeror"), a Delaware
corporation, commenced a tender offer (the "Offer") for all of the
outstanding Common Stock at a cash price of $20.50 per share pursuant to
an Agreement and Plan of Merger, dated October 9, 1997 (the "Merger
Agreement"), among Offeror, Borden Chemical, Inc. ("Parent"), a Delaware
corporation and wholly owned by Borden Inc. ("Borden"), a New Jersey
corporation, and the Company. Offeror is a wholly owned subsidiary of
Parent. The Merger Agreement provides that upon acceptance for payment
for the shares of Common Stock by the Offeror pursuant to the Offer, the
Offeror will be entitled to designate such number of directors, rounded
up to the next whole number, that will provide the Offeror with
representation on the Board equal to at least that number of directors
equal to the product of (i) the total number of directors on the Board
and (ii) the percentage that the number of shares of Common Stock
purchased pursuant to the offer bears to the number of Shares
outstanding, and the Company is required, at such time, at the option of
the Offeror to either increase the size of the Board or to use its best
efforts to cause the appropriate number of directors to resign and the
Offeror's designees to be appointed or elected. Until the consummation
of the Merger, the Company is required to maintain on the Board, to the
extent they are willing to serve, at least three directors who were
directors on October 9, 1997 and who are not designees, officers,
directors, employees or affiliates of Parent or the Offeror, or
employees of the Company.
Offeror Designees
The Offeror and Parent have advised the Company that they
currently intend to designate one or more of the persons listed on
Schedule I to the Offer to Purchase, dated October 15, 1997 (Exhibit
99.1 hereto and incorporated herein by reference), to serve as directors
of the Company. The Offeror and Parent have advised the Company that
each such person has consented to serve, if so designated.
Current Directors of the Company
The following table sets forth certain information as of October
20, 1997 regarding the current directors of the Company. Unless
otherwise indicated, each director has been engaged in the principal
occupation shown for more than the past five years.
Name, Age, Principal Occupation and Director Term
Directorships in Other Public Corporations Since Expires
- ------------------------------------------ -------- -------
Nilon H. Prater, 68 1991 1997
Retired corporate executive;
Director, Calgon Carbon Corporation;
Director, Harsco Corporation;
Director, Koppers Industries, Inc.
Daniel D. Reneau, 57 1987 1997
President, Louisiana Tech University
David J. D'Antoni, 52 1992 1998
President, Ashland Chemical Company and
Senior Vice President, Ashland Inc.;
Director, State Auto Financial Corporation
Frederic R. Huber, 62
President and Chief Executive Officer, 1996 1998
Melamine Chemicals, Inc.
R. Michael Summerford, 49 1983 1998
Vice President and Chief Financial Officer,
ChemFirst, Inc. (or a predecessor company);
Director, Getchell Gold Corporation
James W. Crook, 67 1972 1999
Chairman of the Board of the Company;
Director, ChemFirst, Inc.
Charles M. McAuley, 64 1979 1999
Retired corporate executive(1)
Scotty B. Patrick, 62 1968 1999
Group Vice President, Petrochemical and
Technical, Ashland Chemical Company
- --------------
(1) From April 1992 to August 1994, Mr. McAuley served as
President, Chief Executive Officer and a Director of
FirstMiss Gold Inc.
________________
During the fiscal year ended June 30, 1997, the Board held five
meetings. All of the directors attended 75% or more of the aggregate
number of meetings of the Board and committees of which they were
members.
The Board has no nominating committee. The Board has an Audit
Committee on which Messrs. Patrick, Prater and McAuley serve. The Audit
Committee has general responsibility for meeting from time to time with
representatives of the Company's independent public accountants in order
to obtain an assessment of the financial position and results of
operations of the Company and to report to the Board with respect
thereto. The Committee met two times during fiscal year 1997. The
Board also has a Personnel and Compensation Committee (the "Compensation
Committee") on which Messrs. Prater, Summerford and Reneau serve. The
Compensation Committee has general responsibility for the administration
of certain of the Company's employee benefit plans and of the Company's
compensation structure. The Compensation Committee met four times
during fiscal year 1997. The Long-Term Incentive Plan Committee, on
which Messrs. Reneau and Prater serve, administers the 1996 Incentive
Plan and determines the type, size and recipients of awards granted
thereunder. This committee met once during fiscal year 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and greater-than-10%
stockholders to file with the SEC reports of beneficial ownership of the
Company's Common Stock. During 1997, Mr. William A. Sorensen, the
Company's Vice President of Sales and Marketing, inadvertently filed
late one report relating to one transaction.
Item 11. Executive Compensation
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
WITH MANAGEMENT
Summary of Executive Compensation
The following table sets forth information with respect to
compensation paid by the Company for services rendered in all capacities
during the fiscal years ended June 30, 1995, 1996 and 1997 by the
Company's Chief Executive Officer and each other executive officer who
received compensation totaling $100,000 or more for services rendered
during the most recently completed fiscal year.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
------------
Annual Compensation Number of Shares
-----------------------
Name and Principal Fiscal Underlying All Other
Position Year Salary Bonus Options Compensation(1)
- ------------------ ------ ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
Frederic R. Huber 1997 $209,250 $198,361 10,000 $8,370
President and Chief 1996 191,735 71,050 15,000 7,669
Executive Officer 1995 179,907 86,394 15,000 7,196
Wayne D. DeLeo 1997 $ 140,828 $101,550 10,000 $5,440
Vice President and 1996 120,185 44,100 10,000 4,635
Chief Financial Officer 1995 109,859 28,547 7,500 4,233
Martin F. Lapari 1997 $ 135,013 $96,376 10,000 $5,216
Vice President of 1996 114,841 42,140 10,000 4,429
Manufacturing and 1995 104,976 27,277 7,500 4,045
Engineering
William A. Sorensen 1997 $ 110,750 $72,074 7,500 $4,430
Vice President of 1996 100,372 37,100 5,000 4,015
Sales and Marketing 1995 95,457 20,684 0 1,935
(1) Amount represents the Company's matching contribution to the 401(k)
retirement plan.
</TABLE>
Stock Options
Set forth below is information on stock options granted in fiscal
1997:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
----------------------------------------
Number of
Securities Percent of Total Potential Realizable Value at Assumed
Underlying Options Granted to Exercise Annual Rates of Stock Price
Options Employees in Price Expiration Appreciation for Option Term
----------------------------
<S> <C> <C> <C> <C> <C> <C>
Name Granted(1) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- ----------------- ---------- ----------- --------- -------- ---------- -----------
Frederic R. Huber 10,000 17.4% $7.125 8/13/06 $44,809 $113,554
Wayne D. DeLeo 10,000 17.4% 7.125 8/13/06 44,809 113,554
Martin F. Lapari 10,000 17.4% 7.125 8/13/06 44,809 113,554
William A. Sorensen 7,500 13.0% 7.125 8/13/06 33,607 85,166
__________________
(1) The options become exercisable in three equal annual increments
beginning one year after they are granted except that upon a change
of control all options, whether exercisable or not, are terminated
in exchange for their cash value. Accordingly, all options will be
terminated and surrendered in exchange for their cash value upon
consummation of the Offer.
</TABLE>
___________________
Set forth below is information on the options exercised in fiscal
1997 and the fiscal year-end value of unexercised options to purchase
Common Stock held by the named executives:
<TABLE>
<CAPTION>
Aggregate Option Exercises
in Last Fiscal Year and Fiscal Year-end Option Values
Number of Securities
Underlying Value of Unexercised
Number of Unexercised Options in-the-money Options
Shares Acquired Value at Fiscal Year-End at Fiscal Year-End
Name on Exercise Realized Exercisable/Unexercisable(1) Exercisable/Unexercisable(1)
- ----------------- ----------- -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Frederic R. Huber 40,000 $190,000 35,000/25,000 $258,750/147,500
Wayne D. DeLeo 17,500 98,125 23,333/19,167 79,790/115,210
Martin F. Lapari 0 0 35,833/19,167 131,665/115,210
William A. Sorensen 0 0 16,667/10,833 120,835/66,353
__________________
(1) The options become exercisable in three equal annual increments
beginning one year after they are granted except that upon a change
of control all options, whether exercisable or not, are terminated
in exchange for their cash value. Accordingly, all options will be
terminated and surrendered in exchange for their cash value upon
consummation of the Offer.
</TABLE>
___________________
Compensation Pursuant to Plans
Retirement Plans
The Company funds a qualified defined benefit retirement plan and
related trust (the "Retirement Plan") covering all employees of the
Company who have completed six months of employment and worked at least
1,000 hours. An employee becomes fully vested after five years.
Retirement Plan benefits are based on the participant's highest average
base monthly compensation for any successive five-year period preceding
retirement or termination of employment and are not subject to reduction
for Social Security benefits. Retirement income payable to a
participant is equal to the sum of 1.4% of that portion of highest
average monthly compensation that is not in excess of $600, plus 1.8% of
his or her highest average base monthly compensation in excess of $600,
multiplied by years of service.
A participant may select one of five alternative payment options
under the Retirement Plan, including the Ten Years Certain and Life
Option, the Life Option, the Joint Annuitant Option, the Joint and 66
2/3% Survivor Option or the lump-sum distribution. Except for lump sum
distribution and the Life Option, each of these options allows for the
payment of benefits to the participant's dependents upon the
participant's death. Each payment option has the same actuarial value
at commencement, but monthly payments vary according to the alternative
selected. The benefit formula notwithstanding, the annual retirement
benefit cannot exceed the maximum benefit allowed under Section 415(b)
of the Internal Revenue Code. For 1997, the maximum annual benefit is
$125,000.
In fiscal year 1995, the Company adopted a Supplemental Retirement
Plan (the "Supplemental Plan") to supplement Retirement Plan benefits
that are limited under federal law. The supplemental annual payment
under this plan is equal to the excess of the participant's benefits
calculated under the Retirement Plan over the maximum benefit permitted
by law. The Compensation Committee approves all employees covered under
the Supplemental Plan. Mr. Huber is the only employee currently covered
by the Supplemental Plan.
The following table reflects annual retirement benefits that a
participant with the years of service and the salary levels indicated
below can expect to receive under the Retirement Plan and, in the case
of Mr. Huber, the Supplemental Plan upon retirement at age 65. The
table assumes that benefits are paid pursuant to the Ten Years Certain
and Life Option. Covered compensation for each of the named officers
equals the amount of salary reported in the Summary Compensation Table.
As of June 30, 1997, Messrs. Huber, DeLeo, Lapari and Sorensen had 5, 9,
14 and 3 years of credited service, respectively.
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------
5 10 15 20 25 30
----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Remuneration
$100,000 $ 8,856 $17,712 $26,568 $35,424 $44,280 $53,136
125,000 11,106 22,212 33,318 44,424 55,530 66,636
150,000 13,356 26,712 40,068 53,424 66,780 80,136
175,000 15,606 31,212 46,818 62,424 78,030 93,636
200,000 17,856 35,712 53,568 71,424 89,280 107,136
225,000 20,106 40,212 60,318 80,424 100,530 120,636
250,000 22,356 44,712 67,068 89,424 111,780 134,136
</TABLE>
Change of Control Severance Agreements
The Company has entered into agreements with Messrs. Huber, DeLeo,
Lapari, and Sorensen providing for severance benefits if the officer's
employment is terminated for the reasons described below during a two-
year period following a change in control of the Company. The severance
benefit is equal to the sum of (i) two times the sum of the officer's
annual salary and bonus; (ii) any accrued and unpaid or deferred
benefits, including accrued salary, vacation pay and accrued bonus, and
(iii) the actuarial difference between (a) the amount the officer would
receive under the Retirement Plan and the Supplemental Plan if he were
employed for the two-year period following termination and (b) the
amount paid or payable thereunder at the time of termination. The
agreement also provides for the continued provision of benefits under
the Company's welfare benefit plans, practices, policies and programs.
Severance benefits under these agreements are payable to Messrs.
Huber and DeLeo upon termination of employment by the Company other than
for disability or cause, as defined therein, or by the officer for any
reason. Such severance benefits are payable to Messrs. Lapari and
Sorensen upon termination of employment by the Company other than for
disability or cause, as defined therein, or by the officer for good
reason, as defined therein. In no event, however, may severance
benefits payable under such agreements exceed the amount allowable to
the Company as a deduction for federal tax purposes under applicable
law.
Compensation of Directors
During the period July 1, 1996 through June 30, 1997, non-employee
directors were compensated for their services at the rate of $800 per
month and $800 per day for attendance at board and committee meetings.
The chairman of each committee receives an additional $100 per meeting.
Each non-employee director is also entitled to receive a grant of stock
options each year. The number of options granted to each non-employee
director is equal to the amount of cash compensation paid to the
director by the Company for services as a director during the preceding
twelve months divided by the per share fair market value of the Common
Stock. On November 13, 1996, Mr. McAuley was granted an option to
purchase 1,909 shares; Mr. Prater was granted an option to purchase
1,698 shares; and Messrs. Reneau and Summerford were each granted an
option to purchase 1,923 shares. Messrs. D'Antoni and Patrick have
waived their right to receive directors' fees and options. Directors
are reimbursed for travel expenses to and from meetings upon request.
No fees are paid for informal meetings or meetings held by telephone
conference call. The Company furnishes each director with $50,000 in
accidental death and dismemberment insurance protection at an annual
premium cost of approximately $31 per director.
Compensation Committee Interlocks and Insider Participation
Messrs. Prater, Reneau and Summerford serve on the Compensation
Committee and Messrs. Prater and Reneau also serve on the Long-Term
Incentive Plan Committee. Mr. Crook, Chairman of the Board of the
Company, is a member of the Board of Directors of ChemFirst and
Mr. Summerford is an executive officer of ChemFirst. As indicated in
Item 12 below, ChemFirst holds approximately 22.7% of the outstanding
Common Stock.
Compensation Committee and Long-Term Incentive Plan Committee Report
on Executive Compensation
Policies and Programs
The Company seeks to attract and retain executive officers who, in
the judgment of the Board, possess the skill, experience and motivation
to contribute significantly to the long-term success of the Company and
enhance value for the Company's stockholders. The Compensation
Committee and Long-Term Incentive Plan Committee follow a compensation
policy designed to compensate the Company's executive officers with both
cash and equity-based compensation in a program that takes into account
both individual performance and contribution to corporate results.
The compensation policies followed by these committees involve
three components--base salary, annual incentive and long-term incentive
compensation. Base salary compensation is determined by the impact the
executive has on the Company, the skills and experience the executive
brings to the job, competition in the marketplace for those skills and
the potential of the executive in the job. The Compensation Committee
reviews and approves base salary annually based on the executive's
performance in comparison to the Board's and the Chief Executive
Officer's expectations. In addition, the Compensation Committee in 1997
retained a consultant to assist in the determination of base salary.
Annual incentive compensation payments for fiscal year 1997 under
the Company's Annual Incentive Award Plan were based on a computation of
the Company's rate of return on equity for the fiscal year compared to
the prime rate during that period. Individual awards were also
influenced by the Compensation Committee's evaluation of each
individual's overall performance during the fiscal year. If in any
fiscal year the Company does not have net earnings, the Company's
executives will not be eligible for any payments under the Annual
Incentive Award Plan. The Plan is reviewed annually to determine if
changes and modifications are needed.
Long-term incentive compensation generally consists of stock
options awarded by the Long-Term Incentive Plan Committee. The size of
a stock option award is based primarily on the executive's potential to
contribute to the long-term growth of the Company. The value of the
option once it vests (generally over a three-year period) depends upon
the Company's performance as evidenced by the price appreciation of its
Common Stock at the time the option is exercised. The Company's long-
term incentive compensation is designed to provide significant financial
rewards to the executives when shareholder value is added. The
Company's long-term incentive compensation also attempts to align more
closely the executive's interests with those of the Company's
shareholders.
Chief Executive Officer Compensation in 1997
At its February 5, 1997 meeting, the Compensation Committee
reviewed Mr. Huber's performance as Chief Executive Officer of the
Company during the prior year. The report of an outside consultant was
also reviewed to determine how Mr. Huber's salary compared to others in
similar positions. Based upon its review of his performance and the
result of the consultant's report, the Compensation Committee increased
Mr. Huber's salary effective January 1, 1997 from $203,000 to $215,500.
A subsequent salary increase in August 1997 to $238,250 brought Mr.
Huber's salary up to the median salary level for comparable executives
of similarly-situated companies.
On August 14, 1996, the Long-Term Incentive Plan Committee granted
Mr. Huber an option to purchase 10,000 shares of Common Stock at $7.125
per share (the market price at the date of grant) to compensate Mr.
Huber for the role he was expected to play in the improvement of the
Company's performance and in creating shareholder value in the future.
Based on the Company's return on equity for fiscal year 1997 and the
Compensation Committee's evaluation of Mr. Huber's performance during
fiscal year 1997, the Compensation Committee, at its August 6, 1997
meeting, awarded him incentive compensation totaling $198,361.
Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended,
limits the Company's tax deduction to $1 million for compensation paid
to the most highly paid executive officers in a single year. An
exception to the $1 million limit is provided for "performance-based
compensation" that meets certain requirements, including stockholder
approval. The 1996 Long-Term Incentive Plan has been structured to
ensure that grants of options under the Plan will qualify as
"performance based compensation" and be excluded in calculating the $1
million limit under Section 162(m).
Personnel and Compensation Committee: Long-Term Incentive Plan Committee:
Nick H. Prater Daniel D. Reneau Nick H. Prater Daniel D. Reneau
R. Michael Summerford
Performance Graph
The following graph compares the cumulative total shareholder
return on the Company's Common Stock for the last five fiscal years with
the CRSP Total Return Index for the NASDAQ Stock Market (US Companies)
and an index composed of a group of peer issuers. The members of the
peer group were selected by the Company based upon size and type of
business. The peer group includes the following companies: Kinark
Corporation, High Plains Corporation and Detrex Corporation.
[PERFORMANCE GRAPH OMITTED]
Total Return for the Fiscal Year
---------------------------------------------------------
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ------
Melamine Chemicals 100 110.53 129.6 189.47 192.12 89.47
Nasdaq US 100 125.76 126.97 169.48 217.57 264.59
Peer Group 100 97.72 115.12 111.56 81.95 88.31
Item 12. Security Ownership of Certain Beneficial Owners and
Management
SECURITY HOLDINGS OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS
Security Holdings of Directors and Executive Officers
The following table sets forth certain information as of October
20, 1997 concerning the beneficial ownership of the Company's Common
Stock by each director and each executive officer named in the Summary
Compensation Table appearing elsewhere herein. Unless otherwise noted,
all shares shown as beneficially owned are held with sole voting and
investment power.
Amount Percent
Beneficially of
Name Owned Class
- ---- ------------ -------
Current Directors and Executive Officers
James W. Crook 121,667(1) 2.1%
David J. D'Antoni 11,370(2) (3)
Frederic R. Huber 86,141(4) 1.5%
Charles M. McAuley 2,109(5) (3)
Scotty B. Patrick 21,000 (3)
Nick H. Prater 2,698(6) (3)
Daniel D. Reneau 2,547(7) (3)
R. Michael Summerford 2,123(8) (3)
Wayne D. DeLeo 57,042(9) 1.0%
Martin F. Lapari 53,589(10) (3)
William A. Sorensen 30,834(11) (3)
Offeror Designees
Persons listed on Schedule 1 to
the Offer to Purchase --------- (3)
All directors, Offeror Designees and
executive officers as a group 391,120(12) 6.5%
- -----------
(1) Includes 56,667 shares which Mr. Crook may purchase under
immediately exercisable options. Does not include 1,275,000 shares
held by ChemFirst with respect to which Mr. Crook shares voting and
investment power as a member of the ChemFirst Board of Directors.
(2) Includes 10,870 shares owned by Mr. D'Antoni's wife and son.
(3) Less than 1%.
(4) Includes 800 shares owned by Mr. Huber's wife, children and mother-
in-law and 63,333 shares which Mr. Huber may purchase under
immediately exercisable options.
(5) Includes 1,909 shares which Mr. McAuley may purchase under
immediately exercisable options.
(6) Includes 1,698 shares which Mr. Prater may purchase under
immediately exercisable options.
(7) Includes 24 shares owned by Mr. Reneau's son and 1,923 shares which
Mr. Reneau may purchase under immediately exercisable options.
(8) Includes 1,923 shares which Mr. Summerford may purchase under
immediately exercisable options.
(9) Includes 47,500 shares which Mr. DeLeo may purchase under
immediately exercisable options.
(10) Includes 40,000 shares which Mr. Lapari may purchase under
immediately exercisable options.
(11) Includes 30,834 shares which Mr. Sorensen may purchase under
immediately exercisable options.
(12) Includes 238,334 shares that executive officers may purchase under
immediately exercisable options.
Holdings of Certain Beneficial Owners
The following table sets forth information
regarding ownership of the Company's Common Stock by each person known
to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock. Unless otherwise noted, all shares shown as
beneficially owned are held with sole voting and investment power.
Amount Percent
Beneficially of
Name and Address Owned Class
- ---------------- ------------ -------
Ashland Inc. 1,275,000(1) 22.7%
5200 Blazer Parkway
Dublin, OH 43017
ChemFirst, Inc. 1,275,000(2) 22.7%
700 North Street
Jackson, MS 39215-1249
The Killen Group, Inc. 465,925(3) 8.3%
1189 Lancaster Avenue
Berwyn, PA 19312
Laifer Capital Management, Inc. 430,300(4) 7.6%
45 West 45th Street
New York, NY 10036
Dimensional Fund Advisors, Inc. 370,000(5) 6.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
SAFECO Corporation 326,200(6) 5.8%
SAFECO Plaza
Seattle, WA 98185
- ------------
(1) As reported on Amendment No. 3 to Schedule 13D dated October 10,
1997 and filed with the SEC.
(2) As reported on Schedule 13G dated February 8, 1988 and filed with
the SEC. Pursuant to a Tender Agreement, dated October 9, 1997,
between ChemFirst, Parent and Offeror, Parent and Offeror now hold
voting power of these Shares with respect to certain matters as
described more fully in a Tender Offer Statement on Schedule 14D-1,
dated October 15, 1997, filed by Offeror.
(3) As reported on Amendment No. 4 to Schedule 13G dated February 14,
1997 and filed with the SEC. Sole voting power is held only with
respect to 144,500 of such shares.
(4) As reported on Form 13F dated August 13, 1997 and filed with the
SEC. Sole voting power is held only with respect of 294,900 of
such shares.
(5) As reported on Amendment No. 5 to Schedule 13G dated February 5,
1997 and filed with the SEC. Dimensional Fund Advisors Inc.
("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of 370,000 shares of the Common Stock as of
December 31, 1996, all of which shares are held in portfolios of
DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional Fund Advisors Inc.
serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares. Sole voting power is held only with
respect of 252,900 of such shares.
(6) As reported on Form 13F dated June 30, 1997 and filed with the SEC.
Item 13. Certain Relationships and Related Transactions
Furnished below is information regarding certain transactions in
which executive officers, directors and principal stockholders of the
Company had an interest during the fiscal year ended June 30, 1997.
Prior to its initial public offering in 1987, the Company was
operated as a joint venture between First Mississippi Corporation
("First Mississippi") and Ashland. As participants in a joint venture,
Ashland and First Mississippi negotiated the terms of many significant
contracts to which the Company is a party. Certain of those contracts
were with Ashland and First Mississippi, and, although the Company did
not negotiate such contracts at arm's-length, the Company believes that
its current commercial relationships with Ashland and First Mississippi
are on terms no less favorable than could be obtained from unaffiliated
third parties.
Feedstock Supply Agreement. From fiscal year 1987 to December 23,
1996, the Company obtained all of its raw materials (urea and anhydrous
ammonia) from First Mississippi and Mississippi Chemical Corporation
("Mississippi Chemical"), an unrelated party, out of the production of
Triad Chemical, a joint venture between First Mississippi and
Mississippi Chemical. Until mid-1988, First Mississippi provided all of
the Company's urea and anhydrous ammonia out of its share of Triad's
production under a feedstock supply agreement. In July 1988, the
Company agreed to an assignment in which one-half of First Mississippi's
obligation under the feedstock supply agreement was assigned to
Mississippi Chemical, and First Mississippi executed a stand-by
agreement pursuant to which it agreed to supply urea and anhydrous
ammonia to the Company to the extent of the assignment if Mississippi
Chemical wrongfully ceased to make deliveries. The prices paid by the
Company for urea and anhydrous ammonia relate to their market prices.
From July 1, 1996 through December 23, 1996, the Company paid First
Mississippi approximately $5.4 million for urea and anhydrous ammonia.
On December 23, 1996, First Mississippi spun-off certain of its assets,
including its investment in the Company, to ChemFirst and thereafter
merged with Mississippi Chemical, so that the Company's feedstock
agreement is now with Triad Nitrogen, Inc. ("TNI") and guaranteed by
Mississippi Chemical, both unrelated parties. On October 9, 1997, the
Company entered into a new feedstock agreement with TNI and Mississippi
Chemical as guarantor of TNI's obligations thereunder.
Payments to Triad for Certain Goods and Services. The Company
obtains certain utilities and services from Triad, including clarified
water, demineralized water and certain of its steam and air. In
addition, the Company has agreed to share the expenses of certain basic
services required for the operation of the Company's and Triad's
facilities including, among others, a guard force, telephone equipment,
road maintenance and shared legal costs. The Company's payment for
services provided under the agreement is based on the actual cost of
such services plus an overhead fee of 25%. The agreement may be
terminated by either party without cause upon one year's notice or the
shutdown of either Triad's or the Company's facilities. Prior to the
December 23, 1996 spin-off referred to in the proceeding paragraph,
Triad was 50% owned by First Mississippi. Payments for such services to
Triad from July 1, 1996 through December 23, 1996 were approximately
$208,000.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
(a)1. Financial Statements
See Item 8 of PART II of this report.
2. Financial Statement Schedules
See Item 8 of Part II of this report.
3. Exhibits
2 Agreement and Plan of Merger, dated as of October 9, 1997,
among Borden Chemical, Inc., MC Merger Corp. and the Company.1
3.1 Restated Certificate of Incorporation of the Company.2
3.2 Amended By-laws of the Company.2
3.3 Amendment No. 1 to the Amended By-laws.3
3.4 Amendment No. 2 to the Amended By-laws.*
4.1 See Exhibits 3.1 and 3.2 for provisions of the Company's
Restated Certificate of Incorporation andAmended By-laws defining
the rights of holders of Common Stock.
4.2 Specimen of Common Stock Certificate.2
4.3 Registration Rights Agreement by and among the Company,
Ashland and First Mississippi.2
4.4 Rights Agreement dated November 15, 1990 between the Company
and Wachovia Bank and Trust Company, N.A. (now Wachovia Bank,
N.A.) as Rights Agent.4
4.5 Amendment to Rights Agreement, dated as of August 7, 1991.4
4.6 Second Amendment to Rights Agreement, dated as of August 3,
1994.4
4.7 Third Amendment to Rights Agreement, dated as of October 9,
1997.1
4.8 Fourth Amendment to Rights Agreement, dated as of October 9,
1997.1
10.1 Feedstock Agreement, dated as of July 1, 1997, by and among
the Company, Triad Nitrogen, Inc. and Mississippi Chemical
Corporation as guarantor of Triad Nitrogen, Inc.'s obligations
thereunder.
10.2 Standby Feedstock Agreement, dated July 1, 1988, by and
between the Company and First Mississippi.*
10.3 MCI/Triad Intercompany Agreement, dated June 10, 1987, by and
between the Company and Triad.2
10.4 Gas Sales Contract, dated August 1, 1986, by and between
Pontchartrain Natural Gas System and the Company.2
10.5 Site Lease Agreement, dated November 4, 1970, and July 1,
1972, by and among Triad, First Mississippi, MisCoa,
Mississippi Chemical Corporation, Ashland and the Company.2
10.6 Assignment of Lease, dated July 23, 1987, by and among Triad,
First Mississippi, Mississippi Chemical Corporation, Ashland
and the Company.2
10.7 Amended and Restated Long-Term Incentive Plan.2
10.8 Second Amended and Restated Long-Term Incentive Plan.5
10.9 1996 Long-Term Incentive Plan.*
10.10 Employee 401(K) Thrift Plan and related Trust (Restated
1996).*
10.11 Amendment No. 1 to Employee 401(k) Thrift Plan.*
10.12 Amendment No. 2 to Employee 401(k) Thrift Plan.*
10.13 Amended and Restated Retirement Plan for Employees of the
Company including First Supplement and related Trust.
(The related Trust is incorporated by reference from the
Company's Registration Statement on Form S-1
(Registration No. 33-15181).
10.14 Amendment No. 1 to the Retirement Plan.*
10.15 Form of Indemnity Agreement.2
10.16 Schedule describing differences between Indemnity
Agreements.*
10.17 Description of Annual Incentive Plan.*
10.18 Form of Single Trigger Change of Control Severance
Agreement.*
10.19 Schedule describing differences between Single Trigger
Change of Control Agreement.*
10.20 Form of Double Trigger Change of Control Severance
Agreement.*
10.21 Schedule describing differences between Double Trigger
Change of Control Agreement.*
10.22 Form of renewal of Change of Control Agreements.*
10.23 Technology Transfer and Technical Cooperation Agreement,
dated as of February 25, 1997, by and between Melamine
Chemicals, Inc. and DSM Melamine B.V. (Portions of this
agreement are confidential and have been omitted and
filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment).6
10.24 $5 million 5.94% Promissory Note due 2000, dated April 3,
1997, DSM Melamine B.V. to the Company.*
10.25 $5 million 6.23% Promissory Note due 2005, dated April 3,
1997, DSM Melamine B.V. to the Company.*
10.26 Site Lease and Servitude Agreement dated as of July 1,
1997 by and among Triad Nitrogen, Inc. Mississippi
Chemical Corporation and the Company.
24.1 Consent of KPMG Peat Marwick LLP.*
27 Financial Data Schedule.
99.1 Offer to Purchase.7
- -------------
*Filed previously
1 Incorporated by reference from the Company's
Solicitation/Recommendation Statement on Form 14D-9 dated October 15,
1997.
2 Incorporated by reference from the Company's Registration Statement
on form S-1 (Registration No. 33-15181).
3 Incorporated by reference from the Company's Registration Statement
on Form S-8 (Registration No. 33-20497).
4 Incorporated by reference from the Company's Registration Statement
on Form 8-A dated November 9, 1990 as amended by the Company's Form 8
dated August 20, 1991 and the Company's Form 8-A/A dated December 8,
1994.
5 Incorporated by reference from the Company's Registration Statement
on Form S-8 (Registration N. 33-43979).
6 Incorporated by reference from the Company's Current Report on Form
8-K filed with the Commission on April 11, 1997.
7 Incorporated by reference from the Company's
Solicitation/Recommendation Statement on form 14D-9 filed with the
Commission on October 15, 1997.
(b) Reports on Form 8-K
A Form 8-K dated July 1, 1996 was filed by the Company announcing
the end of its consideration of expansion projects in Europe and
in Memphis, Tennessee.
A Form 8-K dated July 30, 1996 was filed by the Company relating
to the financial results for the year ended June 30, 1996.
A Form 8-K dated October 14, 1996 was filed by the Company
relating to the financial results for the three month period ended
September 30, 1996.
A Form 8-K dated January 14, 1997 was filed by the Company
relating to the financial results for the three and six month
periods ended December 31, 1996.
A Form 8-K dated February 26, 1997 was filed by the Company
announcing the signing of an agreement relating to the sale of
Melamine Chemicals Inc.'s patented high-pressure melamine
production technologies to DSM Melamine B.V.
A Form 8-K dated March 25, 1997 was filed by the Company
announcing the closing date for the sale of technology.
A Form 8-K dated April 3, 1997 was filed by the Company relating
to the definitive agreement executed with DSM.
A Form 8-K dated April 17, 1997 was filed by the Company relating
to the financial results for the three and nine month periods
ended March 31, 1997.
A Form 8-K dated June 30, 1997 was filed by the Company relating
to an unsolicited proposal by Ashland, Inc. to acquire all of
Melamine's outstanding stock that Ashland does not currently own.
A Form 8-K dated July 18, 1997 was filed by the Company relating
to the financial results for the year ended June 30, 1997.
A Form 8-K dated August 15, 1997 was filed by the Company relating
Ashland's increased offer to purchase the Company.
A Form 8-K dated August 26, 1997 was filed by the Company relating
to its financial advisor's, Goldman, Sachs & Co.'s, continuing
review of Ashland's offer and other available alternatives.
A Form 8-K dated August 27, 1997 was filed by the Company relating
to Ashland Inc. confirming its offer of August 14 to purchase all
of the issued and outstanding shares of the Company that it does
not own.
A Form 8-K dated September 8, 1997 was filed by the Company
announcing that it has temporarily reduced its melamine production
due to equipment repairs being performed by its primary raw
materials supplier, Triad Nitrogen Inc.
A Form 8-K dated October 10, 1997 was filed by the Company
announcing the execution of the Agreement and Plan of Merger,
dated October 9, 1997, between the Company, Parent and the
Offeror.
A form 8-K dated October 22, 1997 was filed by the Company
announcing the first quarter earnings for the Company.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on
October 24, 1997.
MELAMINE CHEMICALS, INC.
/s/ Frederic R. Huber
----------------------
Frederic R. Huber
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and on the dates indicated.
Signature Title Date
/s/ James W. Crook Chairman of the Board October 24, 1997
-------------------
(James W. Crook)
/s/ Charles M. McAuley Director October 24, 1997
-----------------------
(Charles M. McAuley)
/s/ Scotty B. Patrick Director October 24, 1997
----------------------
(Scotty B. Patrick)
/s/ R. Michael Summerford Director October 24, 1997
- --------------------------
(R. Michael Summerford)
Director October __, 1997
- -------------------------
(Daniel D. Reneau, Jr.)
/s/ Nilon H. Prater Director October 24, 1997
--------------------
(Nilon H. Prater)
Director October __, 1997
----------------------
(David J. D'Antoni)
/s/ Wayne D. DeLeo Vice President and October 24, 1997
------------------- Chief Financial Officer
(Wayne D. DeLeo)
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.1 Feedstock Agreement, dated as of July 1,
1997, by and among the Company, Triad
Nitrogen, Inc. and Mississippi Chemical
Corporation as guarantor of Triad Nitrogen,
Inc.'s obligations thereunder.
10.26 Site Lease and Servitude Agreement, dated as
of July 1, 1997 by and among Triad Nitrogen,
Inc., Mississippi Chemical Corporation and
the Company.
27 Financial Data Schedule.
FEEDSTOCK AGREEMENT
THIS FEEDSTOCK AGREEMENT (herein called the "Agreement") is entered
into effective as of July 1, 1997 (the "Effective Date"), among
Melamine Chemicals, Inc. (herein called "MCI"), a Delaware
corporation, having its principal place of business and office at
Donaldsonville, Louisiana, Triad Nitrogen, Inc. (herein called "TNI"),
a Delaware corporation, having its principal place of business and
office at Donaldsonville, Louisiana, and Mississippi Chemical
Corporation (herein called "Guarantor"), a Mississippi corporation,
having its principal place of business and office at Yazoo City,
Mississippi, as an intervenor.
WITNESSETH:
1. Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
a. "Affiliate" shall mean any person, partnership, corporation,
limited liability company, association or other entity or
organization that controls, is controlled by or is under
common control with a specified person, partnership,
corporation, limited liability company, association or other
entity or organization. For purposes of this definition,
"control" shall mean the power, whether direct or indirect,
and whether by exercise of voting power or contract or
otherwise, to direct the management policies and decisions
of another entity or organization.
b. "Anhydrous Ammonia" shall mean anhydrous ammonia meeting the
specifications set forth in Exhibit A hereto, which is made
a part hereof by reference.
c. "Anhydrous Ammonia Equivalent" shall mean a substance
contained in the melamine carbamate recycle which is similar
in composition to Anhydrous Ammonia but has not been
separated out of such melamine carbamate recycle at time of
delivery hereunder by MCI to TNI.
d. "Carbamate" shall have the meaning set forth in Section
3.c.(1) hereof.
e. "Contract Year" shall mean twelve (12) consecutive calendar
months commencing on July 1 and ending on the next
succeeding June 30; provided, however, a Contract Year shall
end on the day immediately preceding the TNI Urea Plant
Expansion Date (as hereafter defined), and succeeding
Contract Years during the term hereof shall begin on the TNI
Urea Plant Expansion Date and on each anniversary of the TNI
Urea Plant Expansion Date.
f. "Facility Charge" shall have the meaning set forth in
Section 5 hereof.
g. "Lease" shall mean that certain Site Lease Agreement between
TNI and MCI effective as of July 1, 1997, as amended,
modified, supplemented or restated from time to time.
h. "Material Breach" shall mean a breach by any party of an
obligation under this Agreement in consequence of which the
objectives of this Agreement are no longer being met.
Without limiting the generality of the foregoing, the
parties agree that any deliberate refusal to deliver or
purchase product in accordance with the terms and conditions
of this Agreement shall constitute a Material Breach.
i. "M-I Facility" shall mean the melamine plant constituting a
part of the MCI Plant which produces melamine through a
continuous chemical process that heats urea under low
pressure in the presence of a catalyst and which produces a
by-product liquid Carbamate meeting the specifications set
forth in Exhibit C hereto.
j. "MCCLP" shall mean Mississippi Chemical Company, L.P., an
Affiliate (under common control) of TNI.
k. "MCI Plant" shall mean, collectively, the melamine plants
and related facilities operated by MCI on the leased
premises located at Donaldsonville, Ascension Parish,
Louisiana more fully described in the Lease, together with
any later additions (including the MCI Plant Expansion, if
undertaken) or modifications thereto.
l. "MCI Plant Expansion" shall mean an expansion of the MCI
Plant to include a new melamine plant.
m. "MCI Plant Expansion Date" shall mean the date upon which
MCI notifies TNI that the MCI Plant Expansion (if any) is
complete and operational or, at TNI's option, a later date
that is no later than the second anniversary date of the MCI
Plant Expansion Notice.
n. "MCI Plant Expansion Notice" shall mean a written notice by
MCI to TNI of MCI's intention to undertake the MCI Plant
Expansion, which notice shall set forth (i) the estimated
date (which shall be no sooner than two (2) years and no
later than three (3) years after issuance of the MCI Plant
Expansion Notice) that the MCI Plant Expansion will be
complete and operational, (ii) MCI's reasonable, good-faith
estimate of the increase (number of Tons) in its
requirements of Urea Melt per twelve-month Contract Year
after the MCI Plant Expansion is complete and operational,
as compared to the maximum quantity of Urea Melt that TNI is
obligated to sell to MCI (pursuant to Section 3.a.(1)
hereof) during the Contact Year within which the MCI Plant
Expansion Notice is given, and (iii) the volume of and all
specifications applicable to the off-gases to be produced
from the MCI Plant, to the extent they would be relevant to
a determination by TNI as to whether to accept the return of
such off-gases.
o. "Month" shall mean a calendar month.
p. "Post-Expansion Urea Supply Obligation" shall have the
meaning set forth in Section 3.a.(2) hereof.
q. "Submission Date" shall have the meaning set forth in
Section 13.e.(2) hereof.
r. "TNI Anhydrous Ammonia Price," with respect to each Month
during the term hereof, shall be the weighted average price
per Ton, excluding all taxes reflected therein, that is
received on all sales of Anhydrous Ammonia produced by TNI
and sold FOB Donaldsonville, Louisiana, to persons or
entities other than MCI and the Affiliates of TNI. The
parties acknowledge that, as of the Effective Date, MCCLP is
the party to whom TNI sells and intends to sell
substantially all of the Anhydrous Ammonia produced by TNI
at Donaldsonville, Louisiana. MCCLP in turn markets such
Anhydrous Ammonia to third parties. Therefore, starting on
the Effective Date, the TNI Anhydrous Ammonia Price for each
Month shall be the weighted average price per Ton, excluding
all taxes reflected therein, that MCCLP receives on all of
its Anhydrous Ammonia sales, FOB Donaldsonville, Louisiana,
during the six (6) Months immediately preceding such Month,
excluding (i) sales to MCI and TNI Affiliates and
(ii) intracompany transfers. If TNI should cease to sell
substantially all of the Anhydrous Ammonia produced by TNI
at Donaldsonville, Louisiana to MCCLP, and instead sells
such Anhydrous Ammonia to another Affiliate for re-sale to
third parties, then such Affiliate shall be substituted for
MCCLP as of the date of such change for purposes of the
foregoing calculation. If TNI should cease to sell
substantially all of the Anhydrous Ammonia produced by TNI
at Donaldsonville, Louisiana to MCCLP or another Affiliate,
and instead begins selling such Anhydrous Ammonia directly
to unaffiliated third parties, then the TNI Anhydrous
Ammonia Price, with respect to each Month after TNI ceases
to sell substantially all of the Anhydrous Ammonia produced
by TNI at Donaldsonville, Louisiana to MCCLP or another
Affiliate, shall be the weighted average price per Ton,
excluding all taxes reflected therein, that TNI (or MCCLP or
the other relevant Affiliate, with respect to prior Months
during which MCCLP or another Affiliate purchased
substantially all of the Anhydrous Ammonia produced by TNI
for re-sale to unaffiliated third parties) receives on all
of its Anhydrous Ammonia sales, FOB Donaldsonville,
Louisiana during the six (6) Months immediately preceding
such Month, excluding (i) sales to MCI and to TNI's
Affiliates and (ii) intracompany transfers. If for any
reason the parties cannot determine the TNI Anhydrous
Ammonia Price by the method set forth above, or if at any
time after the second Contract Year, either party shall
reasonably determine that the then-applicable TNI Anhydrous
Ammonia Price differs by more than ten percent (10%) from
the average prevailing spot market price of Anhydrous
Ammonia produced and sold in the Gulf region of the United
States during the six (6) Months immediately preceding the
Month when such determination is made, then such party may,
by written notice to the other party, request an adjustment
in or substitute methodology for the calculation of the TNI
Anhydrous Ammonia Price. Authorized representatives of the
parties shall, within thirty (30) days after either party's
issuance of such written notice, meet in good faith to
negotiate a mutually satisfactory adjustment in, or
substitute methodology for, the calculation of the TNI
Anhydrous Ammonia Price. If, within forty-five (45) days
after the parties' first meeting to discuss such issue, the
parties are unable to agree upon an alternate method of
calculating the TNI Anhydrous Ammonia Price, then the
Parties shall submit such determination to the alternate
dispute resolution procedures set forth in Section 13.e
hereof (except that the negotiations described above shall
substitute for the negotiations and mediations described in
Sections 13.e.(1), (2) and (3)), which alternate dispute
resolution procedures will determine the method for
calculating the TNI Anhydrous Ammonia Price.
s. "TNI Urea Plant" shall mean the urea plant operated by TNI
located at Donaldsonville, Ascension Parish, Louisiana,
together with any later additions (including the TNI Urea
Plant Expansion, if undertaken) or modifications thereto.
t. "TNI Urea Plant Expansion" means the expansion of the TNI
Urea Plant that may be undertaken by TNI in connection with
its obligation (subject to any and all restrictions and
limitations herein set forth) to sell and deliver to MCI its
increased requirements of Urea Melt in response to a MCI
Plant Expansion.
u. "TNI Urea Plant Expansion Date" shall mean the earlier of:
(i) the first date that both (x) the MCI Plant Expansion
Date shall have occurred and (y) TNI shall have notified MCI
that the TNI Urea Plant Expansion is complete and
operational; or (ii) the first date that both (A) the
estimated date for completion of the MCI Plant Expansion (as
set forth in the MCI Plant Expansion Notice) shall have
elapsed (regardless of whether the MCI Plant Expansion is
complete on such date) and (B) ninety (90) days shall have
elapsed since the date of written notice by TNI to MCI that
the TNI Urea Plant Expansion is complete and operational.
If the earlier of (i) or (ii) above shall occur on a
February 29, then the TNI Urea Plant Expansion Date shall be
the next day (March 1).
v. "TNI Urea Price," with respect to each Month during the term
hereof, shall be the weighted average price per Ton,
excluding all taxes reflected therein, that is received on
all sales of bulk prilled, granular or melt urea produced by
TNI and sold FOB Donaldsonville, Louisiana, to persons or
entities other than MCI and the Affiliates of TNI. The
parties acknowledge that, as of the Effective Date, MCCLP,
an Affiliate (under common control) of TNI, is the party to
whom TNI sells and intends to sell substantially all of the
prilled, granular and/or melt urea produced by TNI at the
TNI Urea Plant. MCCLP in turn markets such bulk prilled,
granular and/or melt urea to third parties. Therefore,
starting on the Effective Date, the TNI Urea Price for each
Month shall be the weighted average price per Ton, excluding
all taxes reflected therein, that MCCLP receives on all of
its bulk prilled, granular and/or melt urea sales, FOB
Donaldsonville, Louisiana, during the six (6) Months
immediately preceding such Month, excluding (i) sales to MCI
and TNI Affiliates, and (ii) intracompany transfers. If TNI
should cease to sell substantially all of the prilled,
granular and/or melt urea produced by TNI at the TNI Urea
Plant to MCCLP, and instead sells such prilled, granular
and/or melt urea to another Affiliate for re-sale to third
parties, then such Affiliate shall be substituted for MCCLP
as of the date of such change for purposes of the foregoing
calculation. If TNI should cease to sell substantially all
of the prilled, granular and/or melt urea produced by TNI at
the TNI Urea Plant to MCCLP or another Affiliate, and
instead begins selling such urea directly to unaffiliated
third parties, then the TNI Urea Price, with respect to each
Month after TNI ceases to sell substantially all of the urea
produced by TNI at the TNI Urea Plant to MCCLP or another
Affiliate, shall be the weighted average price per Ton,
excluding all taxes reflected therein, that TNI (or MCCLP or
the other relevant Affiliate, with respect to prior Months
during which MCCLP or another Affiliate purchased
substantially all of the prilled, granular and/or melt urea
produced by TNI for re-sale to unaffiliated third parties)
receives on all bulk, prilled, granular and/or melt urea
sales, FOB Donaldsonville, Louisiana, during the six (6)
Months immediately preceding such Month, excluding (i) sales
to MCI and to TNI's Affiliates, and (ii) intracompany
transfers. If for any reason the parties cannot determine
the TNI Urea Price by the method set forth above, or if at
any time after the second Contract Year either party shall
reasonably determine that the then-applicable TNI Urea Price
differs by more than ten percent (10%) from the average
prevailing spot market price of prilled (or other urea
form(s) being produced by TNI) urea produced and sold in the
Gulf region of the United States during the six (6) Months
immediately preceding the Month when such determination is
made, then such party may, by written notice to the other
party, request an adjustment in or substitute methodology
for the calculation of the TNI Urea Price. Authorized
representatives of the parties shall, within thirty (30)
days after either party's issuance of such written notice,
meet in good faith to negotiate a mutually satisfactory
adjustment in, or substitute methodology for, the
calculation of the TNI Urea Price. If, within forty-five
(45) days after the parties' first meeting to discuss such
issue, the parties are unable to agree upon an alternate
method of calculating the TNI Urea Price, then the Parties
shall submit such determination to the alternate dispute
resolution procedures set forth in Section 13.e hereof
(except that the negotiations described above shall
substitute for the negotiations and mediations described in
Sections 13.e.(1), (2) and (3)), which alternate dispute
resolution procedures will determine the method for
calculating the TNI Urea Price.
w. "TNI's Plant Expansion Cost Estimate" shall mean a
reasonable, good-faith estimate by TNI of the total capital
cost of the TNI Urea Plant Expansion, (including capitalized
interest prior to the TNI Urea Plant Expansion Date at the
prime rate as posted from time to time by Citibank, New
York, New York) based upon the assumption that the TNI Plant
Expansion would be sized for the sole purpose of
accommodating MCI's increased requirements for Urea Melt as
set forth in the MCI Plant Expansion Notice. The parties
agree that TNI's Plant Expansion Cost Estimate shall be
binding and non-adjustable for the purpose of calculating
the Facility Charge pursuant to Section 5 hereof; however,
TNI's Plant Expansion Cost Estimate shall not limit the
actual size of the TNI Urea Plant Expansion (it being agreed
that TNI may undertake the TNI Urea Plant Expansion to
increase its urea output beyond that necessary to meet MCI's
additional requirements, so long as the incremental cost of
such a larger plant expansion is not passed to MCI through
the Facility Charge).
x. "Ton" shall mean a net ton of two thousand (2,000) pounds.
y. "Urea Melt" shall mean industrial grade urea melt which
meets the specifications set forth in Exhibit B hereto,
which is made a part hereof by reference.
2. Term. This Agreement shall be effective as of the Effective Date
and shall remain in full force and effect for a term of twenty-
eight (28) years which shall expire on June 30, 2025. This
Agreement shall supersede and take the place of that certain
Feedstock Agreement dated April 30, 1987, as amended, between
Melamine Chemicals, Inc., and TNI (as successor in interest to
First Mississippi Corporation), which agreement is hereby
canceled and terminated as of the Effective Date.
3. Quantity. Quantities expressed herein for Contract Years of less
than three hundred sixty-five (365) days shall be proportionately
reduced.
a. Urea Melt
(1) Prior to the MCI Plant Expansion Date, TNI agrees to
sell and deliver to MCI, and MCI agrees to purchase and
receive from TNI, all of MCI's requirements of Urea
Melt for use in the MCI Plant up to two hundred ten
thousand (210,000) Tons of Urea Melt per Contract Year;
provided, however, after the third Contract Year, the
figure two hundred ten thousand (210,000) shall be
reduced to a figure equal to the number of Tons of Urea
Melt that MCI purchased from TNI hereunder during the
prior Contract Year during which MCI purchased the
largest quantity of Urea Melt, if such figure is less
than two hundred ten thousand (210,000) Tons, unless
MCI provides written notice to TNI within thirty (30)
days after the end of the third Contract Year that
MCI's requirements for Urea Melt (as reasonably and in
good faith determined by MCI) in the fourth Contract
Year will exceed such figure, in which case: (i) TNI
shall supply MCI's requirements for the fourth Contract
Year up to the lesser of (x) MCI's estimate of its
requirements of Urea Melt for the fourth Contract Year
as set forth in MCI's written notice or (y) two hundred
ten thousand (210,000) Tons; and, thereafter, (ii) the
figure two hundred ten thousand (210,000) shall be
reduced to the number of Tons of Urea Melt that MCI
purchased during the prior Contract Year (including the
fourth Contract Year) during which MCI purchased the
largest quantity of Urea Melt, if such figure is less
than two hundred ten thousand (210,000) Tons. This
Section 3.a.(1) shall not apply from and after the MCI
Plant Expansion Date, and the calculation set forth in
this Section 3.a.(1) is expressly made subject to the
provisions of Section 3.a.(7) below.
(2) MCI is evaluating whether to undertake the MCI Plant
Expansion (which, if undertaken, could increase the
total requirements for Urea Melt at the MCI Plant to as
much as three hundred fifteen thousand (315,000) Tons
per Contract Year). If, at any time prior to the end
of the fifth Contract Year, MCI decides to proceed with
the MCI Plant Expansion, it shall give TNI the MCI
Plant Expansion Notice. TNI shall, within one hundred
eighty (180) days following its receipt of the MCI
Plant Expansion Notice, give MCI written notice setting
forth one of the following elections: (i) that TNI
will sell and deliver to MCI all of its requirements of
Urea Melt for use in the MCI Plant up to an annual
quantity not to exceed the Post-Expansion Urea Supply
Obligation (as hereinafter defined), without
undertaking a TNI Plant Expansion; or (ii) that TNI
will sell and deliver to MCI all of MCI's requirements
of Urea Melt for use in the MCI Plant up to a quantity
per Contract Year not to exceed the Post-Expansion Urea
Supply Obligation (as hereinafter defined), and that in
connection with TNI's obligation to sell and deliver
such increased requirements, TNI will undertake the TNI
Urea Plant Expansion. Such notice by TNI shall
include: (w) TNI's calculation of the applicable Post-
Expansion Urea Supply Obligation (number of Tons) in
accordance with the definition thereof set forth below
(including any fluctuations over time due to the
existence of third-party urea sale contracts); (x) if
TNI is undertaking the TNI Urea Plant Expansion, the
estimated date that the TNI Urea Plant Expansion will
be complete and operational (which shall not be earlier
than ninety (90) days prior to the estimated date for
completion of the MCI Plant Expansion as set forth in
the MCI Plant Expansion Notice); (y) TNI's Plant
Expansion Cost Estimate; and (z) if TNI is undertaking
the TNI Urea Plant Expansion, TNI's decision as to
whether it will accept none, all or a specified portion
of the off-gases from the MCI Plant from and after the
date of the TNI Urea Plant Expansion (subject to such
off-gases meeting the specifications contained in the
MCI Plant Expansion Notice). MCI shall have thirty
(30) days following its receipt of TNI's response to
the MCI Plant Expansion Notice within which to revoke
the MCI Plant Expansion Notice by written notice to
TNI. If MCI revokes the MCI Plant Expansion Notice:
(A) MCI shall have no obligation to undertake the MCI
Plant Expansion, or to increase its requirements for
Urea Melt for use in the MCI Plant; and (B) TNI shall
have no obligation to undertake the TNI Urea Plant
Expansion, and there shall be no increase in TNI's Urea
Melt supply obligation beyond that set forth in Section
3.a.(1) above. If MCI does not revoke the MCI Plant
Expansion Notice, and TNI has elected in its response
to the MCI Plant Expansion Notice not to accept the
return of all of the off-gases from the MCI Plant
Expansion, then MCI, as lessee under the Lease, shall
be entitled to construct and operate facilities on the
leased premises to convert the off-gases produced by
the MCI Plant Expansion which TNI declines to accept
into Anhydrous Ammonia or into quantities of urea which
are no greater than .45 times the Urea Melt
requirements of the MCI Plant Expansion for MCI's own
consumption, provided that MCI commences construction
of such facilities within one (1) year of TNI's
response. TNI's consent to the use of the leased
premises for such purposes shall be binding upon all
successor landlords under the Lease and shall survive
the termination of this Agreement.
As used herein, the term "Post-Expansion Urea
Supply Obligation" shall mean a quantity of Urea Melt
equal to the lesser of: (i) the sum of (x) the maximum
quantity of Urea Melt that TNI is obligated to sell to
MCI pursuant to Section 3.a.(1) hereof during the
Contract Year during which the MCI Plant Expansion
Notice is given plus (y) the estimate of MCI's
increased requirements of Urea Melt as contained in the
MCI Plant Expansion Notice; or (ii) three hundred
fifteen thousand (315,000) Tons; provided, that if TNI
elects not to undertake the TNI Urea Plant Expansion or
is unable to complete the TNI Urea Plant Expansion,
then the Post-Expansion Urea Supply Obligation may be
reduced by TNI, but only if and to the extent necessary
due to contracts between TNI or Affiliates of TNI and
third parties for the sale of all forms of urea (i.e.,
prilled, granular and liquid) by TNI or Affiliates of
TNI in effect on the date of the MCI Plant Expansion
Notice, and then only for the remaining term of such
contracts, including any renewals and extensions
exercisable (and ultimately exercised) at the buyer's
option thereunder. Furthermore, such reduction must be
set forth in TNI's response to the MCI Plant Expansion
Notice; otherwise, the existence of third party
contracts shall not be taken into account in
establishing TNI's Post-Expansion Urea Supply
Obligation. If MCI does not revoke the MCI Plant
Expansion Notice as aforesaid, then with respect to
each Contract Year after the MCI Plant Expansion Date,
TNI shall be obligated to sell and deliver to MCI, and
MCI shall be obligated to purchase and receive from
TNI, all of MCI's requirements of Urea Melt for use in
the MCI Plant up to the Post-Expansion Urea Supply
Obligation; provided, however, that if the MCI Plant
Expansion Date does not occur within three years after
the MCI Plant Expansion Notice, then TNI shall, at its
option, be released from its obligations under this
Section 3.a.(2), unless MCI reasonably demonstrates to
TNI, on or before the third anniversary of the MCI
Plant Expansion Notice, that MCI has undertaken, and
will continue to undertake, all reasonable, good-faith
efforts to achieve the MCI Plant Expansion Date.
Within thirty (30) days after MCI's receipt of any
written request by TNI (which request shall not be made
prior to the third anniversary date of the MCI Plant
Expansion Notice), MCI shall submit to TNI the opinion
of an engineering or construction firm of recognized
standing that the MCI Plant Expansion Date can be
achieved within five (5) years after the MCI Plant
Expansion Notice. If either: (i) the MCI Plant
Expansion Date does not occur within three (3) years
after the MCI Plant Expansion Notice, and MCI fails to
provide TNI with the reasonable assurances required
above regarding MCI's ability to achieve the MCI Plant
Expansion Date within five (5) years after the MCI
Plant Expansion Notice; or (ii) notwithstanding such
assurances, MCI fails to achieve the MCI Plant
Expansion Date within five (5) years after the MCI
Plant Expansion Notice, then TNI may redesignate, in
its sole discretion, the maximum quantity (which
quantity shall not be less than the maximum quantity of
Urea Melt that TNI was obligated to sell to MCI
pursuant to this Agreement during the immediately
preceding Contract Year) of Urea Melt that TNI shall be
obligated to sell and deliver to MCI during each
Contract Year thereafter.
If both the MCI Plant Expansion and the TNI Urea
Plant Expansion are undertaken, the parties shall, to
the maximum extent practicable, coordinate the
completion dates of their respective expansions. If
the TNI Urea Plant Expansion is undertaken, but is not
complete and operational by the estimated date set
forth in TNI's response to the MCI Plant Expansion
Notice, then the provisions of Section 3.a.(4) shall
apply during the period of time between TNI's estimated
completion date and the date that the TNI Urea Plant
Expansion is complete and operational. If the TNI Urea
Plant Expansion is not completed within three (3) years
after the later of (A) the estimated completion date
for the TNI Urea Plant Expansion set forth in TNI's
response to the MCI Plant Expansion Notice or (B) the
MCI Plant Expansion Date, then MCI, as lessee under the
Lease, shall be permitted to construct and operate on
the leased premises, as described therein, a Urea Melt
plant having an annual production capacity which is no
greater than that necessary to cover the shortfall
created by such situation, and TNI's consent to the use
of the leased premises for such purposes shall be
binding upon all successor landlords under the Lease
and shall survive the termination of this Agreement.
If MCI begins construction of a Urea Melt plant in
accordance with the foregoing sentence, then TNI shall
waive the entire Facility Charge.
The Facility Charge set forth in Section 5 hereof,
and the rights set forth in this Section 3.a.(2) in
favor of TNI, shall constitute the sole and exclusive
remedies available to TNI with respect to any failure
by MCI to timely complete the MCI Plant Expansion, all
other remedies or damages hereby being waived;
likewise, the rights set forth in this Section 3.a.(2)
in favor of MCI shall constitute the sole and exclusive
remedies available to MCI with respect to any failure
by TNI to timely complete the TNI Urea Plant Expansion,
all other remedies or damages hereby being waived.
(3) Notwithstanding anything herein to the contrary except
the provisions of Section 3.a.(7) below (to which this
Section 3.a.(3) is expressly made subject): (i) with
respect to each Contract Year, after the third Contract
Year of the term hereof, occurring prior to the MCI
Plant Expansion Date (provided, however, that if MCI
gives the notice referenced in Section 3.a.(1), then
this subsection (i) shall not apply until after the
fourth Contract Year), TNI shall not be obligated to
deliver to MCI during any such Contract Year a quantity
of Urea Melt which is greater than one hundred twenty
percent (120%) of the quantity of Urea Melt sold and
delivered to MCI during the immediately preceding
Contract Year; and (ii) beginning with the second
Contract Year occurring after the MCI Plant Expansion
Date and for each Contract Year thereafter, TNI shall
not be obligated to deliver to MCI during any such
Contract Year a quantity of Urea Melt which is greater
than one hundred ten percent (110%) of the quantity of
Urea Melt sold and delivered to MCI during the
immediately preceding Contract Year.
(4) If: (i) TNI is unable or unwilling for any reason to
supply any or all of the Urea Melt that TNI is
obligated to supply hereunder; (ii) MCI properly
rejects any of the Urea Melt supplied by TNI hereunder
due to a failure of such Urea Melt to conform to the
specifications set forth in Exhibit B; and/or (iii) MCI
has requirements of Urea Melt in any Contract Year
which are in excess of TNI's maximum obligation to sell
and deliver Urea Melt (as set forth in this Section 3.a
and the further provisions hereof) and (in the case of
this subsection (iii))TNI does not agree in writing to
sell and deliver such excess quantities within thirty
(30) days after being requested to do so in writing by
MCI, then, in addition to any other remedies available
hereunder, during the period within which TNI is
unwilling or unable to supply all or a portion of MCI's
requirements of Urea Melt in conformity with the
applicable specifications, MCI shall be entitled to
purchase and receive from Affiliates or third party
sources such quantities of Urea Melt as MCI does not
obtain from TNI.
(5) MCI will keep TNI informed regarding its anticipated
requirements of Urea Melt and any significant changes
in such requirements.
(6) MCI shall purchase and accept Urea Melt at reasonably
uniform rates throughout each Contract Year. In no
event shall TNI be required to deliver more than
twenty-eight (28) Tons of Urea Melt during any hour or
more than six hundred sixty (660) Tons of Urea Melt in
any day prior to the MCI Plant Expansion Date (such
numbers being subject to pro rata reduction in Contract
Years where TNI's maximum Urea Melt supply obligation
is less than two hundred ten thousand (210,000) Tons)
or more than forty-five (45) Tons of Urea Melt during
any hour or more than one thousand eighty (1080) Tons
of Urea Melt in any day after the MCI Plant Expansion
Date (such numbers being subject to pro rata reduction
in Contract Years where TNI's maximum Urea Melt supply
obligation is less than three hundred fifteen thousand
(315,000) Tons).
(7) If and to the extent that a suspension or reduction in
deliveries of Urea Melt occurs as a result of: (i) any
force majeure event as described in Section 17 hereof;
(ii) a shutdown of the TNI Urea Plant under Section 14
hereof; or (iii) any other failure or refusal of TNI to
supply Urea Melt in accordance with this Agreement
(including without limitation any failure by TNI to
supply Urea Melt in accordance with the specifications
set forth in Exhibit B, resulting in a rejection of
such Urea Melt by MCI), then for purposes of
determining the quantities of Urea Melt purchased by
MCI in each Contract Year affected by one or more such
occurrences, which calculation in turn shall be used to
calculate the maximum quantities of Urea Melt that must
be supplied by TNI in succeeding Contract Years as
described in Sections 3.a.(1) and 3.a.(3), the actual
quantities taken by MCI during each such Contract Year
shall be increased by the excess of the product of the
(x) total days during which such suspensions or
reductions occurred during such Contract Year
multiplied by (y) the average daily quantities of Urea
Melt purchased during such Contract Year, exclusive of
the days during which such suspensions or reductions
occurred, over the actual quantities taken by MCI on
the days during which such suspensions or reductions
occurred. Furthermore, if the quantity of Urea Melt
purchased by MCI in any Contract Year is reduced as a
result of TNI's inability or refusal, for any reason,
to accept from MCI all Carbamate conforming to the
specifications contained in Exhibit C up to the maximum
quantity limit set forth in Section 3.c.(1), then for
purposes of calculating the quantities of Urea Melt
purchased by MCI in such Contract Year, and in turn
performing the calculations required under Sections
3.a.(1) and 3.a.(3), the actual quantities of Urea Melt
taken by MCI in such Contract Year shall be increased
to reflect the additional quantities of Urea Melt that
MCI would have taken had TNI been able or willing to
accept the return of such Carbamate. Notwithstanding
the foregoing, the parties agree that, with respect to
each of the calculations set forth in Sections 3.a.(1)
and 3.a.(3), no adjustment under this Section 3.a.(7)
shall be implemented for a given Contract Year unless
the aggregate adjustment under this Section 3.a.(7) for
such Contract Year would affect the outcome of such
calculation (i.e., the calculation of the maximum
quantity of Urea Melt that TNI is obligated to deliver
to MCI in the immediately succeeding Contract Year
under Section 3.a.(1) or 3.a.(3), as applicable) by
more than five percent (5%), and then such adjustments
shall be implemented only to the extent of the impact
on such calculation above the five percent (5%)
threshold.
b. Anhydrous Ammonia.
(1) TNI agrees to sell, and MCI agrees to purchase, the
entire Anhydrous Ammonia requirements of MCI's Plant,
not to exceed twenty-five thousand (25,000) Tons per
Contract Year.
(2) MCI will keep TNI informed regarding its anticipated
requirements of Anhydrous Ammonia and any significant
changes in such requirements.
(3) In the event that: (i) TNI is unable or unwilling for
any reason to supply any or all of the Anhydrous
Ammonia that TNI is obligated to supply hereunder; (ii)
MCI properly rejects any of the Anhydrous Ammonia
supplied by TNI hereunder due to a failure of such
Anhydrous Ammonia to conform to the specifications set
forth in Exhibit A; and/or (iii) MCI has requirements
of Anhydrous Ammonia in excess of twenty-five thousand
(25,000) Tons per Contract Year and (in the case of
this subsection (iii)) TNI does not agree in writing to
sell and deliver such excess quantities within thirty
(30) days after being requested to do so in writing by
MCI, then, in addition to any other remedies available
hereunder, during the period within which TNI is
unwilling or unable to supply all or a portion of MCI's
requirements of Anhydrous Ammonia in conformity with
the applicable specifications, MCI shall be entitled to
purchase and receive from Affiliates or third-party
sources such quantities of Anhydrous Ammonia as MCI
does not obtain from TNI.
(4) MCI shall purchase and accept Anhydrous Ammonia at
reasonably uniform rates throughout each Contract Year.
In no event shall TNI be required to deliver at a rate
of more than eight (8) Tons of Anhydrous Ammonia per
hour or more than one hundred (100) Tons of Anhydrous
Ammonia in any day.
c. Anhydrous Ammonia Equivalent.
(1) MCI, as a by-product of the manufacture of melamine in
the M-I Facility, will have available Anhydrous Ammonia
Equivalent in the melamine carbamate recycle (herein
called "Carbamate"). Subject to the provisions of
Sections 3.c.(2), 15 and 17 hereof, to MCI's option set
forth in the next paragraph, and to TNI's ability to
efficiently accept and process Carbamate delivered by
MCI, on each day during the term hereof, MCI will sell
and deliver to TNI and TNI will purchase and accept, a
quantity of Anhydrous Ammonia Equivalent, in the form
of Carbamate, which is approximately equivalent to .47
times the number of Tons of Urea Melt used by MCI in
the M-I Facility on such day, not to exceed a quantity
of Carbamate containing one hundred eighty (180) Tons
of Anhydrous Ammonia Equivalent per day or seven and
one-half (7 1/2) Tons in each hour. TNI intends to
modify the TNI Urea Plant in October 1997 to enhance
its efficiency, which modification may result in an
increase in the maximum daily quantity of Carbamate
that TNI is able to efficiently accept from MCI. TNI
will use its reasonable efforts to achieve the results
desired from the TNI Urea Plant modification. If TNI
determines, in its sole reasonable judgment, that such
TNI Urea Plant modification does not increase TNI's
ability to accept the return of additional Carbamate
from MCI, then TNI will notify MCI of such result as
soon as practicable after its completion of the
modification, and there will be no change in the
maximum quantity of Carbamate to be returned to TNI
hereunder. If TNI determines, in its sole reasonable
judgment, that such TNI Urea Plant modification does
increase TNI's ability to accept the return of some
amount of additional Carbamate from MCI without
additional incremental economic operating cost to TNI
(but excluding cost incurred by TNI in constructing the
TNI Urea Plant modification, including depreciation or
amortization), then TNI will notify MCI of such result
as soon as practicable after its completion of the
modification, and the parties will promptly modify this
Agreement to reflect the increase in the maximum daily
quantity of Carbamate that can be accepted by TNI
without TNI incurring any such additional incremental
operating costs (as designated by TNI in its sole and
reasonable judgment). If TNI determines, in its sole
reasonable judgment, that (A) such TNI Urea Plant
modification does increase TNI's ability to accept the
return of additional Carbamate from MCI but only at
additional incremental economic operating cost
(calculated as aforesaid) to TNI, or (B) if a portion
of the possible increase in TNI's ability to accept the
return of additional Carbamate has been or can be
achieved without additional incremental economic
operating cost to TNI, but the remainder of the
possible increase in TNI's ability to accept the return
of additional Carbamate can be achieved only at
additional incremental economic operating cost
(calculated as aforesaid) to TNI, then TNI will notify
MCI of such result as soon as practicable after its
completion of the modification, and the parties will
meet to discuss MCI's reimbursement of such increased
cost. If the parties are unable to reach agreement
within forty-five (45) days regarding MCI's
reimbursement of such increased cost to TNI, there will
be no change in the maximum quantity of Carbamate to be
returned to TNI hereunder in excess of the amount which
TNI is able to accept without incurring such additional
incremental economic operating cost (which amount, if
greater than one hundred eighty (180) Tons of Anhydrous
Ammonia Equivalent per day, will be documented by a
modification to this Agreement). If the parties are
able to reach agreement within forty-five (45) days
regarding MCI's reimbursement of such increased cost to
TNI, then the parties will promptly modify this
Agreement to reflect the increase in the maximum daily
quantity of Carbamate that can be accepted by TNI (as
designated by TNI it its sole and reasonable judgment)
and the agreed process by which MCI will reimburse
TNI's increased costs of accepting the return of such
higher quantity of Carbamate.
MCI shall operate the M-I Facility at approximately
historical production levels for the first ten (10)
calendar years of the term hereof, subject to the terms
and conditions of Section 15 hereof. As long as MCI
keeps the M-I Facility in operation (including any
period of operation after the tenth calendar year of
the term hereof), MCI will supply Carbamate to TNI in
accordance with the terms and conditions of this
Section. However, at any time after the tenth calendar
year of the term hereof, MCI shall have the option on
eighteen (18) months written notice to TNI (which
notice may be given up to eighteen (18) months prior to
the end of such tenth calendar year in order to become
effective as soon as such tenth calendar year has
elapsed) to shut down the M-I Facility for any reason
and permanently discontinue the delivery to TNI of
Carbamate in accordance with this Section 3.c.(1);
provided, however, that upon any shut-down of the M-I
Facility and permanent discontinuance by MCI of the
delivery of Carbamate, the price per Ton of Urea Melt
sold hereunder will revert to the TNI Urea Price less
Five and 00/100 Dollars ($5.00) per Ton, the price per
Ton of Anhydrous Ammonia will revert to the TNI
Anhydrous Ammonia Price less Five and 00/100 Dollars
($5.00) per Ton, and the price per Ton of Anhydrous
Ammonia Equivalent will revert to the TNI Anhydrous
Ammonia Price less Five and 00/100 Dollars ($5.00) per
Ton. For so long as MCI continues to operate the M-I
Facility after the end of the tenth calendar year of
the term hereof, MCI agrees to operate the M-I Facility
on a relatively continuous basis at approximately
historical production levels.
At any time after the tenth calendar year of the term
hereof, TNI shall have the option on three (3) years
prior written notice to MCI to permanently discontinue
the purchase and acceptance of Carbamate in accordance
with this Section 3.c.(1). If TNI exercises its option
to permanently discontinue the acceptance of Carbamate,
MCI shall have the right, exercisable by written notice
given within sixty (60) days from receipt of TNI's
notice, to reject the exercise of TNI's option. If MCI
rejects the exercise of TNI's option, then from and
after such rejection the price of Urea Melt sold
hereunder shall be the TNI Urea Price. In the event
that MCI does not reject the exercise of of TNI's
option, MCI, as lessee under the Lease, shall be
permitted to construct and operate a Urea Melt plant on
the leased premises to convert into Urea Melt all or
part of the Carbamate produced by the M-I Facility and
all or none of the off-gases produced by the other
facilities comprising the MCI Plant.
(2) If any Carbamate delivered hereunder shall fail to meet
the quality and composition standards set forth in
Exhibit C hereto, if TNI reasonably determines that it
cannot efficiently accept Carbamate, or if the TNI
production facilities are shut down for any reason, TNI
reserves the right not to accept such Carbamate. In
the event that TNI is operating under normal conditions
(i.e., the TNI Urea Plant is running and there is no
force majeure condition at the TNI Urea Plant, as
described in Section 17 hereof), then if the Carbamate
returned to TNI by MCI meets the specifications in
Exhibit C and does not exceed the quantities provided
in Section 3.c.(1) hereof, TNI will be presumed to be
able to take the Carbamate efficiently. In the event
that the TNI Urea Plant is operating under normal
conditions and the Carbamate returned by MCI fails to
meet the specifications in Exhibit C, unless TNI
reasonably feels that accepting such Carbamate will
have a significant adverse effect (operational or
financial) on the TNI Urea Plant, then before declining
to receive further Carbamate, appropriate officials of
TNI having decision-making authority will meet with
officials of MCI with decision-making authority to
discuss in good faith the failure to meet
specifications and the problems it is causing for TNI.
In such a circumstance, TNI officials will give a
reasonable opportunity to MCI to correct the problem
with the Carbamate content or make other adjustments
prior to declining to take further Carbamate. If a
force majeure situation exists within the scope of
Section 17 hereof, TNI shall have no responsibility to
accept the Carbamate whether or not it meets the
specifications in Exhibit C.
(3) If the MCI Plant produces Carbamate that TNI declines
to receive for any reason, MCI shall be entitled to
sell, or give away, and deliver such Carbamate to third
parties during the period TNI declines to receive such
Carbamate.
4. Prices and Credits.
a. Urea Melt.
(1) With respect to each Month prior to June 30, 2000, the
price per Ton of Urea Melt sold hereunder will be the
TNI Urea Price less Five and 00/100 Dollars ($5.00) per
Ton.
(2) With respect to each Month after June 30, 2000, the
price per Ton of Urea Melt sold hereunder will be the
TNI Urea Price less the lesser of (i) Ten and 00/100
Dollars ($10.00) per Ton or (ii) five percent (5%) of
the TNI Urea Price.
b. Anhydrous Ammonia.
(1) With respect to each Month prior to June 30, 2000, the
price per Ton of Anhydrous Ammonia sold hereunder will
be the TNI Anhydrous Ammonia Price less Five and 00/100
Dollars ($5.00) per Ton.
(2) With respect to each Month after June 30, 2000, the
price per Ton of Anhydrous Ammonia sold hereunder will
be the TNI Anhydrous Ammonia Price less the lesser of
(i) Ten and 00/100 Dollars ($10.00) per Ton or (ii)
five percent (5%) of the TNI Anhydrous Ammonia Price.
c. Anhydrous Ammonia Equivalent.
(1) With respect to each Month prior to June 30, 2000, the
price per Ton of Anhydrous Ammonia Equivalent sold
hereunder will be the TNI Anhydrous Ammonia Price less
Five and 00/100 Dollars ($5.00) per Ton.
(2) With respect to each Month after June 30, 2000, the
price per Ton of Anhydrous Ammonia Equivalent sold
hereunder will be the TNI Anhydrous Ammonia Price less
the lesser of (i) Ten and 00/100 Dollars ($10.00) per
Ton or (ii) five percent (5%) of the TNI Anhydrous
Ammonia Price.
(3) The price per Ton of Anhydrous Ammonia Equivalent, as
set forth in subsections (1) and (2) above, shall apply
to all Anhydrous Ammonia Equivalent sold by MCI to TNI,
whether in the form of Carbamate or through the return
of off-gases from the MCI Plant after the MCI Plant
Expansion has been completed.
5. Facility Charge. With respect to each of the seven (7)
consecutive Contract Years beginning on and immediately following
the TNI Urea Plant Expansion Date, MCI shall, on the last day of
each of such Contract Years, pay to TNI an annual facility charge
(the "Facility Charge"). The Facility Charge for each such
Contract Year shall be calculated as the amount equal to the
product of:
a. The annual payment required to amortize a seven (7) year
loan having a principal amount equal to TNI's Plant
Expansion Cost Estimate and which bears interest from the
TNI Urea Plant Expansion Date at an interest rate which is
250 basis points higher than the interest rate reported as
of the TNI Urea Plant Expansion Date for U.S. Treasury Notes
maturing seven (7) years after the TNI Urea Plant Expansion
Date; multiplied by
b. A fraction (which shall be no greater than one (1)), the
numerator of which is the positive remainder, if any, of:
(i) the number equal to the Post-Expansion Urea Supply
Obligation; minus (ii) the number of Tons of Urea Melt
purchased by MCI during the relevant Contract Year, and the
denominator of which is the remainder of: (A) the Post-
Expansion Urea Supply Obligation, but not less than two
hundred ten thousand (210,000); minus (B) two hundred ten
thousand (210,000);
subject, however, to all adjustments required by the further
terms of this Section 5.
The parties agree that if, due to the provisions of Section
3.a.(3) hereof, TNI offers to MCI a maximum quantity of Urea Melt
for any Contract Year that is less than the Post-Expansion Urea
Supply Obligation, then the Facility Charge for such Contract
Year shall be adjusted as follows: the adjusted Facility Charge
shall be calculated as the amount equal to the product of:
y. The annual payment calculated pursuant to the formula set
forth in subparagraph a. of this Section 5; multiplied by
z. A fraction (which shall be no less than zero (0) and no
greater than one (1)), the numerator of which is the
positive remainder, if any, of: (i) the maximum quantity of
Urea Melt made available by TNI to MCI for such Contract
Year; minus (ii) the number of Tons of Urea Melt purchased
by MCI during the relevant Contract Year, and the
denominator of which is the remainder of: (A) the maximum
quantity of Urea Melt made available by TNI to MCI for such
Contract Year; minus (B) two hundred ten thousand (210,000).
Furthermore, the parties agree that if and to the extent a
suspension or reduction in the deliveries of Urea Melt occurs as
a result of: (i) a force majeure event as described in Section
17 hereof affecting TNI's ability to deliver Urea Melt hereunder;
(ii) a shutdown of the TNI Urea Plant under Section 14 hereof; or
(iii) any other failure or refusal of TNI to supply Urea Melt in
accordance with this Agreement (including without limitation any
failure by TNI to supply Urea Melt in accordance with the
specifications set forth in Exhibit B, resulting in a rejection
of such Urea Melt by MCI), then for purposes of determining the
quantities of Urea Melt purchased by MCI in any Contract Year
affected by one or more of such occurrences, which determination
in turn shall be used to calculate the Facility Charge as set
forth above, the actual quantities taken by MCI during any such
Contract Year shall be increased by the excess of the product of
the (x) total days during which such suspensions or reductions
occurred during such Contract Year multiplied by (y) the average
daily quantities of Urea Melt purchased during such Contract
Year, exclusive of the days during which such suspensions or
reductions occurred, over the actual quantities taken by MCI on
the days during which such suspensions or reductions occurred.
Finally, in the event that the quantity of Urea Melt purchased by
MCI in any Contract Year is reduced as a result of TNI's
inability or refusal, for any reason, to accept Carbamate
supplied by MCI in conformity with the specifications contained
in Exhibit C up to the maximum quantity limit set forth in
Section 3.c.(1), then for purposes of calculating the quantities
of Urea Melt purchased by MCI in such Contract Year and in turn
performing the calculation of the Facility Charge for such
Contract Year, the actual quantities of Urea Melt taken by MCI in
such Contract Year shall be increased to reflect the additional
quantities MCI would have taken had TNI been able or willing to
accept the return of such Carbamate.
Notwithstanding the foregoing, the parties agree that the
Facility Charge calculation, as set forth in the first paragraph
of this Section 5, shall not be subject to the adjustments
thereafter described in this Section unless the aggregate
adjustments under this Section 5 for such Contract Year would
reduce the Facility Charge as calculated under the first
paragraph hereof by more than five percent (5%), and then such
adjustments shall be implemented only to the extent of the
reduction in the Facility Charge in excess of the five percent
(5%) threshold.
6. Taxes. For each calendar quarter, MCI agrees to pay any and all
taxes (other than corporate income taxes of TNI) in any way
related to the Anhydrous Ammonia and Urea Melt sold to MCI
hereunder, including, but not limited to, sales taxes. If a
"Superfund" tax is hereafter imposed on Anhydrous Ammonia and
Urea Melt sold for industrial uses, TNI shall be responsible for
its payment. MCI will reimburse TNI on a quarterly basis for any
such "Superfund" tax payments in an amount which is the greater
of (i) the amount of such tax monies that MCI is able to bill and
collect from purchasers of its manufactured products during the
preceding quarter or (ii) the amount of TNI's "Superfund" tax
payments on Anhydrous Ammonia and Urea Melt sold to MCI during
each quarter multiplied by the percentage of "Superfund" taxes
paid by TNI on Anhydrous Ammonia and Urea Melt sales to its other
customers for industrial use that TNI is able to collect from
such customers during the immediately preceding calendar quarter.
7. Payment. Within five (5) business days after the beginning of
each Month, TNI shall notify MCI in writing of the TNI Urea Price
and TNI Anhydrous Ammonia Price applicable during such current
Month. TNI shall invoice MCI for Anhydrous Ammonia and Urea Melt
sold and delivered to MCI hereunder during each Month within five
(5) business days after the end of such Month. Each such TNI
invoice shall include, with respect to each product: (a) the
quantity delivered; (b) the then-effective price per Ton; (c) the
total amount due for the quantity delivered; and (d) such other
information and detail as may be mutually agreeable to the
parties. Likewise, MCI shall invoice TNI for the Anhydrous
Ammonia Equivalent returned to TNI hereunder during each Month
within five (5) business days after the end of such Month. Each
such MCI invoice shall include: (i) the quantity of Anhydrous
Ammonia Equivalent returned; (ii) the then-effective price for
such Anhydrous Ammonia Equivalent; (iii) the total amount due for
the quantity returned; and (iv) such other information and detail
as may be mutually agreeable to the parties. Payment of invoices
shall be made by the indebted party (as determined by crediting
the amount of MCI's invoice against TNI's invoice for the same
month) within thirty (30) days from date of the other party's
invoice; provided, however, that if TNI and Affiliates of TNI
should change the payment terms generally applicable to their
sales of urea and other nitrogen products to industrial customers
then the payment terms hereunder shall be changed to be
consistent with such then-prevailing payment terms generally
applicable to sales by TNI and TNI Affiliates to industrial
customers. TNI shall separately invoice MCI for taxes quarterly
and for Facility Charges annually, and MCI shall pay such
invoices within thirty (30) days from the date thereof. Any
properly invoiced amounts not paid by the aforesaid due dates
shall accrue interest from the day following the applicable due
date until paid at an annual rate equal to the prime rate of
Citibank, New York, New York then in effect plus three percent
(3%).
8. Records. TNI shall keep, and shall cause (or require the
Guarantor hereunder to cause) MCCLP or any other relevant
Affiliate to keep, complete and accurate books and records on all
sales used to determine the TNI Anhydrous Ammonia Price, the TNI
Urea Price, and the Facility Charge and shall permit, on request
by MCI, an independent auditor selected by MCI, and to whom TNI
shall have no reasonable objection, to examine such books and
records for any period ending not more than two (2) years prior
to such request to determine the correctness of any price
hereunder. Said auditor shall not disclose any information
relating to said books or records except his opinions as to the
correctness of such price.
MCI shall keep complete and accurate books and records on all
suspensions or reductions in TNI's deliveries of Urea Melt, all
failures by TNI to accept the return of Carbamate by MCI, and
other matters relevant to (i) the calculations addressed in
Section 3.a.(7) and (ii) the Facility Charge adjustments
addressed in the final paragraph of Section 5, and shall deliver
to TNI a report on or before of the fifteenth (15th) day of each
Month relating to all such matters occurring during the previous
Month. TNI shall endeavor to raise objections (if any) to any
such report within thirty (30) days from its receipt thereof.
If TNI fails to raise objections to any report applicable to a
particular Contract Year within sixty (60) days after the end of
such Contract Year, such report shall be deemed to have been
accepted by TNI. If TNI objects in a timely manner to any
monthly report issued by MCI, MCI shall permit TNI, on written
request, to examine MCI's books and records for the relevant
period to determine the correctness of any calculations in the
MCI report being questioned. All calculations made by MCI with
respect to the adjustments under Section 3.a.(7) and/or the
Facility Charge adjustments referred to in Section 5 shall be
given effect unless and until TNI raises a timely objection
thereto and a determination is made either by mutual agreement of
the parties or in accordance with the dispute resolution
procedures of Section 13. No interest shall accrue on additional
payments to be made as a result of any such determinations until
the thirtieth (30th) day following the determination date, at
which time interest shall accrue at the rate specified in Section
7.
9. Delivery, Title, Custody and Control. During the life of this
Contract:
a. MCI shall provide transportation facilities for the
Anhydrous Ammonia and Urea Melt sold by TNI by pipeline from
a mutually agreeable point of connection within the battery
limits of the TNI Urea Plant or the TNI Anhydrous Ammonia
plant, as the case may be, or by other acceptable method.
Title, custody, possession, control and risk of loss of
Anhydrous Ammonia and Urea Melt so delivered shall pass from
TNI to MCI upon transfer of product by TNI to MCI, or if by
pipeline, at the mutually agreeable point of connection
within the battery limits of the TNI Urea Plant or the TNI
Anhydrous Ammonia plant, as the case may be.
b. MCI shall similarly provide transportation facilities for
the Carbamate to be delivered to TNI. Transportation and
delivery shall be by pipeline at a mutually agreeable point
of connection. Title, custody, possession, control and risk
of loss of Carbamate shall pass from MCI to TNI upon
delivery at such point of connection.
10. Testing and Metering Procedures.
a. Testing. The testing procedures as to all products
delivered hereunder shall be as follows:
(1) As to all Anhydrous Ammonia and Urea Melt delivered by
TNI hereunder, testing shall be performed jointly, with
TNI and MCI sharing equally in the cost of the tests,
based on generally accepted standard industry
practices.
(2) As to all Carbamate delivered by MCI to TNI hereunder,
TNI and MCI shall take samples at the Carbamate surge
tank simultaneously at a mutually agreeable time once
per day. Each party will also take two (2) additional
samples per day at the Carbamate surge tank at times of
its own choosing. Each party will perform necessary
analyses in keeping with standard industry practices.
The daily average of all samples will be used to
compute the amount of Anhydrous Ammonia in the
Carbamate. Specific gravity of the Carbamate will be
determined by generally accepted industry practices.
If a more accurate means of measuring Anhydrous Ammonia
content or Carbamate is developed, and both parties
ultimately agree, the sampling procedure described
previously may be amended.
b. Metering Procedures. Flow metering procedures as to all
products delivered hereunder shall be as follows: Each
party will maintain a flow meter in good working condition
for Anhydrous Ammonia, Urea Melt and Carbamate. Meters are
to be monitored and compared on a daily basis. Differences
or conflicts in meters will be resolved as soon as
practicable. At the earliest reasonable opportunity, all
Urea Melt and Carbamate meters shall be tested in series at
the same time with water flow tests. Anhydrous Ammonia
meters shall be tested at the same time by a method mutually
agreeable to the parties. Each party shall share equally in
the cost of these tests. No adjustments shall be made to
the meters without the other party's knowledge and consent,
such consent not to be unreasonably withheld. Adjustments
shall always be followed by repeat tests conducted in
accordance with this Section 10.b.
11. Warranties and Covenants. This Agreement contains the following
warranties and covenants:
a. As to Anhydrous Ammonia and Urea Melt delivered by TNI to
MCI hereunder:
(1) TNI warrants and covenants that all product sold and
delivered by TNI hereunder shall conform to the quality
and form, description and specifications set forth in
Exhibit A for Anhydrous Ammonia and Exhibit B for Urea
Melt.
(2) TNI warrants and covenants that it will convey good
title to such Anhydrous Ammonia and Urea Melt to MCI
and that products delivered by TNI shall be free from
any security interest or other lien or encumbrance.
(3) TNI warrants and covenants that the production and sale
of Anhydrous Ammonia and Urea Melt in accordance with
this Agreement will not infringe any valid patent
issued under the laws of the United States of America,
and in the event that any claim, action or suit
charging infringement of any such patent shall be
brought against it or MCI, TNI will, at its own
expense, defend any such action or suit and will hold
MCI harmless against any liability or cost whatsoever
arising from any such claim, action or suit, provided
that if any such claim, action or suit is brought
against MCI, it shall, within fifteen (15) days
thereof, notify TNI in writing with full particulars
concerning the same.
b. As to the Carbamate delivered by MCI to TNI hereunder, MCI
makes the identical warranties, covenants and indemnities as
those set forth in Section 11.a above, except the Carbamate
shall conform to the quality and composition standards set
forth in Exhibit C.
c. Each party hereby also warrants and covenants that it shall
conduct all of its Donaldsonville, Louisiana operations
safely and in material compliance with applicable laws,
rules and regulations. Each party agrees to indemnify,
defend and hold the other party harmless from and against
any liability or cost whatsoever arising out of the
indemnifying party's failure to comply with the foregoing
warranty.
d. TNI further represents and warrants to MCI that on and as of
the date hereof:
(1) TNI and Guarantor have all requisite power and
authority to carry on the respective businesses in
which they are engaged and to perform their respective
obligations under this Agreement;
(2) The execution and delivery of this Agreement by TNI and
Guarantor have been duly authorized and approved by all
requisite corporate action;
(3) TNI and Guarantor have all requisite power and
authority to enter into this Agreement and perform
their respective obligations hereunder;
(4) The execution and delivery of this Agreement by TNI and
Guarantor does not, and consummation of the
transactions contemplated herein will not, violate any
of the material provisions of their respective
organizational documents, any material agreement
pursuant to which TNI or Guarantor or any of their
respective properties are bound or, to its knowledge,
any material laws applicable to TNI and/or Guarantor;
and
(5) This Agreement is valid, binding, and enforceable
against TNI and Guarantor in accordance with its terms,
subject to bankruptcy, moratorium, insolvency, and
other laws generally affecting creditors' rights and
general principles of equity (whether applied in a
proceeding in a court of law or equity).
e. MCI further represents and warrants to TNI that on and as of
the date hereof:
(1) It has all requisite power and authority to carry on
the business in which it is engaged and to perform its
respective obligations under this Agreement;
(2) The execution and delivery of this Agreement have been
duly authorized and approved by all requisite corporate
action;
(3) It has all requisite power and authority to enter into
this Agreement and perform its obligations hereunder;
(4) The execution and delivery of this Agreement does not,
and consummation of the transactions contemplated
herein will not, violate any of the material provisions
of its organizational documents, any material agreement
pursuant to which MCI or its properties are bound or,
to its knowledge, any material laws applicable to MCI;
and
(5) This Agreement is valid, binding, and enforceable
against MCI in accordance with its terms, subject to
bankruptcy, moratorium, insolvency, and other laws
generally affecting creditors' rights and general
principles of equity (whether applied in a proceeding
in a court of law or equity).
12. Liabilities with respect to Product.
a. Provided that the Anhydrous Ammonia delivered hereunder
meets the specifications set forth in Exhibit A, TNI shall
have no liability for, and MCI shall indemnify and hold TNI
harmless against, all claims, losses, liabilities and
expenses on account of any injury or death of persons
(including MCI's or TNI's employees or contractors) or
damaged property (including MCI's or TNI's) arising out of
MCI's handling and/or use of such Anhydrous Ammonia,
including without limitation the unloading, storage,
handling, possession and/or use by MCI of Anhydrous Ammonia,
from and after the delivery thereof by TNI to MCI; provided,
however, that the indemnification set forth in this Section
12.a shall not apply to the extent that any such claims,
losses, liabilities and expenses arise as a result of the
negligence or misconduct of TNI, its employees, agents or
contractors.
b. Provided that the Urea Melt delivered hereunder meets the
specifications set forth in Exhibit B, TNI shall have no
liability for, and MCI shall indemnify and hold TNI harmless
against, all claims, losses, liabilities and expenses on
account of any injury or death of persons (including MCI's
or TNI's employees or contractors) or damaged property
(including MCI's or TNI's) arising out of MCI's handling
and/or use of such Urea Melt, including without limitation
the unloading, storage, handling, possession and/or use by
MCI of Urea Melt, from and after the delivery thereof by TNI
to MCI; provided, however, that the indemnification set
forth in this Section 12.b shall not apply to the extent
that any such claims, losses, liabilities and expenses arise
as a result of the negligence or misconduct of TNI, its
employees, agents or contractors.
c. Provided that the Carbamate delivered hereunder meets the
specifications set forth in Exhibit C, MCI shall have no
liability for, and TNI shall indemnify and hold MCI harmless
against, all claims, losses, liabilities and expenses on
account of any injury or death of persons (including TNI's
or MCI's employees or contractors) or damaged property
(including TNI's or MCI's) arising out of TNI's handling
and/or use of such Carbamate, including without limitation
the unloading, storage, handling, possession and/or use by
TNI of Carbamate, from and after the delivery thereof by MCI
to TNI; provided, however, that the indemnification set
forth in this Section 12.c shall not apply to the extent
that any such claims, losses, liabilities and expenses arise
as a result of the negligence or misconduct of MCI, its
employees, agents or contractors
Neither TNI nor MCI shall have any liability to the other for any
claims (except for any indebtedness of each to the other arising
directly or indirectly out of or in connection with this
Agreement) with respect to the products delivered hereunder
unless the claimant gives the other party notice of the claim,
setting forth fully the facts on which it is based, within thirty
(30) days after the date of the delivery, sale or other
occurrence giving rise to the claim.
13. Remedies.
a. In the event of (i) any Material Breach by MCI of any of the
provisions of this Agreement (as determined pursuant to the
dispute resolution procedures set forth in Section 13.e
below), other than a breach covered by Section 13.d below,
(ii) any material default by MCI under the Lease (as
determined by the dispute resolution procedures set forth
therein), or (iii) any default by MCI in the payment of any
indebtedness to TNI hereunder, and MCI's failure to remedy
such breach or such default within thirty (30) days after
the receipt from TNI of notice thereof, or in the event of
any voluntary or involuntary bankruptcy, receivership,
insolvency or reorganization proceedings by or against MCI,
TNI shall be entitled to exercise all rights and remedies
available at law or in equity, including without limitation
the right (A) to obtain injunctive relief or an order of
specific performance enforcing the terms and provisions
hereof, (B) to recover damages (subject to the provisions of
Section 13.h hereof), (C) to suspend deliveries hereunder,
(D) to require such security as TNI may deem satisfactory
and/or (E) to terminate this Agreement by written notice to
MCI. In the event of any other breach by MCI of any of the
provisions of this Agreement, other than a breach covered by
Section 13.d below, TNI's remedies shall be limited to those
set forth in subsections (A), (B), and (D) of this Section
13.a. TNI's right to require strict performance of MCI's
obligations shall not be affected in any way by any previous
waiver, forbearance or course of dealing.
b. In the event of (i) any Material Breach by TNI of any of the
provisions of this Agreement (as determined pursuant to the
dispute resolution procedures set forth in Section 13.e
below), other than a breach covered by Section 13.c below,
(ii) any material default by TNI under the Lease (as
determined by the dispute resolution procedures set forth
therein), or (iii) any default by TNI in the payment of any
indebtedness to MCI hereunder, and TNI's failure to remedy
such breach or such default within thirty (30) days after
the receipt from MCI of notice thereof, or in the event of
any repudiation of the guaranty set forth in Section 24 by
Guarantor, or any voluntary or involuntary bankruptcy,
receivership, insolvency or reorganization proceedings by or
against TNI or Guarantor, MCI shall be entitled to exercise
all rights and remedies available at law or in equity,
including without limitation the right (A) to obtain
injunctive relief or an order of specific performance
enforcing the terms and provisions hereof, (B) to recover
damages (subject to the provisions of Section 13.h hereof),
(C) to suspend deliveries hereunder, (D) to require such
security as MCI may deem satisfactory and/or (E) to
terminate this Agreement by written notice to TNI. MCI's
right to require strict performance of TNI's obligations
shall not be affected in any way by previous waiver,
forbearance or course of dealing. In the event of any other
breach by TNI of any of the provisions of this Agreement,
other than a breach covered by Section 13.c below, MCI's
remedies shall be limited to those set forth in subsections
(A), (B), and (D) of this Section 13.b.
c. In the event that TNI shall fail to deliver Anhydrous
Ammonia and/or Urea Melt hereunder which conform to the
warranties made by TNI in this Agreement, MCI shall not be
obligated to purchase such non-conforming product and shall
have the option in relation to such non-conforming product
as set forth in Section 3.a.(4) or 3.b.(3), as applicable.
MCI shall not be entitled to seek monetary damages or to
voluntarily suspend deliveries of Carbamate in response to
any unexcused failure by TNI to deliver conforming product;
however, MCI shall have the right to obtain injunctive
relief or an order of specific performance requiring the
delivery of conforming product and/or a determination
pursuant to the dispute resolution procedures set forth
below that such failure constitutes a Material Breach by TNI
entitling MCI to terminate this Agreement.
d. In the event that MCI shall fail to deliver Carbamate
hereunder which conforms to the warranties made by MCI in
Section 11 of this Agreement, TNI shall have the option in
relation to such non-conforming product as set forth in
Section 3.c.(2) hereof. TNI shall not be entitled to seek
monetary damages or to voluntarily suspend deliveries of
Anhydrous Ammonia and Urea Melt in response to any unexcused
failure by MCI to deliver conforming Carbamate; however, TNI
shall have the right to obtain injunctive relief or an order
of specific performance requiring the delivery of conforming
product and/or a determination pursuant to the dispute
resolution procedures set forth below that such failure
constitutes a Material Breach by MCI entitling TNI to
terminate this Agreement.
e. Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach or performance hereof,
including, but not limited to, any disputes concerning the
interpretation of the terms and provisions hereof, shall be
resolved through the use of the following procedures:
(1) The parties will initially attempt in good faith to
resolve any dispute, controversy or claim arising out
of or relating to this Agreement.
(2) Should the party representatives directly involved in
any dispute, controversy or claim be unable to resolve
same within a reasonable period of time, such dispute,
controversy or claim shall be submitted to the
respective senior officers of the parties with such
explanation or documentation as the parties deem
appropriate to aid such senior officers in their
consideration of the issues presented. The date the
matter is first submitted to the senior officers of the
parties shall be referred to as the "Submission Date."
The senior officers shall attempt in good faith,
through the process of discussion and negotiation, to
resolve any dispute, controversy, or claim presented to
them within forty-five (45) days after the Submission
Date.
(3) If the senior officers of the parties cannot so resolve
any dispute, controversy, or claim submitted to them
within forty-five (45) days after the Submission Date,
the parties shall attempt in good faith to settle the
matter by submitting the dispute, controversy or claim
to mediation under the American Arbitration Association
Mediation Rules within sixty (60) days after the
Submission Date, using any mediator upon which they
mutually agree. If the parties are unable to mutually
agree upon a mediator within seventy-five (75) days
after the Submission Date, the case shall be referred
for mediation to the American Arbitration Association
Mediation Division. The cost of the mediator will be
split equally between the parties unless they agree
otherwise in writing.
(4) If the matter has not been resolved pursuant to the
aforesaid mediation procedure within thirty (30) days
of the initiation of such procedure, either Party may
request that the matter be submitted to a board of
three (3) independent arbitrators. Either TNI or MCI
may institute such arbitration by giving written notice
to the other at any time after the thirtieth (30) day
following institution of the mediation procedure and
designating one (1) independent arbitrator. Within ten
(10) days thereafter, the other party shall designate a
second independent arbitrator, and such two (2)
arbitrators shall thereafter select the third
independent arbitrator. If the responding party shall
fail to appoint an arbitrator within the said ten (10)
day period provided above, the American Arbitration
Association shall be called upon by the other party to
appoint such arbitrator and such two (2) shall
thereupon select a third arbitrator and the three (3)
thus chosen shall constitute the board of arbitration.
All arbitrators shall be qualified by education or
experience within the chemical industry to decide the
issues presented for arbitration. No arbitrator shall
be: a current or former director, officer, or employee
of either party or its Affiliates; an attorney (or
member of a law firm) who has rendered legal services
to either party or its Affiliates within the preceding
three years; or an owner of a material amount of the
common stock of either party, or its Affiliates. A
hearing shall be held by the three (3) arbitrators at a
location mutually agreeable to the parties or if the
parties are unable to agree on a site, the arbitrators
shall select the site.
A decision of the matter submitted to the
arbitrators shall be rendered promptly and in
accordance with the rules of the American Arbitration
Association, except to the extent such rules are
modified by this Section 13.e or any other express
written agreement of the parties. In all arbitration
proceedings, with respect to each particular claim in
dispute other than those involving: (i) pricing
determinations; (ii) any adjustments to TNI's Urea Melt
supply obligation under Section 3.a.(7); or (iii) any
adjustments to the Facility Charge under Section 5, the
arbitrators shall be required to agree upon and approve
either one of the positions advocated by MCI or one of
the positions advocated by TNI, whichever best reflects
and implements the purposes and intent of this
Agreement. Any decision rendered by the arbitrators
(other than those involving (i) pricing determinations,
(ii) any adjustments to TNI's Urea Melt supply
obligation under Section 3.a.(7) or (iii) any
adjustments to the Facility Charge under Section 5)
which does not reflect either a position advocated by
MCI or a position advocated by TNI shall be beyond the
scope of authority granted by the arbitrators and
consequently may be overturned by either party. Each
party hereby irrevocably waives, to the fullest extent
permitted by law, any objection it may have to the
arbitrability of any such disputes, controversies or
claims. The decision of a majority of the arbitrators
shall be in writing and shall be final and binding upon
all parties hereto as to the issues submitted.
Judgment upon the award rendered may be entered in any
court having jurisdiction thereof. The cost of
arbitration shall be borne by the party whose
contention was not upheld by the arbitration
proceedings, unless otherwise provided in the
arbitration award.
In any dispute resolution proceeding relating to a
proposed adjustment in the methodology for calculating
the TNI Urea Price or TNI Anhydrous Ammonia Price, the
parties and the arbitrators, as applicable, shall make
their determination without regard to either (a) the
form in which the subject product is being delivered
(e.g., in the case of urea, whether it is being sold in
prilled, granular or liquid form) or (b) the value of
the Carbamate or other by-product being returned by MCI
to TNI (such value having been taken into account in
establishing the discounts set forth in Section 4
hereof). Any pricing determination resolved through
the use of the foregoing dispute resolution procedures
shall be given effect retroactively to the date of the
initial notice by the party requesting such pricing
determination.
Each party agrees to be bound by any determination
made in accordance with the dispute resolution
provisions set forth in the Lease with respect to any
matter resolved pursuant to the dispute resolution
provisions of the Lease. Any party may, however, raise
matters relative to the Lease in any pending dispute
resolution proceeding between TNI and MCI with respect
to this Agreement so long as such matters have not
previously been resolved in a dispute resolution
proceeding under the Lease. Likewise, any party may
raise matters relative to this Agreement in any pending
dispute resolution proceeding between TNI and MCI with
respect to the Lease, so long as such matters have not
previously been resolved in a dispute resolution
proceeding under this Agreement. In the event the
dispute resolution provisions of either this Agreement
or the Lease have been invoked, then either party shall
have the right to require that all then-existing
disputes under either the Lease or this Agreement be
resolved through the same dispute resolution procedure.
(5) All deadlines specified herein may be extended by
mutual written agreement of the parties. The
procedures specified herein shall be the sole and
exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this
Agreement; except, however, that a party may seek a
preliminary injunction or other preliminary judicial
relief from a court of competent jurisdiction pending
mediation and/or arbitration of a dispute, as well as
permanent injunctive relief from a court of competent
jurisdiction in accordance with the terms and
conditions of this Agreement. Despite any injunctive
relief the parties will continue to participate in good
faith in the procedures specified herein. All
applicable statutes of limitation, including, without
limitation, contractual limitation periods provided for
in this Agreement, shall be tolled while the procedures
specified in this Section are pending. The parties
will take all actions, if any, necessary to effectuate
the tolling of any applicable statutes of limitation.
f. Upon the termination of this Agreement, any monies due and
owing either party shall be paid to the other party pursuant
to the terms hereof and any refunds due either party shall
be made at the earliest possible time, and in any event no
later than sixty (60) days after the expiration or
termination of this Agreement. All audit rights shall
survive for the period prescribed by Section 8 hereof. All
indemnification obligations shall survive the expiration or
termination of this Agreement.
g. In the event that MCI terminates this Agreement pursuant to
this Section 13, MCI, as lessee under the Lease, shall be
permitted to construct and operate on the leased premises,
as described therein, a Urea Melt plant and/or an Anhydrous
Ammonia plant, having an annual production capacity which is
no greater than: (1) twenty-five thousand (25,000) Tons, in
the case of an Anhydrous Ammonia plant; and, (2) in the case
of a Urea Melt plant, the lesser of (A) MCI's maximum
anticipated current or future ability to consume Urea Melt
or (B) either two hundred ten thousand (210,000) Tons, if
the MCI Plant Expansion Notice has not been given, or three
hundred fifteen thousand (315,000) Tons, if the MCI Plant
Expansion Notice has been given. TNI's consent to the use
of the leased premises for the foregoing purposes shall be
binding upon all successor landlords under the Lease and
shall survive the termination of this Agreement.
h. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
UNDER ANY PROVISION OF THIS AGREEMENT (INCLUDING, WITHOUT
LIMITATION, ANY INDEMNITY PROVISION HEREOF) FOR PUNITIVE OR
EXEMPLARY DAMAGES IN TORT OR CONTRACT. FURTHERMORE, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER ANY PROVISION
OF THIS AGREEMENT FOR CONSEQUENTIAL, INCIDENTAL, OR INDIRECT
DAMAGES. THE PRECEDING SENTENCES SHALL NOT BE CONSTRUED,
HOWEVER, AS LIMITING THE OBLIGATION OF EITHER PARTY
HEREUNDER TO INDEMNIFY THE OTHER PARTY AGAINST CLAIMS
ASSERTED BY THIRD PARTIES, INCLUDING, BUT NOT LIMITED TO,
THIRD PARTY CLAIMS FOR PUNITIVE, EXEMPLARY, CONSEQUENTIAL,
INCIDENTAL, OR INDIRECT DAMAGES.
i. The parties acknowledge that irreparable damage may occur in
the event that certain provisions of this Agreement are not
performed in accordance with their specific terms or are
otherwise breached and such performance does not occur or
such breach is not cured within the period set forth above.
(Without limiting the generality of the foregoing, the
parties acknowledge that any deliberate refusal to deliver
product in accordance with the terms of this Agreement shall
cause irreparable injury, loss or damage to the other
party.) Each of the parties therefore agrees that in any
such situation the non-defaulting party shall be entitled to
an injunction or injunctions to prevent nonperformance or
breach of such provisions of this Agreement and to enforce
specifically the terms and provisions hereof, without the
necessity of posting a bond or other security as may be
required by law, this being in addition to any other remedy
to which such party is otherwise entitled under this
Agreement, as awarded or issued in accordance with the
dispute resolution procedures provided in this Section 13.
14. Shutdown of TNI Facilities. NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, IN NO EVENT SHALL TNI BE REQUIRED TO MAKE
DELIVERIES DURING PERIODS WHEN TNI'S ANHYDROUS AMMONIA AND/OR
UREA PRODUCTION FACILITIES ARE NOT OPERATIONAL DUE EITHER TO A
FORCE MAJEURE EVENT OR REASONABLE MAINTENANCE. FURTHER,
NOTWITHSTANDING ANY LANGUAGE HEREIN TO THE CONTRARY, IN THE EVENT
THAT RESPONSIBLE OFFICIALS OF TNI DETERMINE THAT IT IS NOT IN
TNI'S ECONOMIC INTEREST TO RUN ALL OR A PORTION OF THE TNI
PRODUCTION FACILITIES, THEN SUCH FACILITIES SHALL BE SHUT DOWN
FOR SUCH PERIOD OF TIME AS TNI DEEMS TO BE IN ITS BEST ECONOMIC
INTEREST WITHOUT ANY LIABILITY WHATSOEVER TO MCI (PROVIDED,
HOWEVER, THAT MCI SHALL HAVE THE RIGHT TO TERMINATE THIS
AGREEMENT UNDER THE TERMS AND CONDITIONS SET FORTH BELOW). The
supply of Urea Melt and Anhydrous Ammonia is vital to MCI's
continuance in business and replacement of TNI with an alternate
supplier thereof could be a lengthy process involving the
installation of capital equipment. If the decision is made to
shut down or significantly reduce the output at the TNI
production facilities for economic reasons, TNI will notify MCI
as soon as practicable of the proposed shutdown or slowdown. TNI
is under no further obligation to MCI, but if MCI requests, MCI
and TNI will meet to determine what if anything can be done to
provide Anhydrous Ammonia and Urea Melt to MCI. IN ANY EVENT,
TNI SHALL BE RELIEVED OF ALL RESPONSIBILITY TO DELIVER ANHYDROUS
AMMONIA OR UREA MELT OR TAKE CARBAMATE DURING EACH SUCH ECONOMIC
SHUTDOWN OF TNI FACILITIES. If, however, any of the TNI
facilities are shut down or production capacity is reduced due to
either: (i) a determination by TNI that a shutdown or slowdown of
such facilities is in TNI's best economic interest; or (ii) a
force majeure event, and the result of such occurrence(s) is
that, during an aggregate period of seven (7) Months within any
period of twelve (12) consecutive Months, TNI is unable to
provide to MCI the lesser of (a) 50% of TNI's then-current
maximum supply obligation or (b) 50% of MCI's requirements of
either Anhydrous Ammonia or Urea Melt, MCI shall have the right
to terminate this Agreement on thirty (30) days' written notice
to TNI. In the event that MCI terminates this Agreement pursuant
to this Section 14, then MCI, as lessee under the Lease, shall
be permitted to construct and operate on the leased premises, as
described therein, a Urea Melt plant and/or an Anhydrous Ammonia
plant, each having an annual production capacity which is no
greater than: (1) twenty-five thousand (25,000) Tons, in the
case of an Anhydrous Ammonia plant; and, (2) in the case of a
Urea Melt plant, the lesser of (A) MCI's maximum anticipated
current or future ability to consume Urea Melt or (B) either two
hundred ten thousand (210,000) Tons, if the MCI Plant Expansion
Notice has not been given, or three hundred fifteen thousand
(315,000) Tons, if the MCI Plant Expansion Notice has been given.
TNI's consent to the use of the leased premises for the foregoing
purposes shall be binding upon all successor landlords under the
Lease and shall survive the termination of this Agreement.
15. Shutdown of MCI Plant. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IN NO EVENT SHALL MCI BE REQUIRED TO PURCHASE ANHYDROUS
AMMONIA AND UREA MELT DURING PERIODS WHEN THE MCI PLANT IS NOT
OPERATIONAL DUE EITHER TO A FORCE MAJEURE EVENT OR REASONABLE
MAINTENANCE, NOR SHALL MCI BE REQUIRED TO MAKE DELIVERIES OF
CARBAMATE DURING PERIODS WHEN THE M-I FACILITY, WHICH SUPPLIES
CARBAMATE, IS NOT OPERATIONAL DUE EITHER TO A FORCE MAJEURE EVENT
OR REASONABLE MAINTENANCE. FURTHER, NOTWITHSTANDING ANY LANGUAGE
HEREIN TO THE CONTRARY, IN THE EVENT THAT RESPONSIBLE OFFICIALS
OF MCI DETERMINE THAT IT IS NOT IN MCI'S ECONOMIC INTEREST TO RUN
ALL OR PART OF THE MCI PLANT (INCLUDING THE M-1 FACILITY, WHICH
SUPPLIES CARBAMATE), THEN ALL OR A PORTION OF SUCH FACILITIES
SHALL BE SHUT DOWN FOR SUCH PERIOD OF TIME AS MCI DEEMS TO BE IN
ITS BEST ECONOMIC INTEREST WITHOUT ANY LIABILITY WHATSOEVER TO
TNI; PROVIDED, HOWEVER, THAT TNI SHALL HAVE THE RIGHT TO
TERMINATE THIS AGREEMENT UNDER THE TERMS AND CONDITIONS SET FORTH
BELOW. EXCEPT FOR SHORT-TERM (NOT TO EXCEED A TOTAL OF SIXTY
(60) DAYS IN ANY PERIOD OF TWELVE (12) CONSECUTIVE MONTHS AND NOT
TO OCCUR MORE FREQUENTLY THAN TWO TIMES IN ANY PERIOD OF TWELVE
(12) CONSECUTIVE MONTHS) SHUT DOWNS OF THE M-I FACILITY FOR THE
SOLE PURPOSE OF CONTROLLING INVENTORIES OF THE TYPE AND FORM OF
MELAMINE PRODUCED BY THE M-I FACILITY ("INVENTORY CONTROL
SHUTDOWNS"), MCI AGREES THAT DURING THE FIRST TEN (10) CALENDAR
YEARS OF THE TERM HEREOF, THERE WILL BE NO REDUCTION OR
CURTAILMENT OF OPERATIONS IN THE M-I FACILITY WHICH REDUCE THE
DAILY QUANTITY OF CARBAMATE RETURN TO LESS THAN ONE HUNDRED FIFTY
(150) TONS UNLESS, DURING THE SAME PERIOD, THE OPERATIONS OF ALL
OTHER MELAMINE PLANTS COMPRISING THE MCI PLANT ARE REDUCED OR
CURTAILED BY A CORRESPONDING PERCENTAGE OF THEIR RESPECTIVE
NORMAL MELAMINE PRODUCTION RATES. MCI WILL ENDEAVOR TO REDUCE
THE IMPACT OF ANY INVENTORY CONTROL SHUTDOWN BY SELLING THE TYPE
AND FORM OF MELAMINE PRODUCED BY THE M-I FACILITY INTO MARKETS
FOR THE TYPE AND FORM OF MELAMINE PRODUCED BY THE OTHER MELAMINE
PLANTS COMPRISING THE MCI PLANT WHERE THE FORM OF MELAMINE
PRODUCED BY THE M-I FACILITY IS SUITABLE AND INTERCHANGEABLE.
DURING INVENTORY CONTROL SHUTDOWNS THE PRICE PER TON OF UREA MELT
SOLD TO MCI HEREUNDER WILL BE THE TNI UREA PRICE PLUS FIVE AND
00/100 DOLLARS ($5.00) PER TON. The supply of Carbamate is
important to TNI's maximization of its urea production, and
replacement of MCI with an alternate supplier thereof could be a
lengthy process involving the installation of capital equipment.
If the decision is made to shut down or significantly reduce the
output from the MCI Plant for economic reasons, MCI will notify
TNI as soon as practicable of the proposed shutdown or slowdown.
IN ANY EVENT, MCI SHALL HAVE NO RESPONSIBILITY TO PURCHASE
ANHYDROUS AMMONIA AND UREA MELT OR DELIVER CARBAMATE TO THE
EXTENT ITS ABILITY TO DO SO IS AFFECTED BY ANY ECONOMIC SHUTDOWN
OF THE MCI PLANT WHICH IS EXPRESSLY PERMITTED HEREUNDER. If,
however, any of the MCI facilities at the MCI Plant are shut down
or production capacity is reduced due solely to a determination
by MCI that a shutdown or slowdown of such facilities is in MCI's
best economic interest, and the result of such occurrence(s) is
that during an aggregate period of seven (7) Months within any
period of twelve (12) consecutive Months, MCI fails to purchase
the lesser of (i) 50% of TNI's then-current maximum annual supply
obligation for Urea Melt or (ii) 50% of MCI's average
requirements for Urea Melt during the preceding Contract Year
(determined by multiplying (a) MCI's average daily requirements
during such Contract Year on days when the MCI Plant was not shut
down or curtailed due to a determination by MCI that such
shutdown or curtailment was in its best economic interest by (b)
365), TNI shall have the right to terminate this Agreement on
thirty (30) days' written notice to MCI. Furthermore, if the M-I
Facility is shut down or production capacity is reduced due
solely to a force majeure event and, for a period of twelve (12)
consecutive months, MCI fails to deliver to TNI the quantity of
Carbamate required to be delivered pursuant to Section 3.c
hereof, then MCI must reasonably demonstrate to TNI, upon TNI's
written request, that MCI has undertaken, and will continue to
undertake, all reasonable, good faith efforts to eliminate or
rectify the force majeure situation; and that in any event such
situation can be eliminated or rectified within four (4) years
after the date it arose. If MCI fails to provide the reasonable
assurances required above within thirty (30) days after TNI's
written request therefor or, notwithstanding such assurances, MCI
fails to eliminate or rectify the force majeure situation within
four (4) years after the date it arose, then TNI shall have the
right to terminate this Agreement on thirty (30) days written
notice to MCI. During periods when MCI is not delivering
sufficient quantities of Carbamate due to a shutdown of the M-I
Facility, TNI shall be entitled to purchase and receive its
requirements of Carbamate from third parties.
16. Cooperation Regarding Planned Shutdowns and Slowdowns. TNI shall
provide to MCI at least sixty (60) days' notice of any shutdown
or slowdown of the TNI production facilities planned more than
sixty (60) days in advance, which notice shall include an
estimate or statement of the duration of such shutdown or
slowdown. MCI shall be entitled to rely on such notice for the
purpose of making any arrangements with alternate supplier(s) of
Anhydrous Ammonia or Urea Melt, as applicable. MCI shall provide
to TNI at least sixty (60) days' notice of any shutdown or
slowdown of the MCI Plant planned more than sixty (60) days in
advance, which notice shall include an estimate or statement of
the duration of such shutdown or slowdown. TNI shall be entitled
to rely on such notice for the purpose of making any arrangements
with alternate supplier(s) of Carbamate. The parties will work
together to coordinate shutdowns and slowdowns to prevent any
adverse impact that may be caused by a planned shutdown or
slowdown of the TNI production facilities or the MCI Plant.
17. Force Majeure. It is understood that under certain provisions
hereof, TNI may be relieved of its responsibility to deliver
Anhydrous Ammonia and Urea Melt and accept Carbamate hereunder,
and MCI may be relieved of its responsibility to purchase
Anhydrous Ammonia and Urea Melt and deliver Carbamate hereunder.
In addition thereto, if the delivery by TNI of product or the
acceptance by TNI of Carbamate in the quantities and of the
quality provided for hereunder or if the ability of MCI to take
product in such quantities and of such quality hereunder or to
deliver Carbamate as required hereunder or the performance of any
other obligation of either party hereto, other than the
obligation to pay money, is prevented, restricted or interfered
with by reason of fire, explosion, breakdown of plant, failure of
machinery, strike, lockout, labor dispute, casualty or accident,
lack or failure of usual transportation facilities, failure or
shutdown of the plant, epidemics, cyclone, flood, lack or failure
of sources of supply of labor, raw materials, power or supplies;
or war, revolution, civil commotion, acts of public enemies,
blockade or embargo or any law, order, proclamation, regulation,
ordinance, demand or requirement of any government or any
subdivision, authority or representative of any such government;
or any other acts, whatsoever, whether similar or dissimilar to
those above enumerated, beyond the reasonable control of a party
hereto, the party so affected, upon giving prompt notice to the
other party, shall be excused from such performance to the extent
of such prevention, restriction or interference, and quantities
so affected may be eliminated from this Agreement without any
liability, provided that subject to the other provisions hereof,
the party so affected shall use its reasonable efforts to avoid
or remove such causes of nonperformance and shall continue
performance hereunder with the utmost dispatch whenever such
causes are removed and, provided further, that if the output of
TNI's production facilities for a particular product is reduced,
as opposed to halted, due to a force majeure event that was in no
way caused by MCI, TNI shall be obligated to supply such product
to MCI on a pro rata basis (e.g., if TNI's production of Urea
Melt is reduced by 30%, TNI will reduce the amount of product
available to MCI by no more than 30%), so long as TNI's pro rata
supply of such products to MCI would not create or increase any
technical or operational hardships or costs to TNI.
18. Resale. MCI represents that the Anhydrous Ammonia and Urea Melt
purchased hereunder are for MCI's own consumption in the United
States for the production of melamine or urea/melamine compounds;
and if any portion thereof is sold or offered for sale by MCI
(except the Carbamate as provided herein), either within or
outside of the United States, TNI shall have the right to
terminate this Agreement unless MCI shall discontinue any such
sale immediately after receipt of written notice from TNI.
19. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and/or their affiliates with
respect to the sale and purchase of the products specified
herein, and no statements or agreements, oral or written, made
prior to or at the signing hereof, or varying or modifying the
written terms hereof, and no amendment, modification or release
from any provision hereof shall be valid and binding unless
reduced to writing and signed by both parties to this Agreement
and shall specifically state that it is an amendment,
modification or release respecting this Agreement.
20. Assignments. This Agreement or any part hereof may be assigned
by MCI or TNI to any bank or banks or other financial institution
as security for the assignor or pledgor, in which case the non-
assigning party shall recognize such transfer or assignment.
Upon request of either party's lender, the other party shall
deliver to such lender a written statement regarding the status
of this Agreement (stating whether this Agreement is in full
force and effect, whether this Agreement has been amended,
modified, supplemented or restated, and whether either party is
in default hereunder). Either party to this Agreement may assign
it in whole or in part with the other party's prior written
consent and, in the case of any such permitted assignment by TNI,
Guarantor shall be released from the guaranty contained in
Section 24 hereof as of the date of such assignment. Either
party to this Agreement may assign this Agreement in whole or in
part without the other party's prior written consent, if said
assignment is to an Affiliate or to a company growing out of a
consolidation or merger or acquisition of the assigning party;
provided, however, that in the event of such assignment, MCI or
Guarantor, as the case may be (or its successor by merger), shall
guarantee or reconfirm, as the case may be, all future
performance by the assignee (or successor by merger) under this
Agreement.
21. Notices. All notices and other communications hereunder shall be
validly given or made if in writing, when delivered personally
(by courier service or otherwise), when delivered by facsimile,
or when actually received when mailed by first-class certified
United States mail, postage prepaid and return receipt requested,
and all legal process with regard hereto shall be validly served
when served in accordance with applicable law, in each case to
the address of the party to receive such notice or other
communication set forth below, or at such other address as either
party hereto may from time to time advise the other party
pursuant to this Section:
If to TNI: Triad Nitrogen, Inc.
P.O. Box 1851
Owen Cooper Administration Building
Highway 49 East
Yazoo City, MS 39194
Attention: Rosalyn B. Glascoe
Secretary
Telephone: (601) 746-6302
Facsimile: (601) 751-2231
With a copy to: Mississippi Chemical Corporation
P.O. Box 388
Owen Cooper Administration Building
Highway 49 East
Yazoo City, MS 39194
Attention: Secretary
Telephone: (601) 746-6302
Facsimile: (601) 751-2231
If to MCI: Melamine Chemicals, Inc.
P.O. Box 748
39041 Highway 18
Donaldsonville, LA 70346
Attention: President and Chief Executive
Officer
Telephone: (504) 473-3121
Facsimile: (504) 473-0550
22. Governing Law. This Agreement shall be construed and the
respective rights of TNI and MCI shall be determined in
accordance with the laws of the State of Louisiana.
23. Headings and Exhibits. Section and paragraph headings are for
convenience of the parties and shall not control the
interpretation of this Agreement. All exhibits referred to
herein shall be attached hereto and, whether or not so attached,
are hereby incorporated by reference herein.
24. Guaranty. The undersigned Guarantor hereby intervenes into this
Agreement and unconditionally guarantees the full and faithful
performance by TNI of all of the terms, provisions,
representations, warranties and obligations of TNI pursuant to
this Agreement, including without limitation the indemnification
and remedial provisions of this Agreement. The Guarantor further
agrees that MCI may, without notice to or further assent of the
Guarantor, and without in any way releasing or impairing the
obligations of the Guarantor hereunder: (i) waive compliance
with, or any default under, this Agreement; (ii) modify or amend
any provisions of this Agreement with the written consent of TNI
only; (iii) grant extensions or renewals of any of the
obligations of TNI; and (iv) in all respects deal with TNI as if
this guaranty were not in effect. The obligations of the
Guarantor under this guaranty shall remain in force
notwithstanding any event that would, in the absence of this
clause, result in the release or discharge by operation of law of
the Guarantor from the performance of its obligations hereunder.
The liability of the Guarantor under this guaranty to MCI shall
be a guaranty of performance and of payment, not merely a
guaranty of collection, and the liability of the Guarantor under
this guaranty shall not be contingent upon the exercise by MCI of
any right it may have in respect of TNI. This guaranty
obligation is not intended to and shall not release or extinguish
any obligations of TNI to MCI. The provisions of this Section
are not intended to create and shall not create or impose any
obligations on the Guarantor in favor of any third party, the
provisions of this Section being only for the benefit of MCI.
25. Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the
different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement in
duplicate originals on the day and year first above written.
MELAMINE CHEMICALS, INC. TRIAD NITROGEN, INC.
By: /s/ Martin F. Lapari By: /s/ Charles O. Dunn
--------------------- -------------------------
Name: Martin F. Lapari Name: Charles O. Dunn
Title: Vice President Title: President
Manufacturing and Engineering
MISSISSIPPI CHEMICAL CORPORATION, as Guarantor
By: /s/ Charles O. Dunn
Name: Charles O. Dunn
Title: President and Chief Executive Officer
Execution Counterpart
ACKNOWLEDGMENT
STATE OF MISSISSIPPI
COUNTY OF YAZOO
Before me, the undersigned authority, personally came and
appeared Charles O. Dunn, the President of Triad Nitrogen, Inc., to
me known to be the person mentioned in and who signed the foregoing
instrument, and who, being duly sworn, did acknowledge and declare in
the presence of the two witnesses whose names are subscribed to said
instrument, that he signed said instrument for and on behalf of said
corporation, being duly authorized so to act, for the purposes
mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal
of office on this the 9th day of October, 1997, at Yazoo City,
Mississippi.
WITNESSES: TRIAD NITROGEN, INC.
/s/ Witness By: /s/ Charles O. Dunn
- ------------ --------------------
Name: Charles O. Dunn
/s/ Witness Title: President
- ------------
/s/ Lynn Montgomery
--------------------
Notary Public
My Commission Expires: January 15, 1999
Execution Counterpart
ACKNOWLEDGMENT
STATE OF MISSISSIPPI
COUNTY OF YAZOO
Before me, the undersigned authority, personally came and
appeared Charles O. Dunn, the President and Chief Executive Officer
of Mississippi Chemical Corporation, to me known to be the person
mentioned in and who signed the foregoing instrument, and who, being
duly sworn, did acknowledge and declare in the presence of the two
witnesses whose names are subscribed to said instrument, that he
signed said instrument for and on behalf of said corporation, being
duly authorized so to act, for the purposes mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal
of office on this the 9th day of October, 1997, at Yazoo City,
Mississippi.
WITNESSES: MISSISSIPPI CHEMICAL CORPORATION
/s/ Witness By: /s/ Charles O. Dunn
- ------------ --------------------
Name: Charles O. Dunn
/s/ Witness Title: President and
- ------------ Chief Financial Officer
/s/ Lynn Montgomery
--------------------
Notary Public
My Commission Expires: January 15, 1999
Execution Counterpart
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ASCENSION
Before me, the undersigned authority, personally came and
appeared Martin F. Lapari, the Vice President - Manufacturing and
Engineering of Melamine Chemicals, Inc., to me known to be the person
mentioned in and who signed the foregoing instrument, and who,
being duly sworn, did acknowledge and declare in the presence of
the two witnesses whose names are subscribed to said instrument,
that he signed said instrument for and on behalf of said corporation,
being duly authorized so to act, for the purposes mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal
of office on this the 9th day of October, 1997, at Donaldsonville,
Louisiana.
WITNESSES: MELAMINE CHEMICALS, INC.
/s/ Witness By: /s/ Martin F. Lapari
- ----------- ---------------------
Name: Martin F. Lapari
Title: Vice President
Manufacturing and Engineering
/s/ Witness
- ------------
/s/ Monica B. Crews
--------------------
Notary Public
My Commission Expires: At death
SITE LEASE
AND SERVITUDE AGREEMENT
by and among
TRIAD NITROGEN, INC.
As Lessor
MISSISSIPPI CHEMICAL CORPORATION,
As Lessor and Guarantor
and
MELAMINE CHEMICALS, INC.
As Lessee
For Premises Located at Donaldsonville, Louisiana
Dated as of July 1, 1997
TABLE OF CONTENTS
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . Page 1
ARTICLE 1
DEFINITIONS; TERMINATION OF PRIOR LEASES;
TERM OF LEASE; AND RENTAL
Section 1.1. Definitions.. . . . . . . . . . . Page 2
Section 1.2. Termination of Prior Leases.. . . Page 4
Section 1.3. Term. . . . . . . . . . . . . . . Page 4
Section 1.4. Leased Premises.. . . . . . . . . Page 5
Section 1.5. Additional Leased Land. . . . . . Page 5
Section 1.6. Servitudes Granted to Lessee. . . Page 6
Section 1.7. Servitude for MCI Road. . . . . . Page 7
Section 1.8. Reservation of Rights.. . . . . . Page 9
Section 1.9. Release of Office Building. . . . Page 9
Section 1.10. Rent. . . . . . . . . . . . . . . Page 9
Section 1.11. Original Leased Premises - First
10 Years . . . . . . . . . . . . .Page 9
Section 1.12. Office Building - First 7 Years . Page 10
Section 1.13. Additional Leased Land. . . . . . Page 11
Section 1.14. Taxes and Assessments. . . . . . Page 11
Section 1.15. Additional Rent.. . . . . . . . . Page 12
Section 1.16. Method of Payment; Due Date.. . . Page 12
Section 1.17. Certainty of Rent Payments. . . . Page 13
Section 1.18. Sanitary Sewer. . . . . . . . . . Page 13
Section 1.19. Storm Water. . . . . . . . . . . Page 15
Section 1.20. Process Wastewater. . . . . . . . Page 15
Section 1.21. Parking.. . . . . . . . . . . . . Page 15
Section 1.22. Rail Facilities.. . . . . . . . . Page 15
ARTICLE 2
OPERATION OF THE PLANT
Section 2.1. Costs of Construction and Operation . . . Page 16
Section 2.2. Secrecy Obligations . . . . . . . . . . . Page 16
ARTICLE 3
INDEMNITIES AND INSURANCE
Section 3.1. Indemnification by Lessee.. . . .Page 16
Section 3.2. Indemnification by Lessor.. . . .Page 16
Section 3.3. Insurance Coverage. . . . . . . .Page 17
ARTICLE 4
IMPROVEMENTS AND ALTERATIONS
Section 4.1. Additions, Alterations, Changes and
Improvements . . . . . . . . . . . Page 19
Section 4.2. The Plant, Fixtures, Equipment and
Personal Property . . . . . . . . .Page 19
Section 4.3. Risk of Loss. . . . . . . . . . . .Page 19
Section 4.4. Condition of Property.. . . . . . .Page 20
ARTICLE 5
USE OF PREMISES; COMPLIANCE WITHORDERS;
WORK PERFORMED BY LESSEE
Section 5.1. Use of Premises, Compliance with
Orders. . . . . . . . . . . . . .Page 20
Section 5.2. Work Performed by Lessee. . . . .Page 20
Section 5.3. Standard of Care. . . . . . . . .Page 20
Section 5.4. Mechanics' Liens. . . . . . . . .Page 20
ARTICLE 6
ENVIRONMENTAL MATTERS
Section 6.1. Environmental Representations,
Warranties and Covenants. . . . .Page 21
Section 6.2. Environmental Assessment. . . . .Page 21
Section 6.3. Use of Hazardous Substances . . .Page 21
Section 6.4. Obligation to Report. . . . . . .Page 21
Section 6.5. Environmental Indemnification by
Lessee. . . . . . . . . . . . . .Page 21
Section 6.6. Environmental Indemnification by
Lessor. . . . . . . . . . . . . .Page 22
Section 6.7. Post-Termination Exposure for
Violations of Applicable Law. . .Page 22
ARTICLE 7
UTILITIES AND CHARGES; LESSOR'S SERVICES
Section 7.1. Utilities and Charges.. . . . . .Page 22
Section 7.2. Inspection Rights.. . . . . . . .Page 22
Section 7.3. Interface Agreement. . . . . . .Page 23
ARTICLE 8
DAMAGE OR DESTRUCTION; CONDEMNATION
Section 8.1. Damage or Destruction of MCI Plant. . .Page 23
Section 8.2. Rent Payments to Continue.. . . . . . .Page 23
Section 8.3. Condemnation. . . . . . . . . . . . . .Page 24
ARTICLE 9
WARRANTY; PRIORITY OF LEASE; ASSIGNMENT
Section 9.1. Warranty of Title.. . . . . . . .Page 24
Section 9.2. Priority of Lease.. . . . . . . .Page 25
Section 9.3. Assignment and Sublease.. . . . .Page 25
Section 9.4. Assignment for Security . . . . .Page 25
Section 9.5. Lessor's Additional Warranties. .Page 25
Section 9.6. Lessee's Warranties.. . . . . . .Page 26
ARTICLE 10
REMOVAL AND DISPOSAL OF PROPERTY
Section 10.1. Removal of Property; Release of
Landlord's Lien . . . . . . . . .Page 26
ARTICLE 11
DEFAULT AND REMEDIES
Section 11.1. Lessee's Events of Default. . . .Page 27
Section 11.2. Remedies of Landlord. . . . . . .Page 28
Section 11.3. Lessor's Events of Default. . . .Page 29
Section 11.4. Remedies of Lessee. . . . . . . .Page 30
Section 11.5. Cumulative Remedies; Waiver Not
Implied. . . . . . . . . . . . . Page 31
Section 11.6. Waiver of Certain Damages . . . .Page 31
Section 11.7. Injunctive Relief . . . . . . . .Page 31
ARTICLE 12
GUARANTY
Section 12.1. Guaranty . . . . . . . . . . . . Page 31
Section 12.2. Guarantor's Representations and
Warranties . . . . . . . . . . . Page 32
ARTICLE 13
DISPUTE RESOLUTION
Section 13.1. Procedures. . . . . . . . . . . . . Page 32
Section 13.2. Good-Faith Negotiations.. . . . . . Page 33
Section 13.3. Mediation.. . . . . . . . . . . . . Page 33
Section 13.4. Arbitration . . . . . . . . . . . . Page 33
Section 13.5. Decision and Awards of Arbitrators. Page 33
Section 13.6. Exclusive Methods.. . . . . . . . . Page 34
Section 13.7. Rules.. . . . . . . . . . . . . . . Page 34
ARTICLE 14
GENERAL
Section 14.1. Notices.. . . . . . . . . . . . . . .Page 35
Section 14.2. Force Majeure. . . . . . . . . . . .Page 35
Section 14.3. Governing Law.. . . . . . . . . . . .Page 36
Section 14.4. Unenforceable or Illegal Provisions .Page 36
Section 14.5. Captions; Headings. . . . . . . . . .Page 36
Section 14.6. Successors and Assigns. . . . . . . .Page 36
Section 14.7. Several Counterparts. . . . . . . . .Page 36
Section 14.8. Short-Form Lease. . . . . . . . . . .Page 36
Section 14.9. Relationship of Parties . . . . . . .Page 36
DESCRIPTION OF EXHIBITS to
SITE LEASE and SERVITUDE AGREEMENT
Exhibit "A" - Legal Description of Original Leased Premises
Exhibit "A-1" - Map of Premises
Exhibit "B" - Legal Description of Lessor's Land
Exhibit "C" - Legal Description of Additional Leased Land
Exhibit "D" - Drawing of Servitudes for Existing Roads
Exhibit "E" - Drawing of Servitudes for Lessee's Existing
Lines and for Lessee's New Storm Water System
Exhibit "F" - Drawing of Servitude for MCI Road
SITE LEASE AND SERVITUDE AGREEMENT
This Site Lease Agreement ("Lease"), entered into effective as of
the 1st day of July, 1997, by and among Triad Nitrogen, Inc., a
Delaware corporation ("TNI"), and Mississippi Chemical Corporation, a
Mississippi corporation ("Guarantor") (TNI and Guarantor being
collectively referred to herein as "Lessor"), and Melamine Chemicals,
Inc., a Delaware corporation ("Lessee"):
BACKGROUND
A. Lessor's predecessor in interest, Triad Chemical, and First
Mississippi Corporation, Mississippi Chemical Corporation and Coastal
Chemical Corporation, as original lessors, and Lessee's predecessor in
interest, Ashland Oil and Refining Company, as original lessee,
entered into that certain Site Lease Agreement dated as of June 4,
1969, as amended by the Supplemental Site Lease Agreement dated as of
November 4, 1970, agreement dated January 9, 1971, and Supplement No.
2 dated as of July 1, 1972 (collectively, the "Original Site Lease"),
pertaining to the lease of certain property located in Section 10,
T11S, R15E, Ascension Parish, Louisiana, more particularly described
on Exhibit "A" to this Agreement (the "Original Leased Premises").
B. The original lessors and original lessee entered into that
certain lease agreement dated October 13, 21 and 28, 1969 (the "Office
Lease"), pertaining to the lease of a building located on Lessor's
Land.
C. Lessor and Lessee desire to terminate the Original Site
Lease and the Office Lease, as of the effective date of this Lease,
and to enter this Lease of the Original Leased Premises, the Office
Building and, under conditions described in Section 1.5 below, an
additional tract of land contiguous to the Original Leased Premises.
D. TNI, Lessee and Guarantor (the latter in the capacity of
guarantor) have entered into a feedstock agreement (the "Feedstock
Agreement") with the same effective date as this Lease under which TNI
intends to supply, and Lessee intends to acquire, urea and anhydrous
ammonia for the operation of Lessee's melamine plant, located upon the
land subject to the Lease, and Lessee intends to return to TNI, and
TNI intends to accept, carbamate produced in Lessee's melamine plant
all subject to the terms, provisions, and conditions set forth in the
Feedstock Agreement. Lessor and Lessee intend that any construction of
the Lease should be consistent with the Feedstock Agreement and vice
versa to give effect to both agreements.
E. The provisions of this section entitled "Background" shall be
construed to be a part of this Lease and shall be given full effect as
written.
AGREEMENT
In consideration of the mutual benefits and covenants herein
contained, Lessor and Lessee hereby agree as follows:
ARTICLE 1
DEFINITIONS; TERMINATION OF PRIOR LEASES; TERM OF
LEASE; AND RENTAL
Section 1.1. Definitions. As used in this Lease, the following
terms shall have the meanings set forth in this Section 1.1 Defined
terms that are used in this Lease and that are not defined herein
shall have the meanings ascribed to those terms in the Feedstock
Agreement.
"Additional Rent" shall have the meaning set forth in Section
1.15 of this Lease.
"Affiliate" shall mean any person, partnership, corporation,
limited liability company, association or other entity or organization
that controls, is controlled by, or is under common control with a
specified person, partnership, corporation, limited liability company,
association or other entity or organization. For purposes of this
definition, "control" shall mean the power, whether direct or
indirect, and whether by exercise of voting power or contract or
otherwise, to direct the management policies and decisions of another
entity or organization.
"Applicable Laws" means all Laws applicable to the use and
occupancy of the Leased Premises or the operation of the MCI Plant, or
to Lessor's Land or the operation of the plants upon Lessor's Land, as
may be applicable by the context of this Lease, including, but not
limited to, laws relating to industrial safety, building codes,
environmental protection or standards of operation and similar
matters.
"Additional Leased Land" shall have the meaning set forth in
Section 1.5 of this Lease.
"Effective Date of Lease" shall mean July 1, 1997.
"Existing Access Servitude" shall have the meaning set forth in
Section 1.6.1 of this Lease.
"Feedstock Agreement" shall have the meaning set forth in the
Background section of this Lease.
"Governmental Entity" means any legislative, governmental,
executive, administrative or judicial body, agency, instrumentality or
other Person whose actions have force of law.
"Governmental Order" means any order, decree, mandate,
injunction, writ or directive issued by any Governmental Entity and
having the force of law.
"Guarantor" shall have the meaning set forth in the opening
paragraph of this Lease.
"Hazardous Substances" means any substance whose handling,
release or disposal is regulated by Applicable Law due to the harmful,
toxic or dangerous composition or characteristics of such substance.
The term Hazardous Substance shall also include ammonia, petroleum,
crude oil or fraction thereof, and used or waste oil.
"Laws" means any treaty, constitution, charter, act, statute,
law, ordinance, code, rule, regulation, permit, order, decree,
mandate, injunction, writ, or directive issued by any Governmental
Entity and having the force of law.
"Leased Premises" shall mean collectively the Original Leased
Premises and the Office Building, or if the Office Building is
released from this Lease, then "Leased Premises" shall mean the
Original Leased Premises only. If Lessee should accept the lease of
the Additional Leased Land as provided in Section 1.5, then "Leased
Premises" shall mean the Original Leased Premises, the Office
Building (if not released) and the Additional Leased Land.
"Lease Term" shall mean the term of this Lease, as set forth in
Section 1.3 of this Lease.
"Lessee" shall have the meaning set forth in the opening
paragraph of this Lease.
"Lessee's Events of Default" shall have the meaning set forth in
Section 11.1 of this Lease.
"Lessor" shall have the meaning set forth in the opening
paragraph of this Lease.
"Lessor's Events of Default" shall have the meaning set forth in
Section 11.3 of this Lease.
"Lessor's Land" shall mean the land described in Exhibit "B" to
this Lease, less and except the Leased Premises.
"MCI Plant" shall mean the melamine plants and related facilities
operated by Lessee on the Leased Premises and Servitude Areas,
including any additions, expansions, or modifications thereof.
"MCI Road" shall mean a road as described in Section 1.7 of this
Lease.
"MCI Roadway" shall mean that part of Lessor's Land described in
Exhibit "F" to this Lease and made the subject of Lessor's grant of a
servitude of passage in favor of Lessee as set forth in Section 1.7 of
this Lease.
"Office Building" shall mean a certain white frame and brick
building located on Lessor's Land, which frame and brick building lies
south of Lessor's office facilities and being further identified as a
converted dairy barn, together with the necessary right of ingress and
egress thereto over, upon and across areas customarily used by Lessor
for ingress and egress to its office facilities.
"Office Lease" shall have the meaning set forth in the Background
section of this Lease.
"Original Leased Premises" shall have the meaning set forth in
the Background section of this Lease.
"Original Site Lease" shall have the meaning set forth in the
Background section of this Lease.
"Parties" means Lessor and Lessee, collectively. "Party" means
Lessor or Lessee, individually, as the case may be.
"Permits" means any permit, license, exemption, action, order or
approval issued or required to be issued by, or registration or filing
required to be made with, a Governmental Entity in connection with
Lessee, Lessee's use of the Leased Premises and Servitude Areas,
including permits to use and occupy the Leased Premises and Servitude
Areas, or to operate the MCI Plant, and any required approval of plans
or permits for construction, including permits relating to erosion and
sediment control, waste disposal, occupancy and use.
"Person" means an individual, partnership, corporation, company,
trust, Governmental Entity and any other entity which has legal
capacity to own property in its own name or to sue or be sued.
"Servitude Areas" shall mean those parts of Lessor's Land,
collectively, that are made subject to those servitudes created in
Sections 1.6 and 1.7 of this Lease.
"Submission Date" shall have the meaning set forth in Section
13.2 of this Lease.
"TNI" shall have the meaning set forth in the opening paragraph
of this Lease.
Section 1.2. Termination of Prior Leases. The Original Site
Lease and the Office Lease are terminated as of the Effective Date of
this Lease.
Section 1.3. Term. The term of this Lease (the "Lease Term")
is retroactive to July 1, 1997, and shall expire on June 30, 2027,
unless sooner terminated in accordance with the terms and conditions
hereof.
Section 1.4. Leased Premises. Lessor, in consideration of the
rentals reserved and the covenants and agreements herein contained,
does hereby lease to Lessee, and Lessee agrees to, and does hereby,
lease, take and hire from Lessor, subject to the terms, conditions and
provisions of this Lease, the following property:
A. the Original Leased Premises; and
B. the Office Building.
Section 1.5. Additional Leased Land. Lessor agrees to lease to
Lessee the premises that are contiguous to the Original Leased
Premises and described on Exhibit "C" to this Lease (the "Additional
Leased Land") subject to the terms, conditions, and provisions of this
Lease; provided however, the lease of the Additional Leased Land, and
Lessee's right to use and occupy the Additional Leased Land, shall not
become effective unless and until Lessee shall have given Lessor
written notice that Lessee accepts the lease of the Additional Leased
Land. In that event Lessee's right to use and occupy the Additional
Leased Land shall commence on the date of Lessee's notice of
acceptance of the lease. Failure of Lessee to give any notice on or
before January 3, 1998, as provided in Section 1.5.1 below shall be
considered as a rejection of the lease of the Additional Leased Land.
The rejection of the lease of the Additional Leased Land shall not
affect the validity of this Lease with respect to the Leased Premises.
1.5.1. Additional Leased Land. Lessor grants to Lessee
the right to enter the Additional Leased Land for the purpose of
conducting an evaluation of the Additional Leased Land for Lessee's
intended purpose, including the right to drill borings and perform
other testing procedures customarily done for environmental assessment
purposes. Lessee shall indemnify and hold harmless Lessor against and
from all claims by or on behalf of any Person arising from any act or
negligence of Lessee or of any of its agents, contractors, servants,
employees or licensees on the Additional Leased Land during Lessee's
evaluation of the Additional Leased Land. On or before January 3,
1998, Lessee may: (a) elect to reject the lease of the Additional
Leased Land; (b) accept the lease of the Additional Leased Land; or
(c) accept the lease of the Additional Leased Land subject, however,
to a satisfactory mitigation of the environmental condition by Lessor
at Lessor's expense. If Lessor should elect to mitigate, then, Lessor,
at its sole cost and expense, shall promptly take all actions to
remediate the Leased Premises which are reasonably necessary to
mitigate the environmental contamination or to allow full economic use
of the property. Such action shall include, but not be limited to,
the further investigation of the environmental condition of the
property; the preparation of feasibility studies, reports or remedial
plans; and performance of any cleanup, remediation, containment,
operation, maintenance, monitoring, or restoration work, whether on or
off the Additional Leased Premises. If Lessor should elect not to
mitigate the environmental condition, Lessor shall give written notice
of its election to Lessee, and in that event Lessee shall have the
right to revoke its earlier acceptance of the lease of the Additional
Leased Land. If Lessor should elect to commence the mitigation or
remediation but thereafter elects to terminate such work before
completion, Lessor shall give Lessee written notice of its termination
of the work, and in that event Lessee shall have the right to revoke
its earlier acceptance of the lease of the Additional Leased Land.
The acceptance or rejection of the lease of the Additional Leased
Land shall be made by Lessee in its sole discretion. If Lessee elects
to reject the lease of the Additional Leased Land, Lessee shall repair
any damage caused to the land by Lessee's investigation thereon,
provided however if from Lessee's inspection Lessor has commenced
mitigation or remediation work thereon, Lessee shall have no further
obligation to repair damage resulting from Lessee's inspection.
Section 1.6. Servitudes Granted to Lessee. In addition to a
lease of the Leased Premises, and in consideration of the Rent
provided herein, Lessor hereby grants unto Lessee, but only during the
Lease Term, the following servitudes that shall run with the Leased
Premises and for the benefit of Lessee, its successors and assigns, as
lessee of the Leased Premises and as owner of the MCI Plant.
1.6.1. Existing Access Servitude. A non-exclusive
servitude (the "Existing Access Servitude") over, across and along
the roadways currently utilized by Lessee in the locations shown on
Exhibit "D" for the purpose of ingress and egress to and from the
Leased Premises and Louisiana State Highway 18 by motor vehicles and
pedestrians; provided that the Existing Access Servitude shall expire
upon completion of the MCI Road. Lessor shall have no obligation to
maintain the roads in any particular condition, but Lessee shall have
the right to use such roads in the condition in which they are
maintained. Until the Office Building is released as provided in
Section 1.9 of this Lease, Lessee shall continue to have access to the
Office Building by the existing roads customarily used by Lessor for
ingress and egress to its office facilities. Lessee shall use
commercially reasonable efforts to minimize any disruption or
inconvenience to Lessor caused by Lessee's construction traffic during
the construction of the MCI Plant Expansion (as defined in the
Feedstock Agreement).
1.6.2. Existing Lines. A non-exclusive servitude in
common with Lessor over, across, along and under Lessor's Land located
along the routes currently utilized by Lessee as shown on Exhibit "E"
for the maintenance, operation, repair, replacement, and removal of
the existing underground, surface and overhead pipelines, together
with all necessary appurtenances and surge tanks, for the
transportation of (a) all feedstock and other raw materials necessary
or desirable for the operation of the MCI Plant, (b) any product or
by-product produced in the MCI Plant, (c) waste disposal; (d) fire
water, (e) sanitary sewer disposal, (f) process wastewater disposal,
(g) storm water and (h) any other item, service or material necessary
or desirable for the operation of the MCI Plant. Either Party may
relocate the pipelines and appurtenances to a mutually agreed-upon
location provided that the Party requesting the move shall pay all
costs of the relocation and provided further that the Parties mutually
agree upon the timing of the move and other factors relating to the
interruption of operations of Lessor and Lessee. Lessee acknowledges
that a pipe rack located on the west side of the Original Leased
Premises adjacent to Lessee's cooling towers encroaches onto Lessor's
Land located on the west line of the Original Leased Premises. If
Lessor should have a future need for the land upon which the
encroachment is situated, Lessee shall relocate the pipe rack at
Lessee's expense.
1.6.3. Contingent Rights. Lessor covenants and agrees
with Lessee to grant to Lessee reasonable and necessary servitudes
over Lessor's Land for installation, repair and maintenance of
pipelines, railroads, and motor vehicular passage for the
transportation of urea, ammonia, and carbamate by Lessee to and from
Affiliates or third persons but only in those circumstances and only
for the time periods permitted by the Feedstock Agreement.
Section 1.7. Servitude for MCI Road. Lessor further grants to
Lessee an exclusive servitude, forty (40) feet in width over and
across that portion of Lessor's Land described on Exhibit "F" (the
"MCI Roadway") for the purpose of ingress and egress to and from the
Leased Premises and a public road now known as Louisiana State Highway
3089. The center line of the "Asphalt Driveway" shown on Exhibit "F"
shall be the center line of the MCI Roadway. If Lessee should elect
to expand the MCI Plant as provided in the Feedstock Agreement, Lessee
shall, at Lessee's expense, construct within the MCI Roadway a
hard-surfaced road (the "MCI Road") designed to meet Lessee's
anticipated needs for its plant operations together with properly
designed drainage to efficiently remove storm water from the
servitude. Construction of the MCI Road shall be substantially
completed no later than the date on which the MCI Plant Expansion
shall be completed. Lessee, at its option, may construct the MCI Road
at any time prior to an expansion of the MCI Plant. The servitude over
and across the MCI Roadway shall automatically terminate if (a) Lessee
does not give Lessor the MCI Plant Expansion Notice (as defined in the
Feedstock Agreement) within the time period set forth in the Feedstock
Agreement; (b) Lessee timely gives Lessor the MCI Plant Expansion
Notice but later revokes the MCI Plant Expansion Notice as allowed by
the Feedstock Agreement; or (c) Lessee timely gives Lessor the MCI
Plant Expansion Notice but fails to complete the MCI Plant Expansion
within the time periods provided in the Feedstock Agreement; provided,
however, the servitude for the MCI Roadway shall not terminate if
construction of the MCI Road has been commenced or completed on the
date of the foregoing events.
1.7.1. Use. The MCI Road shall be for the primary use of
Lessee, its employees, agents, vendors, contractors, tenants, invitees
and others designated by Lessee. Lessor, and others designated by
Lessor, may use the MCI Road from time to time provided that Lessor's
use, or use by others designated by Lessor, shall not unreasonably
interfere with Lessee's use and provided further that if Lessor
regularly uses the MCI Road, Lessor shall contribute to the cost of
the maintenance of the MCI Road and MCI Roadway as may be mutually
agreed from time to time. Lessor reserves the right to install, use,
maintain, repair and replace railroad spur tracks, vehicular and
pedestrian crossings, pipes, lines, conduits, and other facilities
over, under and across the MCI Roadway, provided such does not
unreasonably interfere with Lessee's use of the MCI Roadway or
increase the cost of maintenance of the MCI Road. Such improvements
shall not impede the drainage of the MCI Roadway.
1.7.2. Existing Lines in MCI Roadway. Lessee shall
construct and maintain the MCI Road in such a manner as to not
interfere with those pipes, lines, utilities, railroads or other
improvements located in or crossing the servitude area as shown on
Exhibit "F." Provided, Lessee may, at its expense, move, relocate,
bury, or raise any existing pipes, lines, or utilities described on
Exhibit "F," as necessary or desirable in the sole opinion of Lessee,
for the construction of the MCI Road; however, any such work must be
done with the consent of Lessor and the owner of the pipe, line, or
utility and in accordance with Applicable Law.
1.7.3. Release of MCI Roadway from Farm Lease. On the
Effective Date of this Lease, the MCI Roadway is part of a larger
tract of land that is leased by Lessor to other persons for farming
operations, and Lessor intends to continue to lease the tract to that
person or other persons for farming. If the MCI Roadway is leased at
the time that Lessee should give notice to Lessor of Lessee's intent
to construct the MCI Road, Lessor shall cause the MCI Roadway to be
released from the third-party lease prior to commencement of
construction of the road. Lessee agrees to reimburse Lessor for
reasonable costs and damages paid by the Lessor to the farm lessee for
the cancellation of the farm lease insofar as it affects the MCI
Roadway and other land made unusable for the farm lessee's operations
because of the location of the MCI Roadway, but in no event shall the
reimbursement be greater than the sum of One Hundred Fifty Thousand
and no/100 Dollars ($150,000.00).
1.7.4. Temporary Use of Farm Road. Lessor grants to
Lessee a temporary, nonexclusive right to use the existing farm road
located near the MCI Roadway for ingress and egress as may be
necessary for the initial construction of the MCI Road; provided that
Lessee shall, upon completion of the MCI Road, cease to use the
existing farm road and return the farm road to the same condition as
existed prior to the use thereof by Lessee, including the relocation
of any portion of the farm road now located within the MCI Roadway.
During the period of construction of the MCI Road, Lessee shall
maintain the farm road.
1.7.5. Maintenance of MCI Road. Lessee shall, at
Lessee's cost, keep, maintain and repair the MCI Road, and all other
improvements made by Lessee within the MCI Roadway in good condition
throughout the Lease Term.
1.7.6 Fence. Lessee shall, at Lessee's expense, construct
a fence around the perimeter of the Leased Premises and complete
construction within thirty (30) days following the completion of the
MCI Road. The fence shall include one (1) emergency gate for vehicles
and one (1) personnel gate with controlled access. Lessee and Lessor
shall mutually agree upon specifications of the fence.
1.7.7. Relocation of MCI Roadway. Prior to commencement
of construction of the MCI Road, Lessor may deliver a written notice
to Lessee that Lessor has a bona fide need for the use of all or a
part of the MCI Roadway in connection with its plant operations upon
Lessor's Land and request Lessee to either release the servitude for
the MCI Roadway, or part thereof, or to relocate all or part of the
MCI Roadway to a mutually agreeable location. Lessee shall respond in
writing to Lessor and advise Lessor if Lessee, on the date of the
response, has a good-faith, bona fide intent to build the MCI Road.
If Lessee notifies Lessor that Lessee does not intend to build the MCI
Road, the servitude over the MCI Roadway shall be released. If
Lessee does intend to build the MCI Road, the servitude shall be
relocated to a mutually agreeable location. If the parties are unable
to agree upon a mutual relocation, the dispute resolution procedure of
Article 13 shall apply. If Lessee shall have incurred engineering or
other costs directly related to the design and planning of the MCI
Road, Lessor shall reimburse Lessee for those reasonable costs which
do not apply to the new location.
Section 1.8. Reservation of Rights. Lessor reserves the right
to use that portion of the Leased Premises described on Exhibit "A-1"
for the maintenance, operation, repair, replacement and removal of the
existing underground surface and overhead pipelines and facilities,
together with all necessary appurtenances, for the purposes for which
such facilities are currently utilized, and for future purposes and
facilities necessary or desirable for the operation of Lessor's plant.
To the extent that Lessor and Lessee share the same areas of the
Leased Premises, the Parties shall cooperate in the use of the areas,
and neither Party shall cause unreasonable interference with the use
of the shared areas by the other Party. Until such time as Lessee
shall have accepted the lease of the Additional Land, Lessor shall
have the right of ingress and egress over, across and along the
roadways currently utilized by Lessor in the location shown on Exhibit
"D" for the purpose of vehicular and pedestrian access to the
Additional Leased Land.
Section 1.9. Release of Office Building. Prior to July 1,
2007, Lessor shall have the right to obtain a release of the Office
Building from this Lease but only if Lessor should have a reasonable
need for the site of the Office Building for the expansion of its
plant. After July 1, 2007, Lessor shall have the right to obtain a
release of the Office Building from this Lease, provided Lessor shall
give Lessee written notice of Lessor's election effective no less than
six (6) months from the date of the notice. Either Lessor or Lessee
shall have the right to obtain a release of the Office Building
following completion of office facilities for Lessee upon either the
Original Leased Premises or the Additional Leased Land. The
effective date of a release shall be the release date set forth in a
written notice from Lessor to Lessee or from Lessee to Lessor, as
applicable, provided that the release date shall be not less than six
(6) months from the date of the written notice. Rent shall be
reduced, as of the effective date of the release, by the amount of the
rent applicable to the Office Building, and Lessee shall vacate the
Office Building on or before the effective date of the release.
Section 1.10. Rent. During the Lease Term, Lessee shall pay to
Lessor rent in the amount set forth below for use of the Leased
Premises, for the performance by Lessor of its covenants herein, and
as compensation for the servitudes and other rights herein granted to
Lessee.
Section 1.11. Original Leased Premises - First 10 Years. From
July 1, 1997 through June 30, 2007, the rent for the Original Leased
Premises shall be the sum of Three Thousand and no/100 Dollars
($3,000.00) per acre per year payable annually in advance on the
first day of July in each year. For purposes of calculating the rent
under this section, Lessor and Lessee agree that on the Effective Date
of this Lease, the Original Leased Premises contains 8.287 acres, and
therefore the annual rent is Twenty-Four Thousand Eight Hundred
Sixty-One and no/100 Dollars ($ 24,861.00). Within thirty (30) days
following the date on which this Lease has been signed by all Parties,
Lessee shall pay the annual rental for July 1, 1997, through June 30,
1998, with credit for the amount of rent that Lessee will have paid
to Lessor under the Original Site Lease for the period commencing July
1, 1997.
1.11.1. Original Leased Premises - Next 5 Years. From
July 1, 2007 through June 30, 2012, rent for the Original Leased
Premises shall be adjusted to an amount per acre per year then equal
to the fair market rental value of the Original Leased Premises
without taking into effect to the value of improvements made thereon
by Lessee. No later than September 1, 2006, the Parties shall meet
to discuss and agree upon the fair market rental value. If the
Parties fail to reach an agreement within thirty (30) days with
respect to such issue, then the Parties shall jointly engage a
professional real estate appraiser, with not less than ten (10) years'
experience in appraising similar property in the State of Louisiana,
to express an opinion of the fair market rental value, and his opinion
shall be binding on the Parties. If the Parties fail to agree upon
the selection of the appraiser, then each Party shall appoint an
appraiser, with the same qualifications described above, to express
professional opinions of the fair market rental value. If the
difference in the fair market rental value expressed by the two (2)
appraisers is less than twenty percent (20%) of the higher appraisal,
then the fair market rental value shall be an amount equal to the
average of the two appraisals. If the difference expressed by the two
appraisers is more than twenty percent (20%), then the two (2)
appraisers shall appoint a third appraiser with the same
qualifications described above to render a third professional opinion
as to the fair market rental value. The average fair market rental
value of the two (2) closest appraisals shall be the fair market
rental value. The fees and costs of all of the appraisers engaged by
either Party shall be borne equally by the Parties.
1.11.2. Original Leased Premises - Thereafter. From and
after July 1, 2012, the rent for the Original Leased Premises shall be
adjusted to fair market rental value every five (5) years for the
remainder of the Lease Term. The procedure described in Section
1.11.1 shall be used to determine the fair market rental value.
Section 1.12. Office Building - First 7 Years. From July 1,
1997, through June 30, 2004, the rent for the Office Building shall be
the sum of Five Hundred and no/100 Dollars ($500.00) per month,
payable monthly in advance on the first day of each month effective as
of July 1, 1997. Within thirty (30) days following the date on which
this Lease has been signed by all Parties, Lessee shall pay the
adjusted annual rental for the Office Building for the period from
July 1, 1997, with credit for the amount of rent that Lessee will have
paid to Lessor under the Office Lease for the period commencing July
1, 1997.
1.12.1. Office Building - Next 3 Years. From July 1,
2004, through June 30, 2007, the rent for the Office Building shall be
adjusted, as of July 1, 2004, to an amount then equal to the fair
market rental value of the Office Building. Fair market rental value
shall be determined in the manner prescribed in Section 1.11.1 above,
except that Lessee's improvements to the Office Building shall be
considered in the determination of fair market rental value.
1.12.2. Office Building - Thereafter. From and after July
1, 2007, the rent for the Office Building shall be adjusted to fair
market rental value every five years for the remainder of the Lease
Term. Fair market rental value shall be determined in the manner
prescribed in Section 1.11.1 above, except that Lessee's improvements
to the Office Building shall be considered in the determination of
fair market rental value.
Section 1.13. Additional Leased Land. If Lessee should accept
the lease of the Additional Leased Land as provided in Section 1.5
above, Lessee shall pay rent for the Additional Leased Land from July
1, 1997, through June 30, 2007, in the sum of Three Thousand and
no/100 Dollars ($3,000.00) per acre per year, payable annually in
advance on the first day of July in each year. For purposes of
calculating rent under this section, Lessor and Lessee agree that on
the Effective Date of this Lease, the Additional Leased Land contains
4.443 acres, and therefore the annual rent for the Additional Leased
Land is Thirteen Thousand Three Hundred Twenty-Nine and no/100 Dollars
($13,329.00). If Lessee rejects the lease of the Additional Leased
Land on or before January 3, 1998, or rejects the Additional Leased
Land upon its receipt of notice that Lessor has elected to terminate
efforts to mitigate environmental conditions on the Additional Leased
Land pursuant to Section 1.5.1, Lessee shall owe no rent under this
Section 1.13. If Lessee accepts the lease of the Additional Leased
Land, Lessee shall pay the pro rata first annual rent payment for the
Additional Leased Land within thirty (30) days after Lessee accepts
the lease of the Additional Leased Land. Rent for the Additional
Leased Land shall be adjusted at the same intervals, in the same
amount, and by the same procedures applicable to the adjustment to
rent for the Original Leased Premises.
Section 1.14. Taxes and Assessments. Lessor agrees to pay all
lawfully assessed taxes levied and assessed during the Lease Term
against the Leased Premises, and Lessee agrees to pay all lawfully
assessed taxes levied and assessed during the Lease Term against the
rentals or the MCI Plant and other improvements constructed or placed
on the Leased Premises or Servitude Areas by Lessee prior to or during
the Lease Term. Lessor and Lessee will cooperate in an effort to have
tax bills for the MCI Plant and other improvements made by Lessee
issued in the name of Lessee. If tax bills for the MCI Plant and
improvements are issued in the name of Lessor, then Lessor promptly
will forward such tax bills to Lessee together with Lessor's check
payable to the proper taxing authority for any portion of such tax
bill attributable to the Leased Premises. Lessee is hereby authorized
to pay to the proper taxing authority any taxes or assessments against
the MCI Plant or other improvements made by Lessee on the Leased
Premises assessed in the name of Lessor. In the event Lessor shall
fail to pay when due any taxes which Lessor agrees to pay herein,
Lessee shall have the right to pay such taxes, together with any
penalties and other charges, and to recover all such payments from
Lessor by a deduction from rentals.
1.14.1. Taxes on Improvements by Governmental Authority.
Lessee shall also pay all assessments and charges lawfully assessed
against the Leased Premises by any governmental or public authority
for improvements made by the governmental or public authority, or
services directly provided by governmental or public authority for,
the Leased Premises which become due during the Lease Term. If the
assessment or charge is permitted by the governmental or public
authority to be paid in installments, Lessee may pay in installments
provided that Lessee shall pay all installments that become due during
the Lease Term. To the extent that the improvements or services
directly benefit Lessor, the assessments and charges shall be
allocated in a fair and equitable manner.
1.14.2. Lessee's Right to Contest. Lessee shall have the
right to contest any tax, assessment or charge which Lessee herein
agrees to pay, and shall not be required to pay the same while
conducting any such contest so long as Lessee takes such action as
shall be necessary to prevent the Leased Premises or any part thereof
from being subjected to loss or forfeiture.
1.14.3. Lessee's Rights to Exemptions. Lessee may in its
discretion take such action as may be necessary under the appropriate
law or laws of the State of Louisiana to exempt any prop- erty of
Lessee located in or used on the Leased Premises from ad valorem and
other taxation exemptions to the maximum extent and for the maximum
period permitted by law. Lessor agrees to cooperate in securing this
and any other tax exemptions to which Lessee may be entitled under the
laws of the State of Louisiana.
Section 1.15. Additional Rent. If Lessee shall fail to keep or
perform any of its obligations as provided in this Lease in respect
of: (a) maintenance of insurance; (b) payment of taxes or assessments;
or (c) keeping the Leased Premises free of mechanics' liens, Lessor
may (but shall not be obligated to do so), upon the continuance of
such failure on Lessee's part for thirty (30) days after written
notice by Lessor to Lessee, and without waiving or releasing Lessee
from any obligation, and as an additional but not exclusive remedy,
make any such payment or perform any such obligation, and all sums so
paid by Lessor and all necessary incidental costs and expenses
incurred by Lessor in making such payment or performing such
obligation shall be deemed "Additional Rent," and shall be due and
payable, together with interest from the date of payment by Lessor at
a rate equal to the prime rate of interest charged on commercial loans
by the CitiBank, New York, New York, in effect on the date of such
payment plus one percent (1%), to Lessor by Lessee on demand, or at
Lessor's option may be added to any installment of basic rent
thereafter falling due. If not so paid by Lessee, Lessor shall have
the same rights and remedies as in the case of default by Lessee in
the payment of the rental set forth in Section 11.2 of this Lease.
Section 1.16. Method of Payment; Due Date. In the event the
due date of any rent pay- ment or Additional Rent payment falls on a
Saturday, Sunday or legal holiday, such payment shall not be due and
payable until the time of opening for business on the next succeeding
business day thereafter. Checks in payment of the rentals may be
mailed to Lessor at the address provided herein.
Section 1.17. Certainty of Rent Payments. Rent payments and
Additional Rent payments, if any, shall be payable on the dates or at
the time specified during the Lease Term without notice or demand and
regardless of the existence or occurrence of any of the following
contingencies:
(a) unavailability of all or part of the Leased Premises for use
and occupancy by Lessee at any time by reason of the failure
to complete an expansion of the MCI Plant;
(b) damage to, or destruction of, the Leased Premises, or any
part thereof, the proximate cause of which is not the result
of the negligent or willful acts or omissions of Lessor, its
agents or employees; or
(c) any assignment of Lessee's interest, including, without
limitation, an assignment as part of a transaction involving
merger, consolidation or sale of all or substantially all of
Lessee's assets; performance by an assignee or sub-lessee
shall be considered as performance pro tanto by Lessee.
Section 1.18. Sanitary Sewer. Under the Original Site Lease,
Lessor granted Lessee the right to tie in to and utilize Lessor's
sanitary sewerage system with a capacity sufficient to receive and
transport (over and above the requirements of its other users)
sanitary sewage resulting from normal use from the Leased Premises.
Lessee shall continue to have the right to utilize Lessor's sanitary
sewer system until the system's capacity has been reached in Lessor's
sole opinion. In that event, Lessor shall have the right upon
reasonable notice to Lessee to terminate Lessee's rights to use
Lessor's sanitary sewer system except for sanitary sewer service to
the Office Building. Interpretation of reasonable notice shall include
a period of time for the Lessee to design and construct its own
sanitary sewer system or to tie in to other systems, but not to exceed
six (6) months.
Section 1.19. Storm Water. Under the Original Site Lease,
Lessor permitted Lessee to share a storm water drainage system.
However, under this Lease, Lessor and Lessee intend to maintain and
operate separate storm water drainage systems. Except as noted below
in this Section 1.19, each Party shall endeavor to contain all storm
water runoff from entering the other Party's premises. To accomplish
this intent, Lessor and Lessee agree as follows.
1.19.1. Sale of Existing Pump. Within thirty (30) days
after the date on which this Lease has been executed and delivered by
all Parties, Lessor and Lessee agree to execute and deliver a bill
of sale whereby Lessor will sell to Lessee for the price of
Ninety-Five Thousand and no/100 Dollars ($95,000.00), AS IS, WHERE IS,
the existing vertical pump and sump located in the sump end of the
ditch immediately south of Lessee's shipping warehouse, and the piping
attached to the pump from the pump to the termination of the piping at
an open ditch at the north end of a settling pond near an ammonia
storage tank, all as shown on Exhibit "E" to this Lease.
1.19.2. Additional Piping. Lessee will, at Lessee's cost,
install additional piping over Lessor's Land in the location shown on
Exhibit "E" to this Lease to tie in Lessee's stormwater drainage
system with the existing drainage head of Lessor's storm runoff
outfall pumps as shown on Exhibit "E." Lessee shall submit to Lessor
for approval Lessee's plans for the installation of the additional
piping, which approval shall not be unreasonably withheld or delayed.
Lessee shall maintain, repair and replace Lessee's storm drainage
system, including the vertical pump, piping and other components as
necessary or appropriate throughout the Lease Term. Lessee shall not
remove the pump, sump, and piping during the Lease Term (except as may
be necessary for proper maintenance, repair, or replacement) or upon
the termination of the Lease Term without the consent of Lessor.
Lessee agrees to complete the installation of the additional piping
within six (6) months after the date on which this Lease has been
executed and delivered by all Parties.
1.19.3. Servitude for Storm Water System. Lessor hereby
grants to Lessee for the Lease Term a servitude over Lessor's Land,
in favor of the Leased Premises, in the location shown on Exhibit "E"
for the installation, repair, maintenance, operation, and replacement
of the existing piping, the additional piping. and related equipment
for Lessee's storm water drainage system.
1.19.4. If Additional Leased Land is Accepted. If Lessee
elects to accept the lease of the Additional Leased Land, then in that
event:
(a) Lessor, at its expense, will collect and discharge all
storm water drainage from that portion of Lessor's Land located
north of the Leased Premises to prevent drainage onto the Leased
Premises; and
(b) Lessee, at its expense, will collect and discharge all
storm water on the Original Leased Premises, Additional Leased
Land, the fifty (50) foot strip of Lessor's Land to the west of
the Original Leased Premises and the Additional Leased Land and
that portion of Lessor's Land located between the Additional
Leased Land and the railroad spurs south and east of the
Additional Leased Land, through Lessee's storm water system
described in this section 1.19.
1.19.5. If Additional Leased Land is Not Accepted. If Lessee
elects not to accept the lease of the Additional Leased Land, then in
that event:
(a) Lessor, at its expense, will collect and discharge all
storm water drainage from that portion of Lessor's Land located
north of the Original Leased Premises to prevent drainage onto
the Leased Premises; and
(b) Lessee shall, at its expense, install, maintain, and
replace berms or other reasonable constructions to prevent storm
water drainage from Lessor's Land onto the Leased Premises, and
to prevent storm water drainage from the Leased Premises onto
Lessor's Land (except as otherwise permitted through Lessee's
storm water drainage system described in sub-sections 1.19.1,
1.19.2, and 1.19.3 of this Lease).
Section 1.20. Process Wastewater. Under the Original Site
Lease, Lessor granted Lessee the right to tie in to and utilize
Lessor's process waste water discharge piping over Lessor's Land to
the Mississippi River. Lessee shall continue to have the right to
utilize Lessor's process waste water discharge piping, but only if and
to the extent Lessor determines in Lessor's sole discretion, that
there exists capacity in the system that is not now, or in the future,
will be used by Lessor. Lessor shall give Lessee one hundred eighty
(180) days written notice prior to implementing any scheduled
reduction or termination of Lessee's use of the process wastewater
discharge piping. If Lessor terminates Lessee's right to utilize
Lessor's process wastewater discharge piping, Lessee shall have the
right at Lessee's cost to install discharge piping from the Leased
Premises over Lessor's Land to the Mississippi River at a location to
be mutually approved by Lessor, Lessee, and applicable Governmental
Entities. Lessor agrees to grant to Lessee a predial servitude over
Lessor's Land at such mutually approved location for the purpose of
installing, maintaining, repairing, operating, and replacing discharge
piping and related equipment during the term of this Lease.
Section 1.21. Parking. Lessee shall have the right to use the
parking facilities located upon Lessor's Land for parking by Lessee's
employees, agents, contractors and visitors under the following
conditions. Lessor reserves the right from time to time to change the
location and size of any parking facilities which are or may from time
to time be designated as such, but Lessor will provide a reasonable
number of parking spaces reserved for Lessee in Lessor's parking lot.
Upon completion of the MCI Road, Lessee's right to park in Lessor's
lot shall be limited to parking by Lessee's personnel in, and
visitors to, the Office Building. Upon the release of the Office
Building from this Lease as set forth in Section 1.8, Lessee shall not
have the right to use any of Lessor's parking facilities except as
provided in Section 1.21.1 of this Lease.
1.21.1. Temporary Parking. Throughout the Lease Term,
during periods of construction by Lessee or turnarounds by Lessee,
Lessee and its contractors shall have the non-exclusive right to use,
for parking, a part of Lessor's Land of not more than one (1) acre in
close proximity and convenient to the MCI Road, or if the MCI Road has
not been completed, then in close proximity and convenient to the
Leased Premises. Lessor reserves the right from time to time to
change the location and configuration of such site upon not less than
thirty (30) days' notice to Lessee. Lessee shall pay the cost of any
labor and materials for such parking areas or relocated parking areas.
Section 1.22. Rail Facilities. Lessor agrees to permit Lessee
to use the rail trackage and related rail facilities located upon
Lessor's Land, from time to time, as such facilities may be available,
as determined by Lessor, and in coordination with Lessor's use and
other persons' use of the rail facilities. Lessee agrees to pay
Lessor a reasonable charge for Lessee's use; provided however, Lessor
shall have no obligation to Lessee to repair or maintain the rail
facilities.
ARTICLE 2
OPERATION OF THE PLANT
Section 2.1. Costs of Construction and Operation. The entire
cost of installation and construction of any improvements to the MCI
Plant, and all costs related to the operation, maintenance, repair and
replacement thereof, shall be at the expense of Lessee. Lessor shall
have no obligation to maintain or repair any portion of the Leased
Premises.
Section 2.2. Secrecy Obligations. To the extent that either
Party proposes to gain access to confidential technical information of
the other Party, Lessor and Lessee each agrees that upon the
reasonable request from the other, it will execute and deliver, and
require any assignee or sublessee to execute and deliver, to the other
appropriate secrecy agreements and that it will cause its officers and
employees having access to the other 's plant or any information with
respect to the operations conducted therein to execute and deliver
appropriate secrecy agreements to the other .
ARTICLE 3
INDEMNITIES AND INSURANCE
Section 3.1. Indemnification by Lessee. Lessee shall indemnify
and hold harmless Lessor against and from all claims, other than those
covered in Section 6.5 hereof, by or on behalf of any Person arising
from the conduct or management of, or from any work or thing done or
occurring by Lessee within the MCI Plant, the Leased Premises, or the
Servitude Areas, and against and from all claims arising during the
Lease Term from (a) any condition of the MCI Plant, the Leased
Premises, or the Servitude Areas, or (b) any act or negligence of
Lessee or of any of its agents, contractors, servants, employees or
licensees on the Leased Premises or the Servitude Areas. Lessee shall
indemnify and hold harmless Lessor from and against all costs and
expenses incurred in or in connection with any such claim arising as
aforesaid, or in connection with any action or proceeding brought
thereon, and upon notice from Lessor, Lessee shall defend it in any
such action or proceeding. The foregoing shall not be applicable to
any claim, action or cause of action for damage to property or injury
to persons (including death) the proximate cause of which results from
the negligence or misconduct of Lessor, its agents, employees,
contractors or lessees, other than the Lessee herein or its assignees
or sublessees.
Section 3.2. Indemnification by Lessor. Lessor shall indemnify
and hold harmless Lessee against and from all claims, other than those
covered in Section 6.6 hereof, by or on behalf of any Person arising
from the conduct or management of, or from any work or thing done or
occurring by Lessor within Lessor's Land during the Lease Term, and
against and from all claims arising during the Lease Term from (a) any
condition of the Lessor's Land and the Lessor's plants located
thereon, or (b) any act or negligence of Lessor or of any of its
agents, contractors, servants, employees or licensees on the Lessor's
Land or Servitude Areas. Lessor shall indemnify and hold harmless
Lessee from and against all costs and expenses incurred in or in
connection with any such claim arising as aforesaid, or in connection
with any action or proceeding brought thereon, and upon notice from
Lessee, Lessor shall defend it in any such action or proceeding. The
foregoing shall not be applicable to any claim, action or cause of
action for damage to property or injury to persons (including death)
the proximate cause of which results from the negligence or misconduct
of Lessee, its agents, employees, contractors or its assignees or
sublessees.
Section 3.3. Insurance Coverage.. Lessor and Lessee each shall
procure and maintain throughout the Lease Term at their respective
costs and expense:
3.3.1. Workers' Compensation Insurance with statutory
limits covering Lessor's/Lessee's obligations under the Workers'
Compensation Act of any applicable jurisdiction, and Employers
Liability insurance with limits of not less than One Million
Dollars ($1,000,000) per accident. Neither Party shall be
required to carry Worker's Compensation coverage if it qualifies
as a self-insurer under Applicable Law.
3.3.2. Commercial General Liability Insurance with limits
of not less than One Million Dollars ($1,000,000) per occurrence
and Two Million Dollars ($2,000,000) annual aggregate covering
third-party bodily injury, property damage and personal injury
liability. Such insurance shall be written on an "occurrence
form."
3.3.3. Commercial Automobile Liability Insurance with
limits of not less than One Million Dollars ($1,000,000) per
occurrence covering third party bodily injury and property damage
liability arising out of the ownership, use or maintenance of any
automobile.
3.3.4. Umbrella Liability Insurance with limits of not
less than Five Million Dollars ($5,000,000) per occurrence and
Five Million Dollars ($5,000,000) annual aggregate providing
coverage on a basis not more restrictive than "following-form" of
the liability coverages described in subsections 3.3.1 through
3.3.3 above.
3.3.5. Property and Business Interruption Insurance
covering "All-Risks" of physical loss or damage to Lessor's or
Lessee's, as the case may be, owned, leased or rented real and
personal property and loss of business income arising out of such
damage. Such insurance shall cover the full replacement cost
value of insured property and the One Hundred (100%) percent,
twelve (12) month business income value associated with the
Lessor's plants on Lessor's Land or the MCI Plant, as the case
may be. Such insurance may include deductibles not to exceed
Five Hundred Thousand Dollars ($500,000) for property damage and
ten (10) times the average daily business income value.
3.3.6. Pollution Legal Liability Insurance to the extent
commercially available on reasonable terms, with limits of not
less than One Million Dollars ($1,000,000) per occurrence and Two
Million Dollars ($2,000,000) annual aggregate covering
third-party bodily injury and property damage (including damage
to the Lessor's Land and Leased Premises, and all plants and
facilities located thereon) liability arising out of the
discharge, dispersal, release or escape of any solid, liquid,
gaseous or thermal irritant or contaminant, including smoke,
vapors, soot, fumes, acids, alkalis, or toxic chemicals arising
out of Lessee's use of or operations on the Leased Premises or
Servitude Areas or Lessor's use of the Lessor's Land, as the case
may be. Such insurance may be written on a "claims-made form."
Lessor acknowledges that on the Effective Date of this Lease
Lessee does not carry this type of insurance coverage. However,
within thirty (30) days after date on which this Lease is signed
by all Parties, Lessee agrees to apply for, and diligently
pursue, this coverage and to keep Lessor informed of the progress
of the application process. If the coverage described in this
subsection is not available to Lessee for the Leased Premises or
Servitude Areas, Lessee shall notify Lessor, and neither Lessee
nor Lessor thereafter shall have any further obligation to obtain
or maintain the coverage required under this subsection 3.3.6
during periods when the coverage described in this subsection
3.3.6 is not commercially available on reasonable terms.
3.3.7. Lessor as an Additional Insured. Insurance
policies described in subsections 3.3.2, 3.3.4 and 3.3.6, and
procured by Lessee, shall include Lessor as an Additional Insured
with respect to liability arising out of Lessee's use of, or
operations on, the Leased Premises.
3.3.8. Lessee as an Additional Insured. Insurance
policies described in subsections 3.3.2, 3.3.4 and 3.3.6, and
procured by Lessor, shall include Lessee as an Additional Insured
with respect to liability arising out of Lessor's use of, or
operations on, Lessor's Land.
3.3.9. Waiver of Subrogation Rights. All Insurance
policies described in subsections 3.3.1. through 3.3.6. shall
include mutual waiver of subrogation or counterclaim of one
against the other. Lessor and Lessee shall each obtain from their
respective insurance carriers waivers of the right of subrogation
with respect to the other, and Lessor and Lessee each do hereby
waive and release any claim they may have against the other for
damage or loss to their respective plants and facilities or for
loss of business income arising out of such damage or loss to the
extent that such damage or loss is covered by insurance, or would
be covered had the damaged Party carried the insurance coverage
required by the provisions of this Section 3.3.
3.3.10. Notice of Cancellation or Material Change.
Insurance policies described in subsections 3.3.1. through 3.3.6.
shall provide Lessor or Lessee, as applicable, with a minimum
thirty (30) days' advance written notice of cancellation,
non-renewal or material change in coverage.
3.3.11. Evidence of Insurance. Lessor and Lessee shall,
at all times during the Lease Term, provide each other with
current certificates of insurance clearly evidencing the
existence of insurance and the required provisions described
herein. Upon request of either, the other shall provide
certified copies of any of its insurance policies.
ARTICLE 4
IMPROVEMENTS AND ALTERATIONS
Section 4.1. Additions, Alterations, Changes and Improvements.
Lessee shall have the right from time to time to make additions,
alterations and changes (including demolition) in or to the MCI Plant
and to make, construct, place, and remove other improvements upon the
Leased Premises. Lessee shall take good care of the Office Building,
shall maintain the same in a good and reasonable state of repair, and
shall not materially alter, modify or change the same without the
written consent of Lessor. Unless otherwise provided by Lessor's
written consent, the exterior dimensions of the Office Building shall
not be enlarged, and all alterations, improvements and changes that
may be made to the Office Building shall be at the cost of Lessee. The
ownership of all improvements made by the Lessee to the Leased
Premises and Office Building during the term of the Original Site
Lease shall remain in Lessee and the termination of the Original Site
Lease shall not vest title to those improvements in Lessor. All
additions, alterations, and changes to the MCI Plant and other
improvements to the Leased Premises during the term of this Lease
shall remain the property of Lessee.
4.1.1. Temporary Access during Construction. Until the
MCI Road is completed, Lessee may have temporary access over Lessor's
Land through existing roads to permit Lessee's contractors, suppliers,
and other persons performing additions, alterations, or changes to the
MCI Plant, provided that Lessee shall schedule the use of Lessor's
roads so as not to unreasonably interfere with Lessor's entrance
gates.
Section 4.2. The Plant, Fixtures, Equipment and Personal
Property. At the expiration or earlier termination of this Lease,
Lessee shall return the Leased Premises to Lessor in as good a
condition as when originally let to Lessee under the Original Site
Lease or the Office Lease, as applicable, except for ordinary wear and
tear and damage by casualty. If Lessee should elect to accept the
lease of the Additional Leased Land, then at the expiration or earlier
termination of this Lease, Lessee shall return the Additional Leased
Land to Lessor in as good a condition as when originally let, except
for ordinary wear and tear and damage by casualty. Lessee may, at its
option, remove from the Leased Premises (excluding the Office
Building), no later than the date of expiration or earlier termination
of this Lease, any improvements made by Lessee during the term of the
Original Site Lease or during the term of this Lease. Any
improvements made by Lessee which are not timely removed shall become
the property of Lessor. Lessee shall also remove those improvements
made by Lessee, and designated by Lessor for removal to grade level.
Section 4.3. Risk of Loss. All property of any kind which may
be constructed or placed on the Leased Premises (whether belonging to
Lessee or to any third person) shall be at the sole risk of Lessee and
those claiming by, through or under Lessee, and Lessor shall not be
liable (except for its negligence and the negligence of its officers,
agents, employees and joint venturers) to Lessee or to those claiming
by, through or under Lessee or to third persons for any injury, loss
or damage to any person or property on the Leased Premises.
Section 4.4. Condition of Property. Lessee accepts the Leased
Premises in its current condition and Lessee assumes responsibility
for the condition of the Leased Premises provided, however, nothing in
this section shall be construed to abrogate the effects of Lessor's
indemnities granted in Section 6.6 of this Lease.
ARTICLE 5
USE OF PREMISES; COMPLIANCE WITH ORDERS; WORK
PERFORMED BY LESSEE
Section 5.1. Use of Premises, Compliance with Orders. The
Leased Premises may be used for (a) the production of melamine and
related products and (b) for other lawful uses to which Lessor may
consent provided that Lessor's consent shall not be unreasonably
withheld or delayed. However, no part of the Leased Premises shall be
used for the production of anhydrous ammonia or urea in any form (e.g
prilled, granular, synthesis, melt, etc.) unless Lessee is permitted
to do so under the provisions of the Feedstock Agreement. The Office
Building shall be used solely for general office purposes in
connection with the MCI Plant. Lessee shall, or shall cause any
sublessee to, comply with Applicable Law with respect to the use or
condition of the Leased Premises or the MCI Plant. Lessee shall,
however, have the right to contest any Applicable Law, and Lessee may
postpone compliance until final determination of such contest;
provided, however, Lessee, if required, shall furnish Lessor
reasonably satisfactory security against any loss by reason of any
lien against the Leased Premises arising out of the subject of such
contest and effectively prevent foreclosure thereof.
Section 5.2. Work Performed by Lessee. Lessee shall not do, or
permit others under its control to do, any work in the MCI Plant or on
the Leased Premises or Servitude Areas related to any repair,
rebuilding, alteration of or addition to the MCI Plant, unless Lessee
shall have first procured and paid for, or caused the procurement and
payment for, all requisite governmental permits and authorizations.
Lessor shall join in the application for any such permit or
authorization whenever required, but Lessee shall defend, indemnify
and hold Lessor harmless against and from all costs and expenses which
may be thereby incurred by Lessor. All such work shall be done in a
good and work- manlike manner and in compliance with Applicable Law.
Section 5.3. Standard of Care. Lessee shall maintain the
Leased Premises and operate the MCI Plant in accordance with industry
standards of care and diligence.
Section 5.4. Mechanics' Liens. If any lien shall be filed
against the interest of Lessor in the Leased Premises or asserted
against any rent payable hereunder by reason of work, labor, services
or materials supplied or claimed to have been supplied to the Leased
Premises at the request or with the permission of Lessee, or anyone
claiming under Lessee, Lessee shall, within thirty (30) days after
receipt of notice of the filing thereof or the assertion thereof
against such rents, cause the same to be discharged of record, or
effectively prevent the enforcement or foreclosure thereof against the
Leased Premises or such rents, by contest, payment, deposit, bond,
order of court or otherwise.
ARTICLE 6
ENVIRONMENTAL MATTERS Section 6.1.
Environmental Representations, Warranties and Covenants. Lessee
represents that, to its knowledge, there are not now existing in the
MCI Plant or in the Office Building any material violation of
Applicable Laws, or condition that would require remediation or other
responsive action under Applicable Law.
Section 6.2. Environmental Assessment. Lessor agrees to
deliver to Lessee copies of all prior environmental reports,
investigations, studies, audits, reviews, or other analyses, with
respect to the Leased Premises, conducted by or for Lessor, and which,
to Lessor's knowledge, are in Lessor's possession or control.
Section 6.3. Use of Hazardous Substances. Lessee shall, in
accordance with the requirements of Applicable Law, safely store, use
and dispose of, or cause to be safely stored, used and disposed of,
all materials including Hazardous Substances, which may be used or
generated by it in the MCI Plant or the Leased Premises.
Section 6.4. Obligation to Report. Lessee shall report to
Lessor any material violation of an Applicable Law or condition which
requires remediation or other responsive action under Applicable Law
on the Leased Premises or within the MCI Plant as soon as possible
following the discovery of the event giving rise to a violation, or
with respect to any unauthorized release or discharge of a Hazardous
Substance made to air, water or land from the MCI Plant. Lessor shall
report to Lessee any material violation of an Applicable Law or
condition which requires remediation or other responsive action under
Applicable Law on Lessor's Land or within the plants operated by
Lessor upon Lessor's Land as soon as possible following the discovery
of the event giving rise to a violation, or with respect to any
unauthorized release or discharge of a Hazardous Substance made to
air, water or land from the Lessor's Land or plants operated by Lessor
thereon.
Section 6.5. Environmental Indemnification by Lessee. In
addition to the obligations of Lessee to indemnify Lessor as set forth
elsewhere in this Lease, Lessee covenants and agrees to indemnify and
hold harmless and defend Lessor from and against any and all losses,
damages, injuries, liabilities, penalties, fines, judgments, claims,
demands, suits, actions, costs and expenses (including reasonable
attorneys' fees), arising out of or connected with all accidents,
injuries or damages, including improper transportation, handling,
storage or disposal of Hazardous Substances and from any release to
air, land or water of any Hazardous Substance resulting from the
operation of the MCI Plant. Notwithstanding the foregoing, Lessee
shall not be obligated to indemnify Lessor for any liability with
respect to any claim arising out of or in connection with
environmental contamination of the Leased Premises or Servitude Areas,
if the contamination is caused, in whole or in part, by the negligent
acts or omissions of Lessor, its employees, agents or contractors.
The indemnities set forth in this section shall be applicable with
respect to the Original Leased Premises from the date of commencement
of the Original Site Lease and shall survive the expiration or earlier
termination of this Lease.
Section 6.6. Environmental Indemnification by Lessor. In
addition to the obligations of Lessor to indemnify Lessee as set forth
elsewhere in this Lease, Lessor covenants and agrees to indemnify and
hold harmless and defend Lessee from and against any and all losses,
damages, injuries, liabilities, penalties, fines, judgments, claims,
demands, suits, actions, costs and expenses (including reasonable
attorneys' fees), arising out of or connected with all accidents,
injuries or damages, including improper transportation, handling,
storage or disposal of Hazardous Substances and from any release to
air, land or water of any Hazardous Substance resulting from the
operation of Lessor's plants upon Lessor's Land. Notwithstanding the
foregoing, Lessor shall not be obligated to indemnify Lessee for any
liability with respect to any claim arising out of or in connection
with environmental contamination of the Leased Premises, if the
contamination is not caused by the negligent acts or omissions of
Lessor, its employees, agents or contractors. The indemnities set
forth in this section shall survive the expiration or earlier
termination of this Lease.
Section 6.7. Post-Termination Exposure for Violations of
Applicable Law. Following termination of this Lease, Lessee agrees
to mitigate and/or remediate damage, if any, to the Leased Premises,
Servitude Areas, and Lessor's Land that Lessee has caused, by the
release to air, water or land of any Hazardous Substance. Mitigation
or remediation of damage, if any, shall be made to bring the Leased
Premises, Servitude Areas or Lessor's Land into compliance with
Applicable Law (or to allow full economic use of the property).
ARTICLE 7
UTILITIES AND CHARGES; LESSOR'S SERVICES
Section 7.1. Utilities and Charges. Lessee agrees to pay, or
cause to be paid, all charges for water, gas, sewer, electricity,
light, heat, or power, telephone or other service used, rendered or
supplied in connection with the MCI Plant and the Leased Premises
throughout the Lease Term and to indemnify and save harmless Lessor
against any liability or damage arising out of Lessee's failure to pay
the utility supplier for applicable charges.
Section 7.2. Inspection Rights. Lessee shall permit Lessor and
its agents or employees or contractors to enter into and upon the
Leased Premises at all reasonable times for the purpose of inspecting
the same subject to the provisions of Section 2.2 of this Lease. If
at any time when Lessee has discontinued operation of the MCI Plant,
Lessor has reasonable grounds to believe that a condition exists in
the MCI Plant which creates a hazardous condition with respect to the
plants owned by Lessor, Lessor may enter into the MCI Plant for the
purpose of checking for the existence of such condition. If Lessor,
acting in good faith, determines that a hazardous condition exists,
Lessor may immediately give Lessee notice of the existence of such
condition, and if the condition is within the control of Lessee,
Lessor may require that Lessee immediately correct the condition. If
the condition presents an immediate threat to life or injury to
persons, Lessor shall have the right, but not the obligation, to
correct the condition. The cost of correction shall be paid by the
Party responsible for the condition.
Section 7.3. Interface Agreement. Certain services or costs
provided to Lessee or shared by Lessor and Lessee, including certain
services described in this Lease are set forth in an agreement between
TNI and Lessee (the "Interface Agreement"), and Lessee shall continue
to pay such costs pursuant to the Interface Agreement, as amended
from time to time. This Lease shall not be considered to modify or
terminate the Interface Agreement. ARTICLE 8
DAMAGE OR DESTRUCTION; CONDEMNATION
Section 8.1. Damage or Destruction of MCI Plant. In the event
of damage to or destruction of the MCI Plant, or any major portion
thereof, by fire or other casualty, to such an extent that in the
reasonable judgment of Lessee the MCI Plant is not suitable for use
for Lessee's purposes under this Lease without repair or
reconstruction, then Lessee shall give written notice to Lessor, as
soon as practicable, but in no event later than twelve (12) months
from date of the casualty, whether Lessee intends to repair or rebuild
the MCI Plant. If Lessee elects not to repair or rebuild, then this
Lease shall terminate upon the earlier of two (2) years after the date
of Lessees' notice, or the date upon which the Lessee has removed the
improvement and the improvement Lessor has instructed the Lessee to
remove. If Lessee elects to repair or rebuild, Lessee shall commence
the repair or rebuilding within twelve (12) months from the date of
the casualty and thereafter diligently pursue the progress of the
repair or rebuilding until completion of the work. If work is not
completed within three (3) years from the date of the casualty, and
Lessee fails to provide Lessor with reasonable assurances regarding
Lessee's ability to achieve completion of the repair or rebuilding
within five (5) years from the date of the casualty; or,
notwithstanding such assurances, Lessee fails to achieve completion
within five (5) years from the date of the casualty, then Lessor may
terminate this Lease upon six (6) months' written notice to Lessee.
Section 8.2. Rent Payments to Continue. Lessee's obligation to
make payment of the rent and all other charges on the part of Lessee
to be paid and to perform all other covenants and agreements on the
part of Lessee to be performed shall not be affected by any such
destruction or damage, and Lessee hereby waives the provisions of any
statute or law now or hereafter in effect to the contrary; provided,
however, in the event of termination of this Lease as provided in the
immediately preceding Section, Lessee shall be relieved of all its
obligations and liabilities herein, including the payment of rent,
from and after the effective date of termination. In no event,
however, shall Lessee be required to pay rent or other charges during
a period of time when Lessee is unable to operate the MCI Plant
because the MCI Plant, Leased Premises, or Servitude Areas has
suffered damage as a result of Lessor's acts or omissions to act.
Section 8.3. Condemnation. If during the Lease Term, title to
all or substantially all of the Leased Premises shall be taken or
condemned by a competent authority for any public use or purpose, then
this Lease shall terminate at midnight on the day of the vesting of
title in such authority, and rent shall be paid to and adjusted as of
that day. For purposes of this Section 8.3 "substantially all of the
Leased Premises" shall be deemed to mean a taking of such a
substantial portion thereof that Lessee, as determined by it in its
reasonable discretion, cannot reasonably operate on the remainder in
substantially the same manner as before.
8.3.1. Awards. Lessor shall be entitled to the portion of any
award attributable to the value of the land comprising the Leased
Premises in the condition when leased, and Lessee shall be entitled to
the portion of the award attributable to the MCI Plant and other
improvements constructed or installed by Lessee, including any
increase in value of the land resulting from site preparation, but
excluding improvements made by Lessee to the Office Building. In the
event separate awards are made to Lessor and Lessee by the appropriate
governmental authority for the Leased Premises and for the
improvements thereon, including the MCI Plant and all machinery and
equipment so situated, Lessor and Lessee shall each, in its sole
discretion, determine if it will accept such separate award.
8.3.2. Partial Taking. If less than substantially all of the
Leased Premises shall be taken or condemned by a competent authority
for any public use or purpose, the Lease Term shall not be affected in
any way and the condemnation award shall be apportioned between Lessor
and Lessee as hereinabove provided. If no part of the improvements
or the MCI Plant is taken and Lessee can continue to operate in a
manner satisfactory to it, the condemnation award shall be paid to
Lessor. In the event of a taking which does not result in the
termination of this Lease, the rental payments provided in Section
1.10 of this Lease shall be reduced by the same percentage as the
percentage determined by dividing the total acres in the Leased
Premises into the total acres taken by condemnation.
8.3.3. Temporary Taking. If the use for a limited period of
all or part of the Leased Premises or the MCI Plant shall be taken by
right of eminent domain, this Lease shall not be thereby terminated,
and the Parties shall continue to be obligated under all of its terms
and provisions, subject, however, to the provisions of the Feedstock
Agreement, and Lessee shall be entitled to the entire award for such
temporary taking.
ARTICLE 9
WARRANTY; PRIORITY OF LEASE; ASSIGNMENT
Section 9.1. Warranty of Title. Lessor covenants and warrants
that it holds good and marketable title to the Leased Premises and
Servitude Areas; that Lessor has full right and authority to make this
Lease, and that Lessee, its successors and assigns, shall have quiet
and peaceful posses- sion during the Lease Term, subject to all
existing apparent servitudes and to those servitudes and restrictions
that have been recorded with the Clerk and Recorder of Ascension
Parish, Louisiana, and those rights reserved by Lessor in Section 1.8
of this Lease.
Section 9.2. Priority of Lease. Notwithstanding anything to
the contrary herein, this Lease (and any amendment or supplement
hereto executed in accordance with and pursuant to the provisions
hereof) and the estate of Lessee hereunder are, and shall continue to
be, superior to any and all subsequent encumbrances, mortgages, and
trust indentures, or any of them or any other security instrument,
constituting or granting a lien upon Lessor's interest in the Leased
Premises or in the land subject to the servitudes granted by Lessor to
Lessee herein or revenues or income therefrom.
Section 9.3. Assignment and Sublease. Lessee may assign this
Lease, in whole but not in part, or sublet the Leased Premises, in
whole but not in part, to a purchaser of the entire MCI Plant or to an
Affiliate of Lessee without the consent of Lessor, provided that the
assignee or sublessee expressly agrees in writing to perform all
obligations of Lessee under this Lease and the Feedstock Agreement.
Performance by any assignee or sublessee shall be considered as
performance pro tanto by Lessee. Lessor may assign its interest in
this Lease to any person who may acquire Lessor's Land, provided that
the assignee expressly agrees in writing to perform all obligations of
Lessor under this Lease and the Feedstock Agreement. Except as set
forth herein, this Lease shall not be assigned or the Leased Premises
sublet. An assignment or subletting shall not release Lessee from its
obligations under this Lease except by an express written agreement of
Lessor.
Section 9.4. Assignment for Security. The rights under this
Lease may be assigned in whole or in part by Lessor or Lessee as
collateral security for any obligation or undertaking of the assignor
or its Affiliate. Lessor or Lessee may create liens on their
respective interest in this Lease to secure payment of such
obligations. Upon written request of either Party's obligee, the
other Party shall deliver to the Party's obligee a written statement
whether the Lease is in full force and effect, whether the Lease has
been amended, modified, supplemented or restated, and whether either
Party is in default under the Lease. Additionally, the other Party
shall furnish the Party's obligee notice of any default by the Party
under the terms and provisions of this Lease, and the Party's obligee
shall have the right to cure the default during the same period of
time as allowed to the Party. Performance by the Party's obligee shall
be considered as performance pro tanto by the Party.
Section 9.5. Lessor's Additional Warranties. Lessor further
represents and warrants to Lessee that on and as of the date hereof:
A. it has all requisite power and authority to carry on the
business in which it is engaged and to perform its
respective obligations under this Lease;
B. the execution and delivery of this Lease have been duly
authorized and approved by all requisite corporate action;
C. it has all requisite power and authority to enter into this
Lease and perform its obligations hereunder;
D. the execution and delivery of this Lease does not, and
consummation of the transactions contemplated herein will
not, violate any of the material provisions of its
organizational documents, any material agreement pursuant to
which Lessor or its properties are bound or, to its
knowledge, any material laws applicable to Lessor; and
E. this Lease is valid, binding, and enforceable against Lessor
in accordance with its terms, subject to bankruptcy,
moratorium, insolvency, and other laws generally affecting
creditors' rights and general principles of equity (whether
applied in a proceeding in a court of law or equity).
Section 9.6. Lessee's Warranties. Lessee represents and
warrants to Lessor that on and as of the date hereof:
A. it has all requisite power and authority to carry on the
business in which it is engaged and to perform its
respective obligations under this Lease;
B. the execution and delivery of this Lease have been duly
authorized and approved by all requisite corporate action;
C. it has all requisite power and authority to enter into this
Lease and perform its obligations hereunder;
D. the execution and delivery of this Lease does not, and
consummation of the transactions contemplated herein will
not, violate any of the material provisions of its
organizational documents, any material agreement pursuant to
which Lessee or its properties are bound or, to its
knowledge, any material laws applicable to Lessee; and
E. this Lease is valid, binding, and enforceable against Lessee
in accordance with its terms, subject to bankruptcy,
moratorium, insolvency, and other laws generally affecting
creditors' rights and general principles of equity (whether
applied in a proceeding in a court of law or equity).
ARTICLE 10
REMOVAL AND DISPOSAL OF PROPERTY
Section 10.1. Removal of Property; Release of Landlord's Lien.
Any provision herein to the contrary notwithstanding, it is expressly
agreed and understood that the MCI Plant and all other improvements,
structures and property erected or placed on the Leased Premises by
Lessee shall remain the property of Lessee, that Lessee may sell and
convey all or a portion of the MCI Plant and other improvements
(except the Office Building), either together with or separately from
its interest under this Lease, and that Lessee, its assigns, or any
person otherwise entitled so to do, may remove at any time during the
term of this Lease or upon its termination, any and all buildings,
including foundations, pilings, machinery, equipment, appliances,
fixtures, and any other item of whatever nature which may have been
erected, installed, placed on or affixed to the Leased Premises by
Lessee (except the Office Building). Lessee agrees that upon the
earlier of the termination of this Lease or the release of the Office
Building from this Lease, Lessee will leave the Office Building in
usable condition, less normal wear and tear and damage by casualty.
Lessor hereby releases any lien and any other claim or right which it
may have under the laws of the State of Louisiana against the MCI
Plant and all other improvements, structures, equipment, machinery and
other property erected or placed on the Leased Premises to secure the
payment of the basic rental and additional rental reserved hereunder
or the performance of the other provisions contained herein.
ARTICLE 11
DEFAULT AND REMEDIES
Section 11.1. Lessee's Events of Default. The occurrence of any
one or more of the following events shall constitute a "Lessee's Event
of Default":
A. Lessee shall default in the due and punctual payment of the
basic rent or any Additional Rent payable hereunder, and
such default shall continue for fifteen (15) days after
receipt of written notice from Lessor;
B. Lessee shall neglect or fail to perform or observe any of
the covenants herein contained on Lessee's part to be
performed or observed (other than those referred to in
subsection A of this section) and Lessee shall fail to
remedy the same within thirty (30) days after Lessor shall
have given to Lessee written notice specifying such neglect
or failure (or within such additional period, if any, as may
be reasonably required to cure such default if it is of such
nature that it reasonably cannot be cured within the thirty
(30) day period);
C. there shall exist, on the part of Lessee, a Material Breach
(as defined in the Feedstock Agreement) under the Feedstock
Agreement, and the Material Breach shall continue beyond the
time period set forth in the Feedstock Agreement during
which Lessee may cure such Material Breach.
D. this Lease, the Leased Premises or the MCI Plant, or any
part thereof, shall be taken upon execution or by other
process of law, other than the right of condemnation,
directed against Lessee, or shall be taken upon or subject
to any attachment at the instance of any creditor of, or
claimant against, Lessee, and the attachment shall not be
discharged or disposed of within sixty (60) days after the
levy thereof, or the obligations of Lessee shall not be
fully assumed by such creditor or claimant; or
E. Lessee shall be involved in financial difficulties as
evidenced below and shall not cure the same after one
hundred twenty (120) days' notice from Lessor:
(1) by its admitting in writing its inability to pay its
debts generally as they become due;
(2) by its filing a petition in bankruptcy or for
reorganization or for the adoption of an arrangement
under the Bankruptcy Code (as now existing or in the
future amended) or an answer or other pleading
admitting the material allegations of such a petition
or seeking, consenting to, or acquiescing in the relief
provided under such Code;
(3) by its making an assignment of all or a substantial
part of its property for the benefit of its creditors;
(4) by its seeking or consenting to or acquiescing in the
appointment of a receiver or trustee for all or a
substantial part of its property;
(5) by its being adjudicated a bankrupt or insolvent;
(6) by the entry of a court order without the consent of
Lessee, which order shall not be vacated, set aside or
stayed within one hundred twenty (120) days from the
date of entry (i) appointing a receiver or trustee for
all or a substantial part of its property or (ii)
approving a petition filed against it for the effecting
of an arrangement in bankruptcy or for a reorganization
pursuant to the Bankruptcy Code or for any other
judicial modification or alteration of the rights of
creditors.
The provisions of subsection E of this Section 11.1 shall
not be deemed to apply to any assignee or sublessee of
Lessee or the financial condition of any such assignee or
sublessee so long as Lessee remains liable to Lessor for the
payment of the basic rental and Additional Rent reserved
herein and the performance of the other terms and provisions
of this Lease.
Section 11.2. Remedies of Landlord. If a Lessee's Event of
Default shall occur, Lessor shall have the right, at its election, at
any time while such Event of Default shall thereafter continue,
either:
A. to give Lessee written notice of its intention to terminate
this Lease on the date specified in such notice (but not
less than thirty (30) days from the date of such notice) and
unless such Event of Default be cured within the time period
permitted in Section 11.1 of this Lease, Lessee's right to
possession of the Leased Premises shall cease and this Lease
shall thereupon be terminated upon such date; or
B. subject to the limitations set forth in Section 11.6 below,
take whatever action at law or in equity as may appear
necessary or desirable to collect any rent due or to collect
from Lessee damages that Lessor has suffered from Lessee's
default; or
C. take whatever action at law or in equity as may appear
necessary or desirable to enforce any obligation, covenant
or agreement of Lessee.
Section 11.3. Lessor's Events of Default. The occurrence of any
one or more of the following events with respect to either TNI or
Guarantor shall constitute a "Lessor's Event of Default":
A. Lessor shall neglect or fail to perform or observe any of
the covenants herein contained on Lessor's part to be
performed or observed and Lessor shall fail to remedy the
same within thirty (30) days after Lessee shall have given
to Lessor written notice specifying such neglect or failure
(or within such additional period, if any, as may be
reasonably required to cure such default if it is of such
nature that it reasonably cannot be cured within the thirty
(30) day period);
B. there shall exist, on the part of TNI or Guarantor, a
Material Breach (as defined in the Feedstock Agreement)
under the Feedstock Agreement, and the Material Breach shall
continue beyond the time period set forth in the Feedstock
Agreement during which TNI or Guarantor, as the case may be,
may cure such Material Breach.
C. this Lease, the Lessor's Land or any part thereof shall be
taken upon execution or by other process of law, other than
the right of condemnation, directed against Lessor or shall
be taken upon or subject to any attachment at the instance
of any creditor of, or claimant against, Lessor, and the
attachment shall not be discharged or disposed of within
sixty (60) days after the levy thereof or the obligations of
Lessor shall not be fully assumed by such creditor or
claimant; or
D. Lessor shall be involved in financial difficulties as
evidenced below and shall not cure the same after one
hundred twenty (120) days' notice from Lessee:
(1) by its admitting in writing its inability to pay its
debts generally as they become due;
(2) by its filing a petition in bankruptcy or for
reorganization or for the adoption of an arrangement
under the Bankruptcy Code (as now existing or in the
future amended) or an answer or other pleading
admitting the material allegations of such a petition
or seeking, consenting to or acquiescing in the relief
provided under such Code;
(3) by its making an assignment of all or a substantial
part of its property for the benefit of its creditors;
(4) by its seeking or consenting to or acquiescing in the
appointment of a receiver or trustee for all or a
substantial part of its property; or
(5) by its being adjudicated a bankrupt or insolvent; or
(6) by the entry of a court order without the consent of
Lessee, which order shall not be vacated, set aside or
stayed within one hundred twenty (120) days from the
date of entry (i) appointing a receiver or trustee for
all or a substantial part of its property or (ii)
approving a petition filed against it for the effecting
of an arrangement in bankruptcy or for a reorganization
pursuant to said Bankruptcy Code or for any other
judicial modification or alteration of the rights of
creditors.
Section 11.4. Remedies of Lessee. If a Lessor's Event of
Default shall occur, Lessee shall have the right, at its election, at
any time while such Event of Default shall thereafter continue:
A. to give Lessor written notice of its intention to terminate
this Lease on the date specified in the notice (but not less
than thirty (30) days from the date of such notice), and,
unless such Event of Default be cured on or before the
proposed termination date, all of Lessee's obligations under
this Lease shall cease and the Lease shall terminate as of
the date of such notice;
B. subject to the limitations set forth in Section 11.6 below,
take whatever action at law or in equity as may appear
necessary or desirable to collect from Lessor damages that
Lessee has suffered from Lessor's Event of Default; or
C. to specifically enforce any obligation, covenant or
agreement of Lessor, by an action for specific performance
or by injunctive relief.
Section 11.5. Cumulative Remedies; Waiver Not Implied. The
specific remedies provided for in this Lease are cumulative and are
not exclusive of any other remedy. The failure of either Party to
insist in any one or more cases upon strict performance shall not be
construed as a waiver or relinquishment for the future. No acceptance
of rent with knowledge of any default shall be deemed a waiver of such
default. No acceptance by Lessee of feedstock under the Feedstock
Agreement with knowledge of Lessor's default shall be deemed a waiver
of the default.
Section 11.6. Waiver of Certain Damages. IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY UNDER ANY PROVISION OF THIS
LEASE (INCLUDING, WITHOUT LIMITATION, ANY INDEMNITY PROVISION HEREOF)
FOR PUNITIVE OR EXEMPLARY DAMAGES IN TORT OR CONTRACT. FURTHERMORE,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER ANY PROVISION
OF THIS LEASE FOR CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES. THE
PRECEDING SENTENCES SHALL NOT BE CONSTRUED, HOWEVER, AS LIMITING THE
OBLIGATION OF EITHER PARTY HEREUNDER TO INDEMNIFY THE OTHER PARTY
AGAINST CLAIMS ASSERTED BY THIRD PARTIES, INCLUDING, BUT NOT LIMITED
TO, THIRD PARTY CLAIMS FOR PUNITIVE, EXEMPLARY, CONSEQUENTIAL,
INCIDENTAL, OR INDIRECT DAMAGES.
Section 11.7. Injunctive Relief. The Parties acknowledge that
irreparable damage may occur in the event that certain provisions of
this Lease are not performed in accordance with their specific terms
or are otherwise breached and such performance does not occur or such
breach is not cured within the period set forth in this Lease. Each of
the Parties therefore agrees that in any such situation, the
non-defaulting Party shall be entitled to an injunction or injunctions
to prevent non-performance or breach of such provisions of this Lease
and to enforce specifically the terms and provisions hereof, without
the necessity of posting a bond or other security as may be required
by law, this being in addition to any other remedy to which such Party
is otherwise entitled under this Lease.
ARTICLE 12
GUARANTY
Section 12.1. Guaranty. Mississippi Chemical Corporation, a
Mississippi corporation with its principal office in Yazoo City,
Mississippi (the "Guarantor"), hereby intervenes into this Lease and
unconditionally guarantees the full and faithful performance by Lessor
of all of the terms, provisions, representations, warranties and
obligations of Lessor pursuant to this Lease, including, without
limitation, the indemnification and remedial provisions of this Lease.
The Guarantor further agrees that Lessee may, without notice to or
further assent of the Guarantor, and without in any way releasing or
impairing the obligations of the Guarantor hereunder: (i) waive
compliance with, or any default under, this Lease; (ii) modify or
amend any provisions of this Lease with the written consent of Lessor
only; (iii) grant extensions or renewals of any of the obligations of
Lessor; and (iv) in all respects deal with Lessor as if this guaranty
were not in effect. The obligations of the Guarantor under this
guaranty shall remain in force notwithstanding any event that would,
in the absence of this clause, result in the release or discharge by
operation of law of the Guarantor from the performance of its
obligations hereunder. The liability of the Guarantor under this
guaranty to Lessee shall be a guaranty of performance and of payment,
not merely a guaranty of collection, and the liability of the
Guarantor under this guaranty shall not be contingent upon the
exercise by Lessee of any right it may have in respect of the Lessor.
This guaranty obligation is not intended to and shall not release or
extinguish any obligations of Lessor to Lessee. The provisions of
this section are not intended to create and shall not create or impose
any obligations on the Guarantor in favor of any third person, the
provisions of this section being only for the benefit of Lessee, its
permitted successors and assigns.
Section 12.2. Guarantor's Representations and Warranties.
Guarantor represents and warrants to Lessee that on and as of the date
hereof:
A. it has all requisite power and authority to carry on the
business in which it is engaged and to perform its
respective obligations under this Lease;
B. the execution and delivery of this guaranty have been duly
authorized and approved by all requisite corporate action;
C. it has all requisite power and authority to enter into this
guaranty and perform its obligations hereunder;
D. the execution and delivery of this guaranty does not, and
consummation of the transactions contemplated herein will
not, violate any of the material provisions of its
organizational documents, any material agreement pursuant to
which Guarantor or its properties are bound or, to its
knowledge, any material laws applicable to Guarantor; and
E. this guaranty is valid, binding, and enforceable against
Guarantor in accordance with its terms, subject to
bankruptcy, moratorium, insolvency, and other laws generally
affecting creditors' rights and general principles of equity
(whether applied in a proceeding in a court of law or
equity).
ARTICLE 13
DISPUTE RESOLUTION
Section 13.1. Procedures. Any dispute, controversy or claim
arising out of or relating to this Lease, or the breach or performance
hereof, including, but not limited to, any disputes concerning the
interpretation of the terms and provisions hereof, shall be resolved
through the use of the procedures described in this Article 13.
Section 13.2. Good-Faith Negotiations. The Parties will
initially attempt in good faith to resolve any disputes, controversy
or claim arising out of or relating to this Lease. Should the
Parties' representatives directly involved in any dispute, controversy
or claim be unable to resolve same within a reasonable period of time,
such dispute, controversy or claim shall be submitted to the
respective senior officers of the Parties with such explanation or
documentation as the Parties deem appropriate to aid such senior
officers in their consideration of the issues presented. The date the
matter is first submitted to the senior officers of the Parties shall
be referred to as the "Submission Date." The senior officers shall
attempt in good faith, through the process of discussion and
negotiation, to resolve any dispute, controversy, or claim presented
to them within forty-five (45) days after the Submission Date.
Section 13.3. Mediation. If the senior officers of the Parties
cannot resolve the dispute, controversy, or claim submitted to them
within forty-five (45) days after the Submission Date, the Parties
shall attempt in good faith to settle the matter by submitting the
dispute, controversy or claim to mediation under the Mediation Rules
of the American Arbitration Association within sixty (60) days after
the Submission Date, using any mediator upon which they mutually
agree. If the Parties are unable to mutually agree upon a mediator
within seventy-five (75) days after the Submission Date, the mediator
shall be selected by the American Arbitration Association. The cost
of the mediator will be split equally between the parties unless they
agree otherwise in writing.
Section 13.4. Arbitration. If the matter has not been resolved
pursuant to the aforesaid mediation procedure within thirty (30) days
of the initiation of such procedure, either Party may request that the
matter be submitted to a board of three (3) independent arbitrators.
Either Lessor or Lessee may institute such arbitration by giving
written notice to the other at any time after the thirtieth (30th) day
following institution of the mediation procedure and designating one
(1) independent arbitrator. Within ten (10) days thereafter, the
other Party shall designate a second independent arbitrator, and such
two (2) arbitrators shall thereafter select the third independent
arbitrator. If the responding Party shall fail to appoint an
arbitrator within the said ten (10) day period provided above, the
American Arbitration Association shall be called upon by the other
Party to appoint such arbitrator, and such two (2) shall thereupon
select a third arbitrator, and the three (3) thus chosen shall
constitute the board of arbitration. All arbitrators shall be
qualified by education or experience within the chemical industry to
decide the issues presented for arbitration. No arbitrator shall be a
current or former director, officer, or employee of either Party or
its Affiliates; an attorney (or member of a law firm) who has rendered
legal services to either Party or its Affiliates within the preceding
three (3) years; or an owner of a material amount of the common stock
of either Party, or its Affiliates. A hearing shall be held by the
three (3) arbitrators at a location mutually agreeable to the parties
or if the Parties are unable to agree on a site, the arbitrators shall
select the site.
Section 13.5. Decision and Awards of Arbitrators. A decision of
the matter submitted to the arbitrators shall be rendered promptly and
in accordance with the rules of the American Arbitration Association,
except to the extent such rules are modified by this Article 13 or any
other express written agreement of the Parties. In all arbitration
proceedings, with respect to each particular claim in dispute, the
arbitrators shall be required to agree upon and approve either one of
the positions advocated by Lessee or one of the positions advocated by
Lessor, whichever best reflects and implements the purposes and intent
of this Lease. Any decision rendered by the arbitrators which does
not reflect either a position advocated by Lessee or a position
advocated by Lessor shall be beyond the scope of authority granted by
the arbitrators and consequently may be overturned by either Party.
Each Party hereby irrevocably waives, to the fullest extent permitted
by law, any objection it may have to the arbitrability of any such
disputes, controversies or claims. The decision of a majority of the
arbitrators shall be in writing and shall be final and binding upon
all parties hereto as to the issues submitted. Judgment upon the
award rendered may be entered in any court having jurisdiction
thereof. The cost of arbitration shall be borne by the Party whose
contention was not upheld by the arbitration proceedings, unless
otherwise provided in the arbitration award.
Section 13.6. Exclusive Methods. Each Party agrees to be bound
by any determination made in accordance with the dispute resolution
provisions set forth in the Feedstock Agreement with respect to any
matter resolved pursuant to the dispute resolution provisions of the
Feedstock Agreement. Any Party may, however, raise matters relative
to the Feedstock Agreement in any pending dispute resolution
proceeding between Lessor and Lessee with respect to this Lease so
long as such matters have not previously been resolved in a dispute
resolution proceeding under the Feedstock Agreement. Likewise, any
Party may raise matters relative to this Lease in any pending dispute
resolution proceeding between Lessor and Lessee with respect to the
Feedstock Agreement, so long as such matters have not previously been
resolved in a dispute resolution proceeding under this Lease. In the
event the dispute resolution provisions of either this Lease or the
Feedstock Agreement have been invoked, then either Party shall have
the right to require that all then-existing disputes under either this
Lease or the Feedstock Agreement be resolved at the same time through
the same dispute resolution procedure.
Section 13.7. Rules. All deadlines specified herein may be
extended by mutual written agreement of the Parties. The procedures
specified herein shall be the sole and exclusive procedures for the
resolution of disputes between the Parties arising out of or relating
to this Lease; provided, however, that a Party may seek a preliminary
injunction or other preliminary judicial relief from a court of
competent jurisdiction pending mediation and/or arbitration of a
dispute, as well as permanent injunctive relief from a court of
competent jurisdiction in accordance with the terms of this Lease.
Despite any injunctive relief, the Parties will continue to
participate in good faith in the procedures specified herein. All
applicable statutes of limitation, including, without limitation,
contractual limitation periods provided for in this Lease, shall be
tolled while the procedures specified in this section are pending.
The Parties will take all actions, if any, necessary to effectuate the
tolling of any applicable statutes of limitation.
ARTICLE 14
GENERAL
Section 14.1. Notices. All notices and other communications
hereunder shall be validly given or made if in writing, when delivered
personally (by courier service or otherwise), when delivered by
facsimile, or when actually received when mailed by first-class
certified United States mail, postage prepaid and return receipt
requested, and all legal process with regard hereto shall be validly
served when served in accordance with applicable law, in each case to
the address of the Party to receive such notice or other communication
set forth below, or at such other address as either Party hereto may
from time to time advise in writing to the other Party pursuant to
this section:
If to Lessor: Triad Nitrogen, Inc. Post Office 1851
Owen Cooper Administration Building Highway 49 East
Yazoo City, MS 39194
Attention: Rosalyn B. Glascoe, Corporate Secretary
Telephone: (601) 746-6302 Facsimile: (601) 751-2231
with copy to: Mississippi Chemical Corporation Post Office Box
388
Owen Cooper Administration Building Highway 49 East
Yazoo City, MS 39194
Attention: Rosalyn B. Glascoe, Corporate Secretary
If to Lessee: Melamine Chemicals, Inc. River Road, Hwy. 18
Post Office 748
Donaldsonville, LA 70346-0748 Attention: President and
Chief Operating Officer Telephone: (504) 473-3121
Facsimile: (504) 473-0550
Lessee or Lessor may change the address and name of addressee to which
subsequent notices are to be sent by notice to the other given as
aforesaid.
Section 14.2. Force Majeure. In the event either Lessor or
Lessee shall be delayed in performing their respective obligations
under this Lease as a result of strikes or other labor trouble, fire,
flood, riot, war, embargo, accident, acts of God, requisitions or
direction by the Government, priorities or compliance with
governmental action or regulation, shortages of essential materials or
equipment, or any other contingency beyond reasonable control of the
obligee, whether similar to or dissimilar from the above enumerated
causes, the obligee's obligation to perform its undertakings shall be
excused during the period such force majeure shall continue; provided,
however, that force majeure shall not excuse or delay a payment
obligation.
Section 14.3. Governing Law. This Lease shall be construed and
enforced in accordance with the laws of the State of Louisiana.
Wherever in this Lease it is provided that either Party shall or will
make any payment or perform or refrain from performing any act or
obligation, each such provision shall, even though not so expressed,
be construed as an express covenant to make such payment or to
perform, or not to perform, as the case may be, such act or
obligation.
Section 14.4. Unenforceable or Illegal Provisions. If any
provision of this Lease or the application thereof to any person or
circumstances shall, to any extent, be determined to be invalid or
unenforceable, the remainder of this Lease and the application of its
provisions to persons or circumstances other than those as to which it
has been determined to be invalid or unenforceable, shall not be
affected thereby, and such provisions of this Lease shall be valid and
shall be enforced to the fullest extent permitted by law.
Section 14.5. Captions; Headings. The captions and headings in
this Lease are for convenience and reference only and in no way
define, limit or describe the scope or intent of this Lease or any
part thereof, or in anywise affect this Lease and shall not be
considered in any construction thereof.
Section 14.6. Successors and Assigns. The provisions of this
Lease shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors, assigns and sublessees.
Section 14.7. Several Counterparts. This Lease shall be
executed in several counterparts, each of which counterpart shall be
considered as an original without the presentation of the others.
Section 14.8. Short Form Lease. Lessor and Lessee have executed
a short form or memorandum of this Lease for the purposes of recording
public notice of this Lease in the official records of the Clerk and
Recorder of the Parish of Ascension, State of Louisiana.
Section 14.9. Relationship of Parties. The relationship of the
Parties shall be one of lessor and lessee only, and shall not be
considered a partnership, joint venture, license arrangement or
unincorporated association.
Triad Nitrogen, Inc., has caused this Lease to be signed in
the presence of the undersigned witnesses by its duly authorized
officials and officers on the 9th day of October, 1997.
Witnesses as to Triad TRIAD NITROGEN, INC.
By: /s/ Charles O. Dunn
/s/ Witness --------------------
- ------------ Charles O. Dunn, President
/s/ Witness
- ------------
ATTEST:
/s/ Assistant Corporate Secretary
----------------------------------
Assistant Corporate Secretary
Mississippi Chemical Corporation has caused this Lease to be
signed in the presence of the undersigned witnesses by its duly
authorized officials and officers on the 9th day of October, 1997.
Witnesses: MISSISSIPPI CHEMICAL CORPORATION
/s/ Witness By: /s/ Charles O. Dunn
- ------------ -------------------
Charles O. Dunn, President
/s/ Witness
- ------------
ATTEST:
/s/ Assistant Corporate Secretary
----------------------------------
Assistant Corporate Secretary
Melamine Chemicals, Inc., has caused this Lease to be signed in
the presence of the undersigned witnesses, by its duly authorized
officials and officers on the 9th day of October, 1997.
Witnesses as to Lessee: MELAMINE CHEMICALS, INC.
/s/ Witness By: /s/ Wayne D. DeLeo
- ------------ -------------------
Wayne D. DeLeo, Chief Financial Officer
/s/ Witness
- ------------
ACKNOWLEDGMENT
STATE OF MISSISSIPPI
COUNTY OF YAZOO
Before me, the undersigned authority, personally came and appeared
Charles O. Dunn, the President of Triad Nitrogen, Inc., to me known
to be the person mentioned in and who signed the foregoing instrument,
and who, being duly sworn, did acknowledge and declare in the presence
of the two witnesses whose names are subscribed to said instrument,
that he signed said instrument for and on behalf of said corporation,
being duly authorized so to act, for the purposes mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal of office
on this the 9th day of October, 1997, at Yazoo City, Mississippi.
WITNESSES: TRIAD NITROGEN, INC.
/s/ Witness By: /s/ Charles O. Dunn
- ------------ -------------------
Charles O. Dunn, President
/s/ Witness
- ------------
/s/ Lynn Montgomery
--------------------
Notary Public
My Commission Expires: January 15, 1999
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF
Before me, the undersigned authority, personally came and
appeared Wayne D. DeLeo, the Chief Financial Officer of Melamine
Chemicals, Inc., to me known to be the person mentioned in and who
signed the foregoing instrument, and who, being duly sworn, did
acknowledge and declare in the presence of the two witnesses whose
names are subscribed to said instrument, that he signed said
instrument for and on behalf of said corporation, being duly
authorized so to act, for the purposes mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal of
office on this the 9th day of October, 1997, at Donaldsonville, La.
WITNESSES: MELAMINE CHEMICALS, INC.
/s/ Witness By: /s/ Wayne D. DeLeo
- ------------ -------------------
Wayne D. DeLeo, Chief Financial Officer
/s/ Witness
- ------------
/s/ Monica B. Crews
--------------------
Notary Public
My Commission Expires: At Death
ACKNOWLEDGMENT
STATE OF MISSISSIPPI
COUNTY OF YAZOO
Before me, the undersigned authority, personally came and appeared
Charles O. Dunn, the President and Chief Executive Officer of
Mississippi Chemical Corporation., to me known to be the person
mentioned in and who signed the foregoing instrument, and who, being
duly sworn, did acknowledge and declare in the presence of the two
witnesses whose names are subscribed to said instrument, that he
signed said instrument for and on behalf of said corporation, being
duly authorized so to act, for the purposes mentioned therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and seal of office
on this the 9th day of October, 1997, at Yazoo City, Mississippi.
WITNESSES: MISSISSIPPI CHEMICAL CORPORATION
/s/ Witness By: /s/ Charles O. Dunn
- ------------ --------------------
Charles O. Dunn, President and Chief Executive
Officer
/s/ Witness
- ------------
/s/ Lynn Montgomery
--------------------
Notary Public
My Commission Expires: January 15, 1999
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