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Asset Purchase and Methanol Exclusivity Agreement

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Title:

Asset Purchase and Methanol Exclusivity Agreement

Entities:

E.I. Du Pont De Nemours & Co.; Methanex Corp.; Terra Industries Inc.; BMC Holdings Inc.

Date:

2004

Size:

132KB total

Price:

$62

ID:

#211732

► Legal ► Exclusivity ► Misc. Exclusivity Agreements
► Miscellany ► Fortune 100
► Commodities ► Chemical Manufacturing
► Commodities ► Plastic & Rubber

Start of Preview

ASSET PURCHASE AND METHANOL EXCLUSIVITY AGREEMENT

AMONG

TERRA INDUSTRIES INC.

AND

BMC HOLDINGS INC.

AND

METHANEX METHANOL COMPANY

Dated as of December 15, 2003

TABLE OF CONTENTS


1.	INTERPRETATION			1

	1.1.	Definitions		1
	1.2.	Interpretation		2
	1.3.	Jurisdiction, Consent to Service of Process		2
	1.4.	Schedules		2

2.	PURCHASE, SALE AND PURCHASE PRICE			3

	2.1.	Purchase and Sale		3
	2.2.	Purchase Price		3
	2.3.	Method of Payment		3
	2.4.	Sales Taxes		3

3.	TRANSFER OF CONTRACTS			4

	3.1.	Delivery of Contracts and Customer List		4
	3.2.	Notice Requirements and Third Party Consents		4
	3.3.	Assumption of Contracts		4
	3.4.	Non-Assignable Rights		4

4.	TIME OF CLOSING			5

5.	RIGHTS TO METHANOL PRODUCTION/BEAUMONT FACILITY			5

	5.1.	Exclusive Rights		5
	5.2.	Facility Operation/Personnel		5
		5.2.1.	Facility Operation	5
		5.2.2.	Quarterly Review of Operations	5
		5.2.3.	Responsible Care/Codes of Practice	6
		5.2.4.	Personnel	6
		5.2.5.	Beaumont Facility Supply Contracts	6
	5.3.	Facility Suspension		6
		5.3.1.	Suspension for Operation Matters	6
		5.3.2.	Economic Hardship/Temporary Suspension	7
		5.3.3.	Methanex Suspension of Supply Notice	9
		5.3.4.	Methanex Right to Restart Supply	9
		5.3.5.	Terra Production Right	9
	5.4.	Ownership of Assets/Depreciation		11
	5.5.	Insurance		11
		5.5.1.	Obligation to Insure	11
		5.5.2.	Damage to Beaumont Facility	11

6.	FEES			12

	6.1.	Lump Sum Exclusivity Fee		12
	6.2.	Methanol Exclusivity Fees		12
	6.3.	Combined Production Fees/Methanol Production Fees		13
	6.4.	Calculation of Formulas		15

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7.	PAYMENT TERMS/AUDIT RIGHTS		15

	7.1.	Payment of Methanol Exclusivity Fees	15
	7.2.	Terra Invoice	15
	7.3.	Payment Terms	16
	7.4.	Late Payments	16
	7.5.	Audit Rights	16

8.	CONTRACT COVENANTS		17

	8.1.	Terra Contracts	17
	8.2.	Assumed Customers	17
	8.3.	Injunctive Relief	17

9.	TERM AND TERMINATION		17

	9.1.	Term	17
	9.2.	Termination	17
	9.3.	Effect of Termination	18

10.	CONFIDENTIALITY		18

	10.1.	Information	18
	10.2.	Exception	18
	10.3.	Disclosure Required by Law	18
	10.4.	Return of Information	19
	10.5.	Restriction on Disclosure of this Agreement	19
	10.6.	Public Announcements	19
	10.7.	Remedies	19

11.	REPRESENTATIONS AND WARRANTIES OF TERRA		19

	11.1.	Corporate Status	19
	11.2.	Authority to Sell	19
	11.3.	No Conflicts	20
	11.4.	No Governmental Consents Required	20
	11.5.	Ownership and Good Title	20
	11.6.	Litigation	20
	11.7.	Contracts	20
	11.8.	Product/Inventory	20
	11.9.	Beaumont Facility	20

12.	REPRESENTATIONS AND WARRANTIES OF METHANEX		20

	12.1.	Status	20
	12.2.	Authority to Purchase	21
	12.3.	No Conflicts	21

13.	COVENANTS OF TERRA		21

14.	CLOSING CONDITIONS		22

	14.1.	Fulfilment of Conditions in Favour of Methanex	22
	14.2.	Failure to Fulfil Conditions	22
	14.3.	Fulfilment of Conditions in Favour of Terra	22

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	14.4.	Failure to Fulfil Conditions	23

15.	DELIVERIES		23

	15.1.	Closing Deliveries by Terra	23
	15.2.	Closing Deliveries by Methanex	23
	15.3.	Closing Procedures	24

16.	INDEMNIFICATION/LIMITATION OF LIABILITY		24

	16.1.	Indemnification of Terra	24
	16.2.	Indemnification of Methanex	24
	16.3.	Indemnification Procedures	25
	16.4.	Defence of Third Party Claim	25
	16.5.	Payment	26
	16.6.	Limitation of Liability	26

17.	FORCE MAJEURE		26

	17.1.	Force Majeure Event	26

18.	DISPUTE RESOLUTION		27

	18.1.	Amicable Settlement	27
	18.2.	Inadmissibility	27
	18.3.	Arbitration	27
	18.4.	Interim Relief	28
	18.5.	Continuing Obligations	29

19.	MISCELLANEOUS		29

	19.1.	Relationship of Parties	29
	19.2.	Notices	29
	19.3.	Counterparts	30
	19.4.	Benefit and Burden	30
	19.5.	Amendments and Waiver	30
	19.6.	Assignments	30
	19.7.	Severability	30
	19.8.	Applicable Law	30
	19.9.	Expenses	30
	19.10.	Entire Agreement	30

SCHEDULE A			A-1

SCHEDULE B			B-1

SCHEDULE C			C-1

SCHEDULE D			D-1

SCHEDULE E			E-1

SCHEDULE F			F-1

SCHEDULE G			G-1

SCHEDULE H			H-1

SCHEDULE I			I-1

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ASSET PURCHASE AND METHANOL EXCLUSIVITY AGREEMENT

THIS ASSET PURCHASE AND METHANOL EXCLUSIVITY AGREEMENT (the Agreement) is made the 15^th day of December, 2003 between TERRA INDUSTRIES INC. (Terra Industries), a Maryland corporation and BMC HOLDINGS INC. (BMC), a Delaware corporation, each having its head office at 600 Fourth Street, Sioux City, Iowa (Terra Industries and BMC are together Terra) and METHANEX METHANOL COMPANY (Methanex), a Texas partnership having an office at 15301 Dallas Parkway, Suite 1150, Addison, Texas 75001

BACKGROUND:

A. Terra Industries and BMC are Affiliated (defined below) corporations;

B. Terra Industries and BMC are producers of certain chemical products for use in the manufacture of fertilizer and otherwise, including, ammonia, urea, urea ammonium nitrate and methanol;

C. BMC produces methanol at its Beaumont Facility (defined in Schedule A). BMC is the 100% owner and operator of the Beaumont Facility and BMC owns 100% of the methanol produced at that facility. Methanol produced at the Beaumont Facility is sold by BMC to its customers;

D. Effective as of December 31, 2003, BMC wishes to sell, assign and transfer to Methanex, and Methanex wishes to purchase from BMC, all of BMCs right, title and interest in and to the methanol sales and related contracts and the customer list in respect of methanol sales by BMC from the Beaumont Facility and the methanol inventory located at the Beaumont Facility and certain other storage locations;

E. Ancillary to the rights set out in Recital D above, Methanex wishes to acquire the exclusive right to purchase 100% of the methanol produced at the Beaumont Facility during the period December 31, 2003 through December 31, 2008 and BMC wishes to grant Methanex such exclusive right to 100% of the methanol produced at the Beaumont Facility during such period, in order for Methanex to realize certain supply efficiencies and cost savings; and

F. On September 3, 2003, Terra Industries and Methanex Corporation, an Affiliate (defined in Schedule A) of Methanex, entered into a confidentiality agreement (the Confidentiality Agreement), in respect of certain confidential information provided by Terra Industries to Methanex Corporation in the course of Methanex Corporations exploring a potential arrangement with Terra.

AGREEMENT:

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, mutual covenants and agreements contained in this Agreement, and other good and valuable consideration (the receipt and sufficiency of which is acknowledged by the parties), the parties covenant and agree as follows:

1.	INTERPRETATION

1.1.	Definitions: In this Agreement terms with an initial capital letter shall have the meaning given to such terms as set forth in Schedule A.

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1.2.	Interpretation: In this Agreement:

(a)

all terms defined in the singular shall have the same meanings in the plural and vice versa;

(b)

all references to currency in this Agreement are references to the lawful currency of the United States;

(c)

all references to Sections and Subsections shall be references to the Sections and Subsections of this Agreement;

(d)

the captions and headings contained in this Agreement are for convenience of reference only and shall not be considered or given any effect in construing the provisions hereof if any question of intent should arise;

(e)

reference to any Law or Laws means such Law or Laws as amended, modified, codified, re-enacted, supplemented or superseded in whole or in part, and in effect from time to time; and

(f)

no provision of this Agreement shall be interpreted or construed against either Party solely because that Party or its legal representative drafted such provision.

1.3. Jurisdiction, Consent to Service of Process: Subject to the agreement of the Parties to resolve all disputes arising out of or relating to this Agreement in accordance with the procedures set forth in Section 18 of this Agreement, any action or Proceedings which is permitted to be brought by a Party against a Party to this Agreement arising out of or relating to this Agreement, whether in tort or contract or at law or in equity, shall be brought in a federal or state court in the State of New York, Manhattan Borough and each Party: (i) irrevocably submits to the personal and exclusive jurisdiction of such courts; (ii) waives any objection to laying venue in any such action or Proceedings in such courts; (iii) waives any objection that such courts are an inconvenient forum or do not have jurisdiction over it; and (iv) agrees that service of process upon such Party may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address specified in Subsection 19.2. The foregoing consents to jurisdiction and service of process shall not constitute general consents to service of process in the State of New York for any purpose except as provided herein and shall not be deemed to confer rights on any Person other than the Parties to this Agreement. The provisions of this Subsection 1.3 shall not affect a Partys right to bring any Proceedings related to the enforcement of any arbitration award in any other jurisdiction.

1.4. Schedules: The following schedules are attached to this Agreement and are incorporated into and form an integral part of this Agreement:

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