Document barELyyxp1Bj5rDXDdp8vxGdk

JONES DAY 2727 NORTH HARWOOD STREET DALLAS, TEXAS 75201 -1 51 5 MAILING ADDRESS: P.O. BOX 660623 DALLAS, TEXAS 75266-0623 TELEPHONE: 214-220-3939 FACSIMILE: 214-969-5100 214-969-5134 kellystewart@jonesday.com JP131252:skh 049107-130053 October 29, 2004 VIA FEDERAL EXPRESS Mark R. Cuker, Esq. Williams, Cuker, Berezofsky One Penn Center at Suburban Station 1617 J.F.K. Boulevard, Suite 800 Philadelphia, Pennsylvania 19103-1819 Dear Mark: Re: Holmes, et al. v. Airco, et al., Superior Court of New Jersey, Law Division L, Cause No. 001307-04, Burlington County Enclosed as a supplemental production are documents OXY/HOLMES 000636 to OXY/HOLMES 001192. Sincerely, Enclosures cc w/o end.: Kelly Crawford David Field, Esq. W. Kelly Stewart DLl-5881657vl ATLANTA BEIJING BRUSSELS CHICAGO CLEVELAND * COLUMBUS DALLAS FRANKFURT HONG KONG HOUSTON IRVINE LONDON LOS ANGELES MADRID MENLO PARK MILAN MUNICH NEW DELHI NEW YORK PARIS PITTSBURGH SAN DIEGO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TAIPEI TOKYO WASHINGTON 8* Occidental Chemical Corporation Executive Offices TO: John Huber FROM: W. H. Childs SUBJECT: Shell VCM Toll Fee - July Copy to: L. 6. King W. J. Wetzel R. F. Gervals S. P. Dominick H. H. Raster J. F. Rlordan T. A. Sugalskl P. W. Fiedler R. C. Corwin Shell has nominated a new July toll Increase. Their new July nomination million lbs.). \M-WC* W. H. Childs WHC/sr MEMO OC-1007.A (ED. 7-82) OXY/HOLMES 000636 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS H* July 1, 1982 Shell Chemical Company A Division of ShsB Oil Company One Shell Plaza P.O.Box 2463 Houston. Texas 77001 RECPi'/r-n JUL 2 1982 DAVID W. CALHOUN Mr. David Calhoun Director of Purchasing Occidental Chemical Corporation P. 0. Box 4289 Houston, TX 77210 Dear Dave: This confirms our telephone conversation relative to Shell's nominated VCM toll fee as shown below: June 1982 12.00 CPP July 1982 Base 12:00 CPP plus one-half of average PVC increase divided by two to 17 MM/LBS 11.50 CPP plus average PVC increase divided by two for all over 17 MM LBS We believe this nomination represents the level of support required by you to effectively compete in the present marketplace and affords you a special position with Shell. Very truly yours. x R. F. Weiglfe Corporate Account Manager OXY/HOLMES 000637 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS June 19, 1981 V*- Shell Chemical Company A Division of She* Oi Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 Mr. David Calhoun Hooker Chemical Company 1980 South Post Oak P.0. Box 4289 Houston, TX 77210 Dear Dave: On June 9, 1981, we sent you a letter advising a July 1, 1981, Confidential Conversion Fee for VCM of 20.2 cpp. At the same time we would establish a TVA of 0.3 cpp, bringing your effective fee to 19.9 cpp. Due to the com petitive marketplace, we will increase the announced TVA of 0.3 cpp to 2.9 cpp, effective July 1, 1981, bringing your effective fee back to 17.3 cpp for the month of July. On August 1, 1981, Shell will change the 2.9 cpp TVA to 1.2 cpp, bringing you effective fee on August 1, 1981, to 19 cpp. We look forward to seeing you on the 23rd of June to get the long term discussions back on track. In the meantime, if you have any questions, please give me a call. Very truly yours. G. W. Ash Corporate Account Manager cc: J. R. Hopper RECEIVED JUN 2 3 1S81 DAVID W. CALHOUN OXY/HOLMES 000638 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS June 9, 1981 Shell Chemical Company A Owon of She* Oi Company One She! Plaza P.O.Box 2463 Houston. Texas 77001 Mr. David Calhoun Hooker Chemical Company 1980 South Post Oak P.0. Box 4289 Houston, TX 77210 Dear Dave: Confirming your conversation of June 2, 1981, with Dave Litton, please be advsied that Shell, effective July 1, 1981, will remove the existing Temporary Voluntary Allowance and establish a new confidential conversion fee for VCM of 20.2 cpp. Tank Car delivery, FOB Shell's shipping location. At the same time we will establish a new TVA of 0.3 cpp for Hooker, bringing your effective fee to 19.9 cpp. As in the past, this TVA may be removed or changed at any time with notice. We are looking forward to seeing you on the 17th, at which time we can dis cuss this increase in more detail. In the meantime, if you have any questions, please give me a call. Very truly yours. G. W. Ash Corporate Account Manager cc: J. R. Hopper JUNl0 1981 DAVid " caLHoun <11 ft OXY/HOLMES 000639 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS January 28, 1980 Shell Chemical Company One Shell Plaza P.O.Box 2463 Houston. Texas 77001 Mr. Herbert H. Raster Director - Materials Management Hooker Chemical Corporation P. 0. Box 456 Burlington, New Jersey 08016 Dear Herb: RE: VINYL CHLORIDE FORCE MAJEURE We are pleased to advise you that even though we experienced a force majeure situation at Norco in December, we will not have to reduce our VCM obligation quantities to you in 1980. We have been able to adjust our supply plans so that the impact of the ethylene curtailment was not as severe as originally anticipated. The lost VCM production was small. If we shipped you VCM in December against January's entitlement, those shipments would count against our 1980 obligation and the quantity would be applied over the total obliga tion rather than solely against January's business. Herb, I have not been able to verify from the files Dud gave me that you received a letter outlining this Force Majeure situation. Since it will have no impact on our obligation we can discuss it further when I see you again in the near future. We thank you for your understanding in this matter. Yours very truly. George W. Ash Corporate Account Manager cc: David Calhoun Hooker Chemical Company 1980 South Post Oak Road P. 0. Box 4289 Houston, Texas 77210 OXY/HOLMES 000640 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS HOOKER CHEMICAL COMPANY P.O.BOX 4289 HOUSTON. TEXAS 77210 [713)840-7535 TWX 910-881-6327 TELEX 774-349 December 24. 1980 Mr. George Ash Shell Chemical Company One Shell Plaza P. 0. Box 2463 Houston, TX 77001 Dear George: This will confirm the telephone conversation Dave Litton and I had on December 23, 1980, regarding the enclosed amendment dated December 18, 1980 to our conversion contract of July 24, 1978. Firestone assigned its interest in thier agreement with Shell dated July 10, 1978, to Hooker Chemical Company at the time when our purchase of their plastics operation was consummated. Accordingly, we feel there is no need in obtaining consent from Firestone to terminate said agreement. Consequently, we have executed the proposed change in the amendment letter as you will note at the bottom of page 1. Please initial the proposed deletion and return an executed amendment letter to me. JGP/akf Attachment cc: William Merritt D. W. Calhoun J. T. Anderson 0096m James G. Parsons Manager - Raw Material Supply OXY/HOLMES 000641 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS December 18, 1980 Shell Chemical Company A Drvion 0< She! Oa Company One Shell Plaza P.O.Box 2463 Houston. Texas 77001 PRIVATE AND CONFIDENTIAL Hooker Chemicals and Plastics Corporation ATTN Mr. D. W. Calhoun Director Energy and Raw Material Supply 1980 South Post Oak Road Houston, Texas 77056 Gentlemen: In accordance with our discussions following your recent purchase of the former Firestone PVC facilities, this letter when executed by you in the manner indicated below, will constitute an amendment to. the confidential VCM Conversion Agreement between Shell Chemical Company and Hooker Chemicals and Plastics Corporation dated July 24, 1978 as follows: A. Article 2. The table entitled "Quantity Of VCM To Be Converted Million Pounds" is deleted in its entirety and replaced with the following: II Quantities To Be Converted - Million Pounds YEAR MINIMUM MAXIMUM 1979 1980 1981 1982 1983 1984 and Annually Thereafter 150 150 330 330 330 330 180 180 380 380 380 380 B. All other Terms and Conditions of Contract remain in full force and effect. This amendment incorporates the quantities of VCM formerly committed by Shell to Firestone but does not include additional other volumes presently under discussion but not yet finally agreed to. Effective on the date you execute this amendment, the VCM Contract between Firestone and Shell dated July 10, 1978, will be considered terminated by mutual consent. afxfciKestfiRex OXY/HOLMES 000642 Hooker Chemicals and Plastics Corporation 2 We sincerely appreciate the excellent business relationship between our two companies and look forward to serving your VCM requirements for many years to come. Very truly yours. G. W. Ash Corporate Account Manager ACCEPTED AND AGREED TO THIS DAY OF HOOKER CHEMICALS AND PLASTICS CORPORATION , 19 %Q OXY/HOLMES 000643 December 18, 1980 Shell Chemical Company A Dwion cri Sh#i Oil Company One Shell Plaza P.O. Box2463 Houston, Texas 77001 PRIVATE AND CONFIDENTIAL Hooker Chemicals and Plastics Corporation ATTN Mr. D. W. Calhoun Director Energy and Raw Material Supply 1980 South Post Oak Road Houston, Texas 77056 Gentlemen: In accordance with our discussions following your recent purchase of the former Firestone PVC facilities, this letter when executed by you in the manner indicated below, will constitute an amendment to the confidential VCM Conversion Agreement between Shell Chemical Company and Hooker Chemicals and Plastics Corporation dated July 24, 1978 as follows: A. Article 2. The table entitled "Quantity Of VCM To Be Converted Million Pounds" is deleted in its entirety and replaced with the following: " Quantities To Be Converted - Million Pounds YEAR MINIMUM MAXIMUM 1979 1980 1981 1982 1983 1984 and Annually Thereafter 150 150 330 330 330 330 180 180 380 380 380 380 B. All other Terms and Conditions of Contract remain in full force and effect. This amendment incorporates the quantities of VCM formerly committed by Shell to Firestone but does not include additional other volumes presently under discussion but not yet finally agreed to. Effective on the date you execute this amendment, the VCM Contract between Firestone and Shell dated July 10, 1978, will be considered terminated by mutual consent, aRdxwexwiiixabiaiiRxthexwJtitieiixcflflCUJrjreflefix fifxFiresiBRexx OXY/HOLMES 000644 Hooker Chemicals and Plastics Corporation 2 We sincerely appreciate the excellent business relationship between our two companies and look forward to serving your VCM requirements for many years to come. Very truly yours. G. W. Ash Corporate Account Manager ACCEPTED AND AGREED TO THIS V> DAY OF V) HOOKERCHEMICALS AND PLASTICS CORPORATION BY LE_ 19][Q OXY/HOLMES 000645 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS >r 17-421-79 This Agreement is made this 24th day of July 1978, by and between SHELL CHEMICAL COMPANY, a division of SHELL OIL COMPANY, a Delaware corporation with offices at One Shell Plaza, Houston, Texas 77002 (hereinafter referred to as "Shell") and HOOKER CHEMICALS & PLASTICS CORP., a subsidiary of Occidental Petroleum Corporation, a California River Road, Burlington, New Jersey 08016 ^ dfc/ corporation, with offices at /SA5^Thi-x^TcSVytrgV'pfy-rxg3rrTryjrit^TrYvVKnrViirt-ic "'1'' lsfcSflcR (hereinafter referred to as "Hooker"). WHEREAS, Shell and Hooker have entered into previous agreements dated January 24, 1973 and October 24, 1974 for the sale by Shell to Hooker of Vinyl Chloride Monomer (hereinafter referred to as "VCM") during the year 1974 and for the conversion by Shell of Hooker's chlorine to VCM in subsequent years for delivery to Hooker; and WHEREAS, Shell and Hooker desire to maintain a mutually bene ficial long-term agreement for the conversion' of Hooker chlorine into VCM by Shell. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereby agree as follows: WITNESSETH 1. TERM. A. This Agreement shall be binding upon the parties upon and after the execution hereof. It shall remain in full force and effect for a Primary Period of six (6) years, beginning on January 1, 1975, and shall continue thereafter unless and until terminated. Either I'i i /->---------- ,_-U_ / LS-`OXY/HOLMES 000646 2 party may terminate as of the last day of the Primary Period or at any time thereafter by giving notice of termination to the other party at least eighteen (18) months in advance; however, Hooker may terminate this agreement earlier under the sole circumstances described in Article l.B. below. B. If Hooker decides to build or acquire VCM manufactur ing capability, Hooker may terminate this agreement at the end of three (3) years or at the end of four and one-half (4-1/2) years providing that Hooker has given Shell written notice eighteen (18) months in advance of the proposed termination date. If Hooker has failed to notify Shell of its intent to terminate this agreement by July 1, 1980, the option to terminate at the end of three (3) years lapses and Hooker may then not terminate this agreement until the end of four and one-half (4-1/2) years. If Hooker subsequently fails to notify Shell of its intent to terminate by January 1, 1982, then the termination provisions and 12 of Article l.A./are the sole conditions, of termination. 2. QUANTITIES - CONVERSION. During the term of this Agreement, Hooker shall deliver liquid chlorine to Shell by pipeline at Shell's Norco, Louisiana plant, or by mutual consent, by 90 ton tank car to such Shell location(s) as Shell shall designate, pursuant to Article 6 hereof, to be held by Shell in storage for Hooker's account and to be converted subsequently into such amounts of VCM as Hooker- shall order, at a conver sion ratio of 0.64 pounds of chlorine to 1.0 pound of VCM. In no event shall Shell be obligated to deliver to Hooker in any calendar month a quantity of VCM exceeding 1/11 of the applicable calendar year maximum quantity shown below or, cumulatively, 1/6 of such calendar year maximum in any two (2) succeeding months. OXY/HOLMES 000647 3 QUANTITIES OF VCM TO BE CONVERTED - MILLION POUNDS YEAR MINIMUM./*^ MAXIMUM//b/ ^^ , 1979 aad each year thereafter 180 J Hooker shall notify Shell not less than nine (9) months prior \ 1980 to the start of aad any future year as to its^nominatioq of the. quantities of VCM desired during that calendar year within the range of CzL jJ Hooker's nomination for 1979 is 170,000,000 lbfeT the applicable minimum and maximum amounts specified above,/ Except as further limited by such applicable calendar year minimum and maximum quantities, Hooker will be required to receive not less than 95% of the nomination for each succeeding calendar year (Hooker's "obligated quantity"), and Shell will be required to deliver up to, but not in excess of (except at its option), 105% of the nomination for such calendar year (Shell's "obligated quantity"). If Shell has additional VCM capacity after allowing for the supply of its other current or planned obligations, as determined by Shell, then Shell shall offer Hooker on at least a quarterly basis, such excess quantity. If under these conditions Hooker accepts such offer, . or if for any other reason Hooker requests Shell to deliver more VCM in any calendar year than the applicable calendar year Shell obligation (105% of such year's nominated quantity or maximum quantity, whichever is applicable) and Shell so agrees, then the applicable calendar year minimum and maximum and the nominated quantity for such year, will be amended to include the added quantity or quantities. In the event Shell requests Hooker to have less chlorine converted into VCM in anv calendar vear than the aorlicable calendar OXY/HOLMES 000648 4 year minimum, and Hooker so agrees, then the applicable calendar year minimum and maximum shall be of no effect for such year, and that amount requested by Shell and agreed to by Hooker shall be treated as the nomination for such calendar year. 3. PERFORMANCE. If Hooker fails, for reasons other than those provided for in Article 10 hereof, to order and accept its obligated quantity for any calendar year, the provisions outlined in Paragraphs A, C and D shall apply and the amount of the obligated quantity shall reflect any adjustments under Paragraph B. If, however. Hooker gives notice of termination of this agreement at the end of the primary period or anniversary thereof or prior to the end of the primary period as provided for in Article I.B., then option 1 of Paragraph A shall not be available to Hooker in the last year (twelve-month period) of the agreement. A. Subject to Paragraphs B. and C. of this Article 3; at Hooker's option exercised within 15 days after notice from Shell of any " v' underlift for the prior calendar year, either (1) the minimum and maximum quantities specified in Article 2 for all years of this Agreement subse quent to the year of such underperformance by Hooker shall be reduced by the difference between its obligated quantity for the year of under performance and the quantity' actually ordered and accepted by Hooker during such year or, (2) Hooker shall pay to Shell as liquidated damages for each pound of VCM below such obligated quantity not ordered and accepted during the year an amount to be calculated as follows: OXY/HOLMES 000649 7-24-78 5 Payment = CF - 0.4SE - 1-0 cent per pound CF = average conversion fee hereunder expressed in cents per pound for the year in question. E = Shell's valuation of ethylene in VCM expressed in cents per pound as determined by Shell and consistent with the average conversion fee hereunder. If option (2) is applicable, payment shall be made by Hooker within thirty (30) days after the date of Shell's invoice. B. If no later than ninety (90) days prior to January 1 of any calendar year of the Term hereof Hooker requests Shell to attempt to sell elsewhere a specific portion of the obligated quantity of VCM that Hooker is required to order and accept hereunder during that next calendar year, then to the extent that Shell may, after exercising its best efforts, sell such portion thereof at a price considered by Shell, in its sole judgment, to be satisfactory. Hooker's obligated quantity for that next calendar year in question shall be correspondingly reduced. If Hooker, at the time of its request for Shell to sell a specific portion of its obligated quantity, requests that such sale be limited to the quantity for that next calendar year, then Shell will not, without prior consultation with Hooker, commit such- quantity for future periods if such quantity would reduce Hooker's ability to have said quantity converted by Shell in subsequent years. Hooker may also request that Shell sell elsewhere a portion of the obligated quantity for any calendar year up to ninety (90) days after January 1 of such calendar year of the term hereof but Shell may, at its option, decline to sell such material for any reason, including but not licited to disruption of Shell's sales OXY/HOLMES 000650 7/2-/76 6 plan or interference with sales to Shell's other contract customers. The minimums and maximums specified in Article 2 hereof for each calendar year or years shall be correspondingly reduced by any specific portion of Hooker's obligated quantity sold elsewhere by Shell hereunder at Hooker's request. C. If after Hooker requests Shell to sell a specific portion of its obligated quantity in accordance with Paragraph B above, and Hooker fails to order and accept that portion of its obligated quantity not requested of Shell to be sold to third parties during that year, then the provisions of Paragraph A above shall apply with regard to the underlifted quantity (i.e., the difference between the obligated quantity not requested of Shell to be sold to third parties by Shell and the quantity actually ordered and received by Hooker during the year), provided, however, that as to such underlifted quantity the choice of option 1) or option 2) of Paragraph A shall reside in Shell, not Hooker. D. Notice of any underlifting or option elected by Shell under Paragraph C shall be given by Shell, within fifteen (15) days following tha--year in which the underperfonnance by Hooker occurs. CONVERSION FEE. For all VCM converted for and delivered to Hooker hereunder, Hooker shall pay Shell FOB Shell's plant a conversion fee, to be nominated by Shell ninety (90) days in advance of January 1, 1979. As of the date this agreement is signed, such conversion fee is effectively 10.75 cents per pound (11.55 cents per pound conversion fee, less a Temporary Voluntary Allowance of 1.1 cent per pound). This fee cay be reasonably increased at any tire after it has been in effect r nety (90) days upon thirty (30) C given to Hooker by Shell. OXY/HOLMES 000651 / -I c 7 Any conversion fee in effect hereunder may be decreased by Shell at its option at any time and reinstated subsequently by Shell at any time upon notice to Hooker by Shell. For any calendar year, if Hooker provides Shell satisfactory written evidence that a third party is willing to convert Hooker chlorine into at least 75 million pounds of VCM at an overall delivered cost including Hooker chlorine transportation fees which is lower by more than 0.25 cents ($0.0025) per pound for VCM converted hereunder for the same time period, and such competitive offer is made without disclosure by Hooker of the conversion fee hereunder, then unless Shell elects (and so advises Hooker in writing) within thirty (30) days to meet such competitive fee for the quantities so offered, the offered quantities shall be deducted from the obligated quantity of both parties hereunder for such calendar year. In the event Shell elects to meet such a competi tive offer, no later offer of the same competitor or of the same parcel, made within twelve (12) months of the date of Shell's election, shall be considered to be a competitive offer within the meaning of this Article 4. Further if Hooker provides written evidence satisfactory to Shell that Shell's chlorine conversion fee puts Hooker at a significant competitive disadvantage, i.e., 0.25 cents ($0.0025) per pound, as determined in good faith by Shell to costs for VCM otherwise actually available to Hooker from any of the three largest domestic VCM producers other than Shell, then Shell will either reduce its chlorine conversion fee to be competitive or give Hooker the option to reduce its obligated quantity by an amount equal to Hooker's actual purchases from non-Shell tctrees for all regaining years of the contract. OXY/HOLMES 000652  V N, -''AV y' A 5. PAYMENT. Payment of the conversion fee for VCM delivered hereunder shall be made to Shell within thirty (30) days after the date of Shell's invoice. 6. DELIVERIES. A. General: Not less than 10 days prior to the beginning of each calendar month Hooker shall, if Shell desires, advise Shell as to the quantity of chlorine it desires to have converted into VCM, at the conversion ratio set out in Article 2 for subsequent delivery to Hooker during the following three (3) months. It is intended that Hooker shall deliver liquid chlorine to Shell's facilities at Norco, Louisiana via pipeline. By mutual consent, liquid chlorine deliveries may be made by 90 ton tank car to such Shell location(s) as Shell shall designate. Hooker will provide and maintain necessary facilities, includ ing a pipeline to Hooker's Taft, Louisiana property line at Hooker's cost and expense, to deliver such amounts of liquid chlorine as required to produce the appropriate quantity of VCM as specified hereunder. Shell shall transport such quantities of chlorine from Hooker's property line to Shell's Norco, Louisiana Plant in a pipeline to be maintained at Shell's cost and expense. Wr.nldull pay i nn a monthly basis a reasonable pipeline charge for chlorine transported through Shell's pipeline and used for conversion to Hooker's VCM. Shell's pipeline charge will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing Shell's pipeline and on operating costs both prorated on the basis that Hooker's throughput of chlorine for conversion to Hooker's VCM bears to the total throushnut of chlorine OXY/HOLMES 000653 9 through the line provided, however, that such pipeline charge shall not exceed Hooker's equivalent rail .cost for movement of chlorine in Hooker's 90 ton rail cars from Hooker's Taft, Louisiana Plant to Shell's Norco, Louisiana Plant. It is intended that Shell shall deliver the VCM converted hereunder in tank cars acceptable to Shell and furnished by Hooker. With prior mutual agreement such deliveries may be supplemented by tank cars furnished by Shell. Deliveries shall be made from Shell's plant at Norco, Louisiana, or from other locations at Shell's option on reasonably advanced notice. If the chlorine necessary for conversion into VCM as set forth above is not in Shell's storage, or readily accessible at the time of conversion, then Shell shall be excused from delivery of the volume of VCM not produced and Hooker's entitlement to VCM for the calendar year then in effect will be correspondingly reduced. Both parties shall make best efforts to maintain the chlorine delivered in balance with VCM V / shipped. The intent is to maintain balance at all times but should an imbalance occur it shall be redressed during the following month. Imbalances created by planned shutdowns of the VCM plant for maintenance shall be redressed by means mutually agreed to prior to the shutdown. Hooker shall notify Shell in writing by the 20th of each month of the planned chlorine deliveries for the following three months. These quantities will be modified 2s required to redress imbalances. B. Liouid Chlorine: Measurements of the quantities of liquid chlorine shipped to Shell hereunder shall be made in accordance with the procedures set forth below: OXY/HOLMES 000654 10 1- For Shipments by Pipeline. The quantity of liquid chlorine delivered by pipeline will be determined by a turbine meter or mutually acceptable volumetric flow meter. The meter will be checked regularly by a mutually acceptable method and Shell shall have the right to have representatives present during checking and calibration of the meter. Shell shall have the right to approve the piping arrangement through the meter to the pipeline to insure accurate measurement. 2. For Shipment in Tank Cars. Measurement of the net quantity of liquid chlorine shipped to Shell in tank cars shall be made using railroad type weigh scales. The type scales, their calibration and use in weighing shall conform to the requirements set forth by American Association of Railroad (A.A.R.) rule. Cars shall be weighed at rest on stationary scales, the capacity and platform of which will enable each car to be weighed singly. Cars to be weighed shall be uncoupled from any other railroad . r * v, equipment when placed on the scale for weighing. The weigh scale shall be calibrated every six months in accordance with regulations as set forth by the A.A.R. rule. Shell's designated representative from time to time, upon request to Hooker's designated representative, shall be permitted to witness the weighing of the chlorine cars to be shipped to Shell to verify the accuracy of the weights . The tare or light weight of each car to be loaded is to be measured immediately before loading with liquid chlorine. A weight document :;r each car shall be furnished to Shell which shall OXY/HOLMES 000655 1/2U/-C 11 include the time of day, date, weight, weigher and car number for the tare and gross weight. Car seal numbers shall be recorded. C. VCM by Tank Car. The quantity or weight of VCM delivered into tank cars for Hooker's account shall be determined on the basis of outage tables with appropriate corrections for temperature, or on the basis of certified weights of the common carrier of each loaded tank car utilizing printed tare of such tank cars or some other means which is mutually acceptable. "Heel" allowance shall be computed on the basis of the standard factor at 5 psig of 3 pounds per 100 gallons of car capacity, provided such cars are returned to Shell with a VCM pressure of between 5 and 10 psig prior to loading and with an oxygen content less than \ 1,000 ppm. In the event that the oxygen content exceeds 1,000 ppm, no heel allowance will be granted and Hooker shall pay the actual cost (plus plant overhead) of purging the car to make it suitable for loading. 7. GOVERNMENTAL CHARGES. All new taxes and other governmental charges other than those based on income, which are imposed on VCM, or on the raw materials, process materials or catalysts from which the VCM is produced, or on Shell (including without limitation its VCM manufac turing facility), or required to be paid or collected by Shell by reason of the production, conversion, transportation, or delivery of the VCM hereunder, shall be paid to Shell by Hooker in addition to the con version fee and within thirty (30) days after the date of Shell's state ment . 8. TITLE, COMMINGLING AND RESPONSIBILITY FOR LOSS. Title to all chlorine delivered to Shell and held by Shell for Hooker's account and all VCM converted hereunder shall he and retain in Hooker's account OXY/HOLMES 000656 12 but Shell shall have the right to commingle with its own chlorine all chlorine delivered to Shell and held by Shell for Hooker's account hereunder. Shell shall have also the right to commingle with its own VCM or other VCM held for the account of third parties, all VCM converted for Hooker's account hereunder. To the extent caused by Shell's negligence, Shell shall be responsible for all loss or damage 1) to chlorine delivered to Shell and held by Shell for Hooker's account hereunder, 2) to all VCM converted from such chlorine while on Shell's property and 3) to all Hooker tank cars, full or empty, while on Shell's property. Any chlorine required for conversion in excess of the con version ratio shall be supplied by Shell at no cost to Hooker. Any chlorine remaining in Shell's storage because of conversion efficiency shall become the property of Shell. 9. LIABILITIES - CLAIM. Hooker warrants that the chlorine delivered hereunder will meet the specifications set forth in Exhibit \ "A" and Shell warrants that the VCM converted from such chlorine will meet the specifications set forth in Exhibit "B" or subsequently modified by mutual written agreement, but Shell and Hooker make NO OTHER WARRANTIES hereunder, WHETHER OF MERCHANTABILITY, FITNESS OR OTHERWISE, AND NONE SHALL BE IMPLIED. Hooker shall accept Shell's analysis of VCM converted hereunder as determined on the contents of Shell's storage spheres prior to delivery to Hooker and Hooker shall accept Shell's Certificate of Analysis therefore as representative of the quality of the VCM delivered hereunder with respect to meeting the specifications warranted unless proven to be in error. Hooker shall have the right on reasonable advance OXY/HOLMES 000657 / IW 13 notice to obtain from Shell, from time to time, a sample of the VCM delivered hereunder in a sample container provided by Shell and purchased from Shell by Hooker. Shell shall have no liability for, and Hooker shall indemnify Shell against all claims, loss, liability and expense on account of any injury or death of persons (including Hooker's employees) or damage to property (including Hooker's) to the extent caused by Hooker's negligence in unloading, storage, handling or use of the VCM delivered hereunder after the VCM is safely loaded into suitable tank cars and on execution by appropriate railroad representative of a nonnegotiable bill of lading. Hooker shall have no liability for, and Shell shall indemnify Hooker against all claims, loss, liability and expense on account of any injury or death of persons (including Shell's employees) or damage to property (including Shell's) to the extent caused by Shell's negligence in unloading, storage, handling or use of the chlorine delivered here under after arrival of the chlorine upon Shell's premises. Neither Shell nor Hooker shall have any liability to the other for any claims arising directly or indirectly out of or in connection with this Agreement, unless the claimant gives the other party notice of the claim setting forth fully the facts on which it is based within ninety (90) days after the date of delivery or other transaction or occurrence giving rise to the claim. 10. EXCUSES FOR NONPERFORMANCE. Neither Shell nor Hooker shall be liable for failure or delay in the performance of this Agree ment, to the extent that, in Shell's case, its ability to produce or deliver the VCM converted hereunder, or in Hooker's case, its ability to OXY/HOLMES 000658 14 produce or deliver the chlorine converted hereunder or to consume the VCM which Shell converts hereunder, is delayed, impaired, or prevented, by any circumstances (except financial) reasonably beyond its control, or by fire, explosion, breakdown in machinery or equipment, failure of catalyst, or riots, strikes, labor disputes, condemnation or conveyance under threat of condemnation, voluntary or involuntary compliance with any law, order, regulation, recommendation, or request of any governmental authority (including, without limitation, those relating to price controls and product allocation), or total or partial failure of the usual means of transportation of chlorine, ethylene, Dichloroethane, VCM or PVC or inability or delay in obtaining all or any part of the feed stocks, process materials or catalysts used in the manufacture of chlorine, Dichloroethane, VCM or PVC, from earlier established internal or third party sources of supply. As used herein, "labor dispute" shall mean any controversy to which either Shell or Shell's source for feedstocks, process materials or catalysts or Hooker or Hpoker's source of feedstocks, process materials or catalysts has an interest involving wages, hours or working conditions, and includes any strike, picketing, lockout, suspension of construction or any other action taken in connection with or because of the labor dispute. Neither Shell nor Hooker shall have any obligation to participate in any settlement of a labor dispute, or to request its agents or contractors or raw material suppliers to do so. The quantities of VCM consequently undelivered as a result of causes so excused hereunder shall not be required to be made up by Shell upon resumption of full deliveries of VCM hereunder and such excused quantities shall be deducted from the applicable remaining obligated quantities of Shell and Hooker OXY/HOLMES 000659 7/2U / - 15 under this Agreement. In the event that Shell is excused from delivering any quantity of VCM due to any of the causes specified above, Shell shall allocate a pro rata share of its remaining supply of VCM to Hooker, such share to be equal to the percentage which Hooker's nominated quantity for the year in question bears to the total of VCM commitments to all customers and Shell's internal requirements as determined by Shell for such year at Shell's Norco, Louisiana plant, times the volume available for shipment. Neither Hooker nor Shell shall have any obligation in the event of any excused causes specified above to purchase ethylene, chlorine, Dichloroethane or VCM to perform hereunder, nor to be required to supply ethylene, chlorine, Dichloroethane or VCM produced in any of its plants other than those normally used for performance hereunder, provided that available supplies of such products from sources previously used during the applicable calendar year to supply the same hereunder are apportioned equitably among customers and internal uses in such manner as Hooker and Shell, in their sole judgment, find appropriate. If Shell's performance is excused hereunder due to inability to obtain feedstocks, process materials or catalysts used in the manufacture of VCM from Shell's earlier planned or established sources, Shell shall use diligent efforts to obtain such materials from other than earlier planned or established sources but fees hereunder shall be adjusted to reflect any increase in cost to Shell. If Shell is unable to obtain such feedstocks, Hooker, at its option, on reasonable notice may provide such feedstocks as are acceptable to Shell by mutually agreeable delivery methods and at Hooker's cost, and Shell shall convert VCM from such feedstocks provided by Hooker for delivery to Hooker for so icug as Shell's excused performance OXY/HOLMES 000660 7/21/76 16 continues hereunder but fees shall be adjusted to reflect any corresponding increase or decrease in cost of feedstocks to Shell. 11. ASSIGNABILITY. Neither this Agreement nor any claim against Hooker or Shell arising directly or indirectly out of or in connection with this Agreement shall be assignable by either party or by operation of law, without the prior written consent of the other party. 12. REMEDIES. In the event of any breach by either party of any of the provisions of this Agreement which continues for thirty (30) days after notice thereof is given by the other, such other party shall have the right, in addition to any other rights or remedies it may have, to suspend or refuse deliveries hereunder and/or to terminate this Agreement by notice to the defaulting party, effective thirty (30) days following the date of such notice. Either party's right to require strict performance of the obligations of the other shall not be affected in any way by any previous waiver, forebearance or course of dealing. 13. NOTICES. All notices or demands under this Agreement "" > whether required by the terms hereof or otherwise shall be in writing and shall be delivered or mailed by certified or registered mail, return receipt requested, to the following addresses of the parties or to such other addresses as may be hereafter designated in writing by the respec tive parties: OXY/HOLMES 000661 17 If to Hooker: C: Hooker Chemical & Plastics Corp. Ruco Division River Road Burlington, New Jersey 08016 Attention: Division Material Manager If to Shell: Shell Chemical Company A Division of Shell Oil Company P. 0. Box 2463, One Shell Plaza Houston, Texas 77001 Attention: General Manager, Chemical Sales All purchase orders or purchase acknowledgements which may be used to order or acknowledge orders for delivery of VCM hereunder shall be deemed to be intended for convenience and the provisions contained therein shall not serve to add to or otherwise vary the provisions of this Agreement. when it becomes effective 14ENTIRETY-RELEASE. ^T^shall January 1, 1979, shall This Agreement/comprise the entire Agreement an'd/xergeKxRitd supersede, all prior understandings and repre lop- sentations (oral or written) between Shell and Hooker concerning the conversion of chlorine into VCM for Hooker, specifically including an agreement dated October 24, 1974 as amended.-- Neither this Agreement nor any subsequent Agreement amending or supplementing this Agreement shall be binding on Shell or Hooker unless and until it has been signed by the party claimed to be bound thereby, and commencement of performance hereunder or under any such subsequent Agreement shall not constitute a waiver of this requirement. 15. FAVORED NATIONS. If at any time Shell converts chlorine to VCM for a third party of substantially equal or better quality and quantity at a chlorine conversion fee or upon terms more favorable to the customer than in effect hereunder, Shell shall immediately give OXY/HOLMES 000662 18 Hooker the benefit of such lower chlorine conversion fee or more favor able terms for all deliveries of VCM made thereafter for so long as such lower price or more favorable terms remain in effect for a third party. It is understood that this paragraph does not apply to (a) chlorine con versions or deliveries by Shell to the government of the United States of America, (b) chlorine conversions or deliveries by Shell to any company which receives a functional discount for resale on that quantity which is resold, (c) chlorine conversions by Shell to customers for uses in manufacture of products not competitive with products manufactured by Hooker, (d) chlorine conversions for domestic third parties where Shell is meeting bona fide competitive situations, or (e) chlorine conversions for third parties for export outside the United States. IK WITNESS WHEREOF, the parties hereto have signed this Agree ment in duplicate as of the day and date first written above. SHELL CHEMICAL COMPANY HOOKER CHEMICAL & PLASTICS CORP> General Manager Chemical Sales OXY/HOLMES 000663 EXHIBIT A CHLORINE SPECIFICATIONS Chlorine Chlorinated Compounds Nonvolatile Matter Water Bromine 99.5% vol. min. 1000 ppm max. 100 ppm max. 30 ppm max. 100 ppm max. 19 OXY/HOLMES 000664 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS PRIVATE & CONFIDENTIAL 'Wt, 7/24/78 'k>R/0 rbtf. 17-421-79 CONVERSION AGREEMENT This Agreement is made this 24th day of July 1978, by and between SHELL CHEMICAL COMPANY, a division of SHELL OIL COMPANY, a Delaware corporation with offices at One Shell Plaza, Houston, Texas 77002 (hereinafter referred to as "Shell") and HOOKER CHEMICALS & PLASTICS CORP., a subsidiary of Occidental Petroleum Corporation, a California River Road, Burlington, New Jersey 08016 *- corporation, with offices at/KAfrYTbjnrdyStnrwrgfrYyN-rjrgarrancRaTi-iwyvWmncwxk->c (hereinafter referred to as "Hooker"). WHEREAS, Shell and Hooker have entered into previous agreements dated January 24, 1973 and October 24, 1974 for the sale by Shell to Hooker of Vinyl Chloride Monomer (hereinafter referred to as "VCM") during the year 1974 and for the conversion by Shell of Hooker's chlorine to VCM in subsequent years for delivery to Hooker; and WHEREAS, Shell and Hooker desire to maintain a mutually bene ficial long-term agreement for the conversion' of Hooker chlorine into VCM by Shell. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereby agree as follows: WITNESSETH 1. TERM. A. This Agreement shall be binding upon the parties upon and after the execution hereof. It shall remain in full force and effect for a Primary Period of six (6) years, beginning on January 1, 1979, and shall continue thereafter unless and until terminated. Either OXY/HOLMES 000665 7/24/78 party may terminate as of the last day of the Primary Period or at any time thereafter by giving notice of termination to the other party at least eighteen (18) months in advance; however, Hooker may terminate this agreement earlier under the sole circumstances described in Article l.B. below. B. If Hooker decides to build or acquire VCM manufactur ing capability, Hooker may terminate this agreement at the end of three (3) years or at the end of four and one-half (4-1/2) years providing that Hooker has given Shell written notice eighteen (18) months in advance of the proposed termination date. If Hooker has failed to notify Shell of its intent to terminate this agreement by July 1, 1980, the option to terminate at the end of three (3) years lapses and Hooker may then not terminate this agreement until the end of four and one-half (4-1/2) years. If Hooker subsequently fails to notify Shell of its intent to terminate by January 1, 1982, then the termination provisions and 12 of Article l.A./are the sole conditions, of termination. 2. QUANTITIES - CONVERSION. During the term of this Agreement, Hooker shall deliver liquid chlorine to Shell by pipeline at Shell's Norco, Louisiana plant, or by mutual consent, by 90 ton tank car to such Shell location(s) as Shell shall designate, pursuant to Article 6 hereof, to be held by Shell in storage for Hooker's account and to be converted subsequently into such amounts of VCM as Hooker shall order, at a conver sion ratio of 0.64 pounds of chlorine to 1.0 pound of VCM. In no event shall Shell be obligated to deliver to Hooker in any calendar month a quantity of VCM exceeding 1/11 of the applicable calendar year maximum quantity shown below or, cumulatively, 1/6 of such calendar year maximum in any two (2) succeeding months. OXY/HOLMES 000666 7/2U/78 3 QUANTITIES OF VCM TO BE CONVERTED - MILLION POUNDS YEAR MINIMUM 1979 and each 150 year thereafter MAXIMUM 180 Hooker shall notify Shell not less than nine (9) months prior 1980 to the start of ahSfaggt and any future year as to its nomination of the, quantities of VCM desired during that calendar year within the range of Hooker's nomination for 1979 is 170,000,000 lb: the applicable minimum and maximum amounts specified above./ Except as further limited by such applicable calendar year minimum and maximum quantities, Hooker will be required to receive not less than 95% of the nomination for each succeeding calendar year (Hooker's "obligated quantity"), and Shell will be required to deliver up to, but not in excess of (except at its option), 105% of the nomination for such calendar year (Shell's "obligated quantity"). If Shell has additional VCM capacity qfter allowing for the supply of its other current or planned obligations, as determined by Shell, then Shell shall offer Hooker on at least a quarterly basis, such excess quantity. If under these conditions Hooker accepts such offer, or if for any other reason Hooker requests Shell to deliver more VCM in any calendar year than the applicable calendar year Shell obligation (105% of such year's nominated quantity or maximum quantity, whichever is applicable) and Shell so agrees, then the applicable calendar year minimum and maximum and the nominated quantity for such year, will be amended to include the added quantity or quantities. In the event Shell requests Hooker to have less chlorine converted into VCM in any calendar year than the applicable calendar OXY/HOLMES 000667 T/2U/T8 year minimum, and Hooker so agrees, then the applicable calendar year minimum and maximum shall be of no effect for such year, and that amount requested by Shell and agreed to by Hooker shall be treated as the nomination for such calendar year. 3. PERFORMANCE. If Hooker fails, for reasons other than those provided for in Article 10 hereof, to order and accept its obligated quantity for any calendar year, the provisions outlined in Paragraphs A, C and D shall apply and the amount of the obligated quantity shall reflect any adjustments under Paragraph B. If, however, Hooker gives notice of termination of this agreement at the end of the primary period or anniversary thereof or prior to the end of the primary period as provided for in Article I.B., then option 1 of Paragraph A shall not be available to Hooker in the last year (twelve-month period) of the agreement. A. Subject to Paragraphs B. and C. of this Article 3> at Hooker's option exercised within 15 days after notice from Shell of any underlift for the prior calendar year, either (1) the minimum and maximum quantities specified in Article 2 for all years of this Agreement subse quent to the year of such underperformance by Hooker shall be reduced by the difference between its obligated quantity for the year of under performance and the quantity actually ordered and accepted by Hooker during such year or, (2) Hooker shall pay to Shell as liquidated damages for each pound of VCM below such obligated quantity not ordered and accepted during the year an amount to be calculated as follows: OXY/HOLMES 000668 7-24-78 5 Payment = CF - 0.48E - 1.0 cent per pound CF = average conversion fee hereunder expressed in cents per pound for the year in question. E = Shell's valuation of ethylene in VCM expressed in cents per pound as determined by Shell and consistent with the average conversion fee hereunder. If option (2) is applicable, payment shall be made by Hooker within thirty (30) days after the date of Shell's invoice. B. If no later than ninety (90) days prior to January 1 of any calendar year of the Term hereof Hooker requests Shell to attempt to sell elsewhere a specific portion of the obligated quantity of VCM that Hooker is required to order and accept hereunder during that next calendar year, then to the extent that Shell may, after exercising its best efforts, sell such portion thereof at a price considered by Shell, in its sole judgment, to be satisfactory. Hooker's obligated quantity for that next calendar year in question shall be correspondingly reduced. If Hooker, at the time of its request for Shell to sell a specific portion of its obligated quantity, requests that such sale be limited to the quantity for that next calendar year, then Shell will not, without prior consultation with Hooker, commit such quantity for future periods if such quantity would reduce Hooker's ability to have said quantity converted by Shell in subsequent years. Hooker may also request that Shell sell elsewhere a portion of the obligated quantity for any calendar year up to ninety (90) days after January 1 of such calendar year of the term hereof but Shell may, at its option, decline to sell such material for any reason, including but not limited to disruption of Shell's sales OXY/HOLMES 000669 T/2U/78 6 plan or interference with sales to Shell's other contract customers. The minimums and maximums specified in Article 2 hereof for each calendar year or years shall be correspondingly reduced by any specific portion of Hooker's obligated quantity sold elsewhere by Shell hereunder at Hooker's request. C. If after Hooker requests Shell to sell a specific portion of its obligated quantity in accordance with Paragraph B above, and Hooker fails to order and accept that portion of its obligated quantity not requested of Shell to be sold to third parties during that year, then the provisions of Paragraph A above shall apply with regard to the underlifted quantity (i.e., the difference between the obligated quantity not requested of Shell to be sold to third parties by Shell and the quantity actually ordered and received by Hooker during the year), provided, however, that as to such underlifted quantity the choice of option 1) or option 2) of Paragraph A shall reside in Shell, not Hooker. D. Notice of any underlifting or option elected by Shell under Paragraph C shall be given by Shell, within fifteen (15) days following the year in which the underperformance by Hooker occurs. 4. CONVERSION FEE. For all VCM converted for and delivered to Hooker hereunder. Hooker shall pay Shell FOB Shell's plant a conversion fee, to be nominated by Shell ninety (90) days in advance of January 1, 1979. As of the date this agreement is signed, such conversion fee is effectively 10.75 cents per pound (11.85 cents per pound conversion fee, less a Temporary Voluntary Allowance of 1.1 cent per pound). This fee may be reasonably increased at any time after it has been in effect ninety (90) days upon thirty (30) days' notice given to Hooker by Shell., OXY/HOLMES 000670 7/24/78 7 Any conversion fee in effect hereunder may be decreased by Shell at its option at any time and reinstated subsequently by Shell at any time upon notice to Hooker by Shell. For any calendar year, if Hooker provides Shell satisfactory written evidence that a third party is willing to convert Hooker chlorine into at least 75 million pounds of VCM at an overall delivered cost including Hooker chlorine transportation fees which is lower by more than 0.25 cents ($0.0025) per pound for VCM converted hereunder for the same time period, and such competitive offer is made without disclosure by Hooker of the conversion fee hereunder, then unless Shell elects (and so advises Hooker in writing) within thirty (30) days to meet such competitive fee for the quantities so offered, the offered quantities shall be deducted from the obligated quantity of both parties hereunder for such calendar year. In the event Shell elects to meet such a competi tive offer, no later offer of the same competitor or of the same parcel, made within twelve (12) months of the date of Shell's election, shall be considered to be a competitive offer within the meaning of this Article 4. Further if Hooker provides written evidence satisfactory to Shell that Shell's chlorine conversion fee puts Hooker at a significant competitive disadvantage, i.e., 0.25 cents ($0.0025) per pound, as determined in good faith by Shell to costs for VCM otherwise actually available to Hooker from any of the three largest domestic VCM producers other than Shell, then Shell will either reduce its chlorine conversion fee to be competitive or give Hooker the option to reduce its obligated quantity by an amount equal to Hooker's actual purchases from non-Shell sources for all remaining years of the contract. OXY/HOLMES 000671 7/24/78 8 5. PAYMENT. Payment of the conversion fee for VCM delivered hereunder shall he made to Shell within thirty (30) days after the date of Shell's invoice. 6. DELIVERIES. A. General: Not less than 10 days prior to the beginning of each calendar month Hooker shall, if Shell desires, advise Shell as to the quantity of chlorine it desires to have converted into VCM, at the conversion ratio set out in Article 2 for subsequent delivery to Hooker during the following three (3) months. It is intended that Hooker shall deliver liquid chlorine to Shell's facilities at Norco, Louisiana via pipeline. By mutual consent, liquid chlorine deliveries may be made by 90 ton tank car to such Shell location(s) as Shell shall designate. Hooker will provide and maintain necessary facilities, includ ing a pipeline to Hooker's Taft, Louisiana property line at Hooker's cost and expense, to deliver such amounts of liquid chlorine as required to produce the appropriate quantity of VCM as specified hereunder. Shell shall transport such quantities of chlorine from Hooker's property line to Shell's Norco, Louisiana Plant in a pipeline to be maintained at Shell's cost and expense. Hooker shall pay Shell on a monthly basis a reasonable pipeline charge for chlorine transported through Shell's pipeline and used for conversion to Hooker's VCM. Shell's pipeline charge will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing Shell's pipeline and on operating costs both prorated on the basis that Hooker's throughput of chlorine for conversion to Hooker's VCM bears to the total throughput of chlorine OXY/HOLMES 000672 7/24/78 through the line provided, however, that such pipeline charge shall not exceed Hooker's equivalent rail cost for movement of chlorine in Hooker's 90 ton rail cars from Hooker's Taft, Louisiana Plant to Shell's Norco, Louisiana Plant. It is intended that Shell shall deliver the VCM converted hereunder in tank cars acceptable to Shell and furnished by Hooker. With prior mutual agreement such deliveries may be supplemented by tank cars furnished by Shell. Deliveries shall be made from Shell's plant at Norco, Louisiana, or from other locations at Shell's option on reasonably advanced notice. If the chlorine necessary for conversion into VCM as set forth above is not in Shell's storage, or readily accessible at the time of conversion, then Shell shall be excused from delivery of the volume of VCM not produced and Hooker's entitlement to VCM for the calendar year then in effect will be correspondingly reduced. Both parties shall make best efforts to maintain the chlorine delivered in balance with VCM v: . shipped. The intent is to maintain balance at all times but should an imbalance occur it shall be redressed during the following month. Imbalances created by planned shutdowns of the VCM plant for maintenance shall be redressed by means mutually agreed to prior to the shutdown. Hooker shall notify Shell in writing by the 20th of each month of the planned chlorine deliveries for the following three months. These quantities will be modified as required to redress imbalances. B. Liquid Chlorine: Measurements of the quantities of liquid chlorine shipped to Shell hereunder shall be made in accordance with the procedures set forth below: OXY/HOLMES 000673 7/2V78 10 1- For Shipments by Pipeline. The quantity of liquid chlorine delivered by pipeline will be determined by a turbine meter or mutually acceptable volumetric flow meter. Tbe meter will be checked regularly by a mutually acceptable method and Shell shall have the right to have representatives present during checking and calibration of the meter. Shell shall have the right to approve the piping arrangement through the meter to the pipeline to insure accurate measurement. 2. For Shipment in Tank Cars. Measurement of the net quantity of liquid chlorine shipped to Shell in tank cars shall be made using railroad type weigh scales. The type scales, their calibration and use in weighing shall conform to the requirements set forth by American Association of Railroad (A.A.R.) rule. Cars shall be weighed at rest on stationary scales, the capacity and platform of which will enable each car to be weighed singly. Cars to be weighed shall be uncoupled from any other railroad equipment when placed on the scale for weighing. The weigh scale shall be calibrated every six months in accordance with regulations as set forth by the A.A.R. rule. Shell's designated representative from time to time, upon request to Hooker's designated representative, shall be permitted to witness the weighing of the chlorine cars to be shipped to Shell to verify the accuracy of the weights. The tare or light weight of each car to be loaded is to be measured immediately before loading with liquid chlorine. A weight document for each car shall be furnished to Shell which shall OXY/HOLMES 000674 7M/78 li include the time of day, date, weight, weigher and car number for the tare and gross weight. Car seal numbers shall be recorded. C. VCM by Tank Car. The quantity or weight of VCM delivered into tank cars for Hooker's account shall be determined on the basis of outage tables with appropriate corrections for temperature, or on the basis of certified weights of the common carrier of each loaded tank car utilizing printed tare of such tank cars or some other means which is mutually acceptable. "Heel" allowance shall be computed on the basis of the standard factor at 5 psig of 3 pounds per 100 gallons of car capacity, provided such cars are returned to Shell with a VCM pressure of between 5 and 10 psig prior to loading and with an oxygen content less than 1,000 ppm. In the event that the oxygen content exceeds 1,000 ppm, no heel allowance will be granted and Hooker shall pay the actual cost (plus plant overhead) of purging the car to make it suitable for loading. 7. GOVERNMENTAL CHARGES. All new taxes and other governmental charges other than those based on income, which are imposed on VCM, or on the raw materials, process materials or catalysts from which the VCM is produced, or on Shell (including without limitation its VCM manufac turing facility), or required to be paid or collected by Shell by reason of the production, conversion, transportation, or delivery of the VCM hereunder, shall be paid to Shell by Hooker in addition to the con version fee and within thirty (30) days after the date of Shell's state ment. 8. TITLE, COMMINGLING AND RESPONSIBILITY FOR LOSS. Title to all chlorine delivered to Shell and held by Shell for Hooker's account and all VCM converted hereunder shall be and remain in Hooker's account OXY/HOLMES 000675 7/24/78 12 but Shell shall have the right to commingle with its own chlorine all chlorine delivered to Shell and held by Shell for Hooker's account hereunder. Shell shall have also the right to commingle with its own VCM or other VCM held for the account of third parties, all VCM converted for Hooker's account hereunder. To the extent caused by Shell's negligence, Shell shall be responsible for all loss or damage 1) to chlorine delivered to Shell and held by Shell for Hooker's account hereunder, 2) to all VCM converted from such chlorine while on Shell's property and 3) to all Hooker tank cars, full or empty, while on Shell's property. Any chlorine required for conversion in excess of the con version ratio shall be supplied by Shell at no cost to Hooker. Any chlorine remaining in Shell's storage because of conversion efficiency shall become the property of Shell. 9. LIABILITIES - CLAIM. Hooker warrants that the chlorine delivered hereunder will meet the specifications set forth in Exhibit ''A" and Shell warrants that the VCM converted from such chlorine will meet the specifications set forth in Exhibit "B" or subsequently modified by mutual written agreement, but Shell and Hooker make NO OTHER WARRANTIES hereunder, WHETHER OF MERCHANTABILITY, FITNESS OR OTHERWISE, AND NONE SHALL BE IMPLIED. Hooker shall accept Shell's analysis of VCM converted hereunder as determined on the contents of Shell's storage spheres prior to delivery to Hooker and Hooker shall accept Shell's Certificate of Analysis therefore as representative of the quality of the VCM delivered hereunder with respect to meeting the specifications warranted unless proven to be in error. Hooker shall have the right on reasonable advance OXY/HOLMES 000676 7/2U/T8 13 notice to obtain from Shell, from time to time, a sample of fb* VCM delivered hereunder in a sample container provided by Shell and purchased from Shell by Hooker. Shell shall have no liability for, and Hooker shall indemnify Shell against all claims, loss, liability and expense on account of any injury or death of persons (including Hooker's employees) or damage to property (including Hooker's) to the extent caused by Hooker's negligence in unloading, storage, handling or use of the VCM delivered hereunder after the VCM is safely loaded into suitable tank cars and on execution by appropriate railroad representative of a nonnegotiable bill of lading. Hooker shall have no liability for, and Shell shall indemnify Hooker against all claims, loss, liability and expense on account of any injury or death of persons (including Shell's employees) or damage to property (including Shell's) to the extent caused by Shell's negligence in unloading, storage, handling or use of the chlorine delivered here under after arrival of the chlorine upon Shell's premises. Neither Shell nor Hooker shall have any liability to the other for any claims arising directly or indirectly out of or in connection with this Agreement, unless the claimant gives the other party notice of the claim setting forth fully the facts on which it is based within ninety (90) days after the date of delivery or other transaction or occurrence giving rise to the claim. 10. EXCUSES FOR NONPERFORMANCE. Neither Shell nor Hooker shall be liable for failure or delay in the performance of this Agree ment, to the extent that, in Shell's case, its ability to produce or deliver the VCM converted hereunder, or in Hooker's case, its ability to OXY/HOLMES 000677 7/24/78 14 produce or deliver the chlorine converted hereunder or to consume the VCM which Shell converts hereunder, is delayed, impaired, or prevented, by any circumstances (except financial) reasonably beyond its control, or by fire, explosion, breakdown in machinery or equipment, failure of catalyst, or riots, strikes, labor disputes, condemnation or conveyance under threat of condemnation, voluntary or involuntary compliance with any law, order, regulation, recommendation, or request of any govern mental authority (including, without limitation, those relating to price controls and product allocation), or total or partial failure of the usual means of transportation of chlorine, ethylene, Dichloroethane, VCM or PVC or inability or delay in obtaining all or any part of the feed stocks, process materials or catalysts used in the manufacture of chlorine, Dichloroethane, VCM or PVC, from earlier established internal or third party sources of supply. As used herein, "labor dispute" shall mean any controversy to which either Shell or Shell's source for feedstocks, process materials or catalysts or Hooker or Hqoker's source of feedstocks, process materials or catalysts has an interest involving wages, hours or working conditions, and includes any strike, picketing, lockout, suspension of construction or any other action taken in connection with or because of the labor dispute. Neither Shell nor Hooker shall have any obligation to participate in any settlement of a labor dispute, or to request its agents or contractors or raw material suppliers to do so. The quantities of VCM consequently undelivered as a result of causes so excused hereunder shall not be required to be made up by Shell upon resumption of full deliveries of VCM hereunder and such excused quantities shall be deducted from the applicable remaining obligated quantities of Shell and Hooker OXY/HOLMES 000678 7/21+/78 15 under this Agreement. In the event that Shell is excused from delivering any quantity of VCM due to any of the causes specified above, Shell shall allocate a pro rata share of its remaining supply of VCM to Hooker, such share to be equal to the percentage which Hooker's nominated quantity for the year in question bears to the total of VCM commitments to all customers and Shell's internal requirements as determined by Shell for such year at Shell's Norco, Louisiana plant, times the volume available for shipment. Neither Hooker nor Shell shall have any obligation in the event of any excused causes specified above to purchase ethylene, chlorine, Dichloroethane or VCM to perform hereunder, nor to be required to supply ethylene, chlorine, Dichloroethane or VCM produced in any of its plants other than those normally used for performance hereunder, provided that available supplies of such products from sources previously used during the applicable calendar year to supply the same hereunder are apportioned equitably among customers and internal uses in such manner as Hooker and Shell, in their sole judgment, find appropriate. If Shell's performance is excused hereunder due to inability to obtain feedstocks, process materials or catalysts used in the manufacture of VCM from Shell's earlier planned or established sources, Shell shall use diligent efforts to obtain such materials from other than earlier planned or established sources but fees hereunder shall be adjusted to reflect any increase in cost to Shell. If Shell is unable to obtain such feedstocks, Hooker, at its option, on reasonable notice may provide such feedstocks as are acceptable to Shell by mutually agreeable delivery methods and at Hooker's cost, and Shell shall convert VCM from such feedstocks provided by Hooker for delivery to Hooker for so long as Shell's excused performance OXY/HOLMES 000679 t 7/2U/78 16 continues hereunder but fees shall be adjusted to reflect any corresponding increase or decrease in cost of feedstocks to Shell. 11. ASSIGNABILITY. Neither this Agreement nor any claim against Hooker or Shell arising directly or indirectly out of or in connection with this Agreement shall be assignable by either party or by operation of law, without the prior written consent of the other party. 12. REMEDIES. In the event of any breach by either party of any of the provisions of this Agreement which continues for thirty (30) days after notice thereof is given by the other, such other party shall have the right, in addition to any other rights or remedies it may have, to suspend or refuse deliveries hereunder and/or to terminate this Agreement by notice to the defaulting party, effective thirty (30) days following the date of such notice. Either party's right to require strict performance of theobligations of the other shall not be affected in any way by any previous waiver, forebearance or course of dealing. 13. NOTICES. All notices or demands under this Agreement whether required by the terms hereof or otherwise shall be in writing and shall be delivered or mailed by certified or registered mail, return receipt requested, to thefollowing addresses of the parties or to such other addresses as may be hereafter designated in writing by the respec tive parties: --Hooker--C-bemrcal -6- Plastics--Gorp. ) 345 Third- -St-rcct-- ) Niagara Falls-New York 14302 Attention:---Manager-,--Purcheees ) Raw-Materials--&--Containers- ) )Deleted OXY/HOLMES 000680 7/24/78 17 If to Hooker: Copy--t-e: Hooker Chemical & Plastics Corp. Ruco Division River Road Burlington, New Jersey 08016 Attention: Division Material Manager If to Shell: Shell Chemical Company A Division of Shell Oil Company P. 0. Box 2463, One Shell Plaza Houston, Texas 77001 Attention: General Manager, Chemical Sales All purchase orders or purchase acknowledgements which may be used to order or acknowledge orders for delivery of VCM hereunder shall be deemed to be intended for convenience and the provisions contained therein shall not serve to add to or otherwise vary the provisions of this Agreement. ENTIRETY-RELEASE. when it becomes effective January 1, 1979, shall This Agreement/comprise the entire . shall Agreement and /Bucxg*wx**td supersede all prior understandings and repre sentations (oral or written) between Shell and Hooker concerning the conversion of chlorine into VCM for Hooker, specifically including an agreement dated October 24, 1974 as amended. Neither this Agreement nor any subsequent Agreement amending or supplementing this Agreement shall be binding on Shell or Hooker unless and until it has been signed by the party claimed to be bound thereby, and commencement of performance hereunder or under any such subsequent Agreement shall not constitute a waiver of this requirement. 15. FAVORED NATIONS. If at any time Shell converts chlorine to VCM for a third party of substantially equal or better quality and quantity at a chlorine conversion fee or upon terms more favorable to the customer than in effect hereunder, Shell shall immediately give OXY/HOLMES 000681 7/2U/78 18 Hooker the benefit of such lower chlorine conversion fee or more favor able terms for all deliveries of VCM made thereafter for so long as such lower price or more favorable terms remain in effect for a third party. It is understood that this paragraph does not apply to (a) chlorine con versions or deliveries by Shell to the government of the United States of America, (b) chlorine conversions or deliveries by Shell to any company which receives a functional discount for resale on that quantity which is resold, (c) chlorine conversions by Shell to customers for uses in manufacture of products not competitive with products manufactured by Hooker, (d) chlorine conversions for domestic third parties where Shell is meeting bona fide competitive situations, or (e) chlorine conversions for third parties for export outside the United States. IN WITNESS WHEREOF, the parties hereto have signed this Agree ment in duplicate as of the day and date first written above. SHELL CHEMICAL COMPANY A Division of Shell Oil Company HOOKER CHEMICAL & PLASTICS CORP.' OXY/HOLMES 000682 7/24/78 19 EXHIBIT A CHLORINE SPECIFICATIONS Chlorine Chlorinated Compounds Nonvolatile Matter Water Bromine 99.5% vol. min. 1000 ppm max. 100 ppm max. 30 ppm max. 100 ppm max. OXY/HOLMES 000683 7/2l*/78 20 EXHIBIT B SPECIFICATIONS FOR VINYL CHLORIDE HOOKER CHEMICAL & PLASTICS CORP. Vinyl Chloride Acetaldehyde Acetylene Acidity, as HC1 Butadiene Heavy Ends* Iron Methyl Chloride Vinyl Acetylene Nonvolatiles Peroxide, as ^02 Sulfur Water Appearance Color Stabilizer 99.9% minimum by weight 1 ppm maximum by weight 0.4 ppm maximum by weight 1 ppm maximum by weight 8 ppm maximum by weight 50 ppm maximum by weight 0.5 ppm maximum by weight 70 ppm maximum by weight 20 ppm maximum by weight 50 ppm maximum by weight 0.06 ppm maximum by weight 1 ppm maximum by weight 100 ppm maximum by weight Clear and free of suspended matter Colorless None added *Heavy ends include the following: Ethyl Chloride, 1,1-Dichloroethylene, 1,2-Dichloroethylene, Beta-Chloropropene, Dichloroacetylene, Chloroprene, Vinylidene Chloride, CIS Dichloroethane, TRANS Dichloroethane, 1,1-Dichloroethane, 1,2-Dichloroethane, Trichloroethylene, Perchloroethylene, Monochloropropane, Dichloropropane, Vinyl Bromide OXY/HOLMES 000684 20 EXHIBIT B SPECIFICATIONS FOR VINYL CHLORIDE HOOKER CHEMICAL & PLASTICS CORP. Vinyl Chloride Acetaldehyde Acetylene Acidity, as HC1 Butadiene Heavy Ends* Iron Methyl Chloride Vinyl Acetylene Konvolatiles Peroxide, as H^O^ Sulfur Water Appearance Color Stabilizer 99.9% minimum by weight 1 ppm maximum by weight 0.4 ppm maximum by weight 1 ppm maximum by weight 8 ppm maximum by weight 50 ppm maximum by weight 0.5 ppm maximum by weight 70 ppm maximum by weight 20 ppm maximum by weight 50 ppm maximum by weight 0.06 ppm maximum by weight 1 ppm.maximum by weight 100 ppm maximum by weight Clear and free of suspended matter Colorless None added `''Heavy ends include the following: Ethyl Chloride, 1,1-Dichloroethylene Eeta-Chlcroprc.pene, Di chlcroacetyler. Yir.ylidene Chloride, CIS D: chloroeth 1,2-Dichloroethylene, Chlor:prene, .. c 1-Li chit methane, schlor:propane, OXY/HOLMES 000685 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS 0 Occidental Chemical Corporation 9 CERTIFIED MAIL RETURN RECEIPT REQUESTED June 27. 1983 Contract No. 17-421-79 Vinyl Chloride Monomer Shell Chemical Company A Division of Shell Oil Company P. 0. Box 2463, 1 Shell Plaza Houston. Texas 77001 Attention: General Manager Chemical Sales Gentlemen: Pursuant to Section l.A of the Conversion Agreement dated July 24, 1978, between Shell Chemical Company, A division of Shell Oil Company, and Hooker Chemicals & Plastics Corp. (now named Occidental Chemical Corporation), notice Is hereby given to Shell of the termination of the Agreement by Occidental as of the last day of the Primary Period. December 31. 1984. Very truly yours OCCIDENTAL CHEMICAL CORPORATION By OXY/HOLMES 000686 Executive Offices 1980 Post Oak Blvd., P.O. Box 4289, Houston, Tx. 77210 (713)840-7535 TWX 910-881-6327 TELEX 775-391 axr Occidental Chemical Corporation Executive Offices t MEMO TO: FROM: SUBJECT: L. G. King W. J. Wetzel W. H. Childs Shell Chemical Meeting Confirming that Larry Wheeler, VCM Product Manager and Bob Welgle, Corporate Account Manager, will be In Occidental's office Friday, July 1st at 10:30 a.m. to discuss VCM and Phenol pricing for July. W. H. Childs WHC/sr OC-1007.A (ED. 7-82) OXY/HOLMES 000687 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS t HOOKER CHEMICAL COMPANY P.O.BOX4289 HOUSTON.TEXAS 77210 f713) 840-7535 - TWX910-E31-6327 TELEX774-349 December 24. 1S80 M* George Ash SHtll Chemical Company 0n Shell Plaza P. 0. Box 2463 Houston, TX 77001 Dear George: This will confirm the telephone conversation Dave Litton and I had on December 23, 1980, regarding the enclosed amendment dated December 18, 1980 to our conversion contract of Duly 24, 1978. Firestone assigned its interest inQthier) agreement with Shell dated July 10, 1978, to Hooker Chemical Company atche time when our purchase of their plastics operation was consummated. Accordingly, we feel there is no need in obtaining consent from Firestone to terminate said agreement. Consequently, we have executed the proposed change in the amendment letter as you will note at the bottom of page 1. Please initial the proposed deletion and return an executed amendment letter to me. JGP/akf Attachment cc: William Merritt D. W. Calhoun J. T. Anderson 0096m Manager - Raw Material Supply OXY/HOLMES 000688 /****** December 18, 1980 Shell Chemical Company A&ij<n<SHHO<Cowpiy One Shel PUzi P.O. Box 2463 Houston. Texas 77001 i PRIVATE AND CONFIDENT!ftL Hooker Chemicals and Plastics Corporation ATTN Mr. D. W. Calhoun Director Energy and Raw Material Supply 1980 South Post Oak Road Houston, Texas 77056 Gentlemen: In accordance with our discussions following your recent purchase of the former Firestone PVC facilities, this letter when executed by you in the manner indicated below, will constitute an amendment to the confidential VCM Conversion Agreement between Shell Chemical Company and Hooker Chemicals and Plastics Corporation dated July 24, 1978 as follows: A. Article 2. The table entitled "Quantity Of VCM To Be Converted Million Pounds" is deleted in its entirety and replaced with the following: " Quantities To Be Converted - Million Pounds YEAR MINIMUM MAXIMUM 1979 1980 1981 1982 1983 1984 and Annually Thereafter 150 150 330 330 330 330 180 180 380 380 380 380 B. All other Terms and Conditions of Contract remain in full force and effect. This amendment incorporates the quantities of VCM formerly committed by Shell to Firestone but does not include additional other volumes presently under discussion but not yet finally agreed to. Effective on the date you execute this amendment, the VCM Contract between Firestone and Shell dated July 10, 1978, will be considered terminated by mutual consent. ofxxesflnex OXY/HOLMES 000689 Hooker Chemicals and Plastics Corporation 2 We sincerely appreciate the excellent business relationship between our two companies and look forward to serving your VCM requirements for many years to come. f Very truly yours. G. W. Ash Corporate Account Manager ACCEPTED AND AGREED TO THIS '2-^ DAY OF HOOKER CHEMICALS AND PLASTICS CORPORATION BY TITLE &IAOCC&., 7^-- , 19^? OXY/HOLMES 000690 December 18, 1980 PRIVATE AND CONFIDENTIAL Shell Chemical Company One Shal Plaza P.O.Box 2463 Houston. Texas 77001 I a Hooker Chemicals and Plastics Corporation ATTN Mr. D. W. Calhoun Director Energy and Raw Material Supply 1980 South Post Oak Road Houston, Texas 77056 Gentlemen: In accordance with our discussions following your recent purchase of the former Firestone PVC facilities, this letter when executed by you in the manner indicated below, will constitute an amendment to the confidential VCM Conversion Agreement between Shell Chemical Company and Hooker Chemicals and Plastics Corporation dated July 24, 1978 as follows: A. Article 2. The table entitled "Quantity Of VCM To Be Converted Million Pounds" is deleted in its entirety and replaced with the following: " Quantities To Be Converted - Million Pounds YEAR MINIMUM MAXIMUM 1979 1980 1981 1982 1983 1984 and Annually Thereafter 150 150 330 330 330 330 180 180 380 380 380 380 B. All other Terms and Conditions of Contract remain in full force and effect. This amendment incorporates the quantities of VCM formerly committed by Shell to Firestone but does not include additional other volumes presently under discussion but not yet finally agreed to. Effective on the date you execute this amendment, the VCM Contract between Firestone and Shell dated July 10, 1978, will be considered terminated by mutual consent, &ndxwexwiiixQbtaiRxthexHrittenxCBcrrecex flfxEirMtMto OXY/HOLMES 000691 Hooker Chemicals and Plastics Corporation 2 We sincerely appreciate the excellent business relationshipsbetween our two companies and look forward to serving your VCM requirements for many years to come. Very truly yours. G. W. Ash Corporate Account Manager ACCEPTED AND AGREED TO THIS l/l DAY OF HOOKERCHEMICALS AND PLASTICS CORPORATION BY. TITLE 19_&Q OXY/HOLMES 000692 : ' >* * s`HIor/> 7/2U/78 17-421-79 CONVERSION AGREEMENT i 5 This Agreement, is made this 24th day of July 1978, by and between SHELL CHEMICAL COMPANY, a division of SHELL OIL COMPANY, a Delaware corporation with offices at One Shell Plaza, Houston, Texas 77002 (hereinafter referred to as "Shell") and HOOKER CHEMICALS & PLASTICS CORP., a subsidiary of Occidental Petroleum Corporation, a California River Road, Burlington, New Jersey 08016 corporation, with offices at/ (hereinafter referred to as "Hooker"). WHEREAS, Shell and Hooker have entered into previous agreements dated January 24, 1973 and October 24, 1974 for the sale by-Shell to Hooker of Vinyl Chloride Monomer (hereinafter referred to as "VCM") during the year 1974 and for the conversion by Shell of Hooker's chlorine to VCM in subsequent years for delivery to Hooker; and WHEREAS, Shell and Hooker desire to maintain a mutually bene ficial long-term agreement for the conversion of Hooker chlorine into > VCM by Shell. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereby agree as follows: WITNESSETH 1. TERM. A. This Agreement shall be binding upon the parties upon and after the execution hereof. It shall remain in full force and effect for a Primary Period of six (6) years, beginning on January 1, 1979, and shall continue thereafter unless and until terminated. Either OXY/HOLMES 000693 7/24/76 2 party may terminate as of the last day of the Primary Period or at any time thereafter by giving notice of termination to the othe party at least eighteen (18) months in advance; however. Hooker may terminate this agreement earlier under the sole circumstances described in Article l.B. below. B. If Hooker decides to build or acquire VCM manufactur ing capability. Hooker may terminate this agreement at the end of three (3) years or at the end of four and one-half (4-1/2) years providing that Hooker has given Shell written notice eighteen (18) months in advance of the proposed termination date. If Hooker has failed to notify Shell of its intent to terminate this agreement by July 1, 1980, +' the option to terminate at the end of three (3) years lapses and Hooker A <cP* may then not terminate this agreement until the end of four and one-half (4-1/2) years. If Hooker subsequently fails to notify Shell of its intent to terminate by January 1, 1982, then the termination provisions and 12 of Article l.A./ are the sole conditions, of termination. 2. QUANTITIES - CONVERSION. During the term of this Agreement, Hooker shall deliver liquid chlorine to Shell by pipeline at Shell's Norco, Louisiana plant, or by mutual consent, by 90 ton tank car to such Shell location(s) as Shell shall designate, pursuant to Article 6 hereof, to be held by Shell in storage for Hooker's account and to be converted subsequently into such amounts of VCM as Hooker shall order, at a conver sion ratio of 0.64 pounds of chlorine to 1.0 pound of VCM. In no event shall Shell be obligated to deliver to Hooker in any calendar month a quantity of VCM exceeding 1/11 of the applicable calendar year maximum quantity shown below or, cumulatively, 1/6 of such calendar year maximum in any two (2) succeeding months. OXY/HOLMES 000694 7/2U/78 & nV QUANTITIES OF VCM TO BE CONVERTED - MILLION POUNI^ YEAS MINIMUM 1979 and each 150 year thereafter MAXIMUM I 180 \J Hooker shall notify Shell not less than nine (9) months prior 1980 '10^] to the start of afoftSff and any future year as to its nomination of the, quantities of VCM desired during that calendar year within the range of LaX (J Hooker's nomination for 1979 is 170,000,000 lbsT the applicable minimum and maximum amounts specified above./ Except as further limited by such applicable calendar year minimum and maximum quantities, Hooker will be required to receive not less than 95% of the nomination for each succeeding calendar year (Hooker's "obligated quantity"), and Shell will be required to deliver up to, but not in excess of (except at its option), 105% of the nomination for such calendar year (Shell's "obligated quantity"). If Shell has additional VCM capacity after allowing for the supply of its other current or planned obligations, as determined by Shell, then Shell shall offer Hooker on at least a quarterly basis, such excess quantity. If under these conditions Hooker accepts such offer, . or if for any other reason Hooker requests Shell to deliver more VCM in any calendar year than the applicable calendar year Shell obligation (105% of such year's nominated quantity or maximum quantity, whichever is applicable) and Shell so agrees, then the applicable calendar year minimum and maximum and the nominated quantity for such year, will be amended to include the added quantity or quantities. In the event Shell requests Hooker to have less chlorine converted into VCM in any calendar year than the applicable calendar OXY/HOLMES 000695 7/2V78 A year minimum, and Hooker so agrees, then the applicable cal^adar year minimum and maximum shall be of no effect for such year, an* that amount requested by Shell and agreed to by Hooker shall be treated as the nomination for such calendar year. 3. PERFORMANCE. If Hooker fails, for reasons other than those provided for in Article 10 hereof, to order and accept its obligated quantity for any calendar year, the provisions outlined in Paragraphs A, C and D shall apply and the amount of the obligated quantity shall reflect any adjustments under Paragraph B. If, however. Hooker gives notice of termination of this agreement at the end of the primary period or anniversary thereof or prior to the end of the primary period as provided for in Article I.B., then option 1 of Paragraph A shall not be available to Hooker in the last year (twelve-month period) of the agreement. A. Subject to Paragraphs B. and C. of this Article 3; at Hooker's option exercised within 15 days after notice from Shell of any * underlift for the prior calendar year, either (1) the minimum and maximum quantities specified in Article 2 for all years of this Agreement subse quent to the year of such underperformance by Hooker shall be reduced by the difference between its obligated quantity for the year of under performance and the quantity actually ordered and accepted by Hooker during such year or, (2) Hooker shall pay to Shell as liquidated damages for each pound of VCM below such obligated quantity not ordered and accepted during the year an amount to be calculated as follows: OXY/HOLMES 000696 7-24-78 5 Payment = CF - 0.48E - 1.0 cent per pound^ > a CF - average conversion fee hereunder expressed ife cents per pound for the year in question. E = Shell's valuation of ethylene in VCM expressed in cents per pound as determined by Shell and consistent with the average conversion fee hereunder. If option (2) is applicable, payment shall be made by Hooker within thirty (30) days after the date of Shell's invoice. B. * If no later than ninety (90) days prior to January 1 of any calendar year of the Term hereof Hooker requests Shell to attempt to sell elsewhere a specific portion of the obligated quantity of VCM that Hooker is required to order and accept hereunder during that next calendar year, then to the extent that Shell may, after exercising its best efforts, sell such portion thereof at a price considered by Shell, in its sole judgment, to be satisfactory. Hooker's obligated quantity for that next calendar year in question shall be correspondingly reduced. If Hooker, at the time of its request for Shell to sell a specific portion of its obligated quantity, requests that such sale be limited to the quantity for that next calendar year, then Shell will not, without prior consultation with Hooker, commit such quantity for future periods if such quantity would reduce Hooker's ability to have said quantity converted by Shell in subsequent years. Hooker may also request that Shell sell elsewhere a portion of the obligated quantity for any calendar year up to ninety (90) days after January 1 of such calendar year of the term hereof but Shell may, at its option, decline to sell such material for any reason, including but not limited to disruption of Shell's sales OXY/HOLMES 000697 7/2U/78 6 plan or interference with sales to Shell's other contract customers. The minimuns and maximums specified in Article 2 hereof foxteach calendar year or years shall be correspondingly reduced by any specific portion of Hooker's obligated quantity sold elsewhere by Shell hereunder at Hooker's request. C. If after Hooker requests Shell to sell a specific portion of its obligated quantity in accordance with Paragraph B above, and Hooker fails to order and accept that portion of its obligated quantity not requested of Shell to be sold to third parties during that year, then the provisions of Paragraph A above shall apply with regard to the underlifted quantity (i.e., the difference between the obligated quantity not requested of Shell to be sold to third parties by Shell and the quantity actually ordered and received by Hooker during the year), provided, however, that as to such underlifted quantity the choice of option 1) or option 2) of Paragraph A shall reside in Shell, not Hooker. 0. Notice of any underlifting or option elected by Shell '-'a* under Paragraph C shall be given by Shell, within fifteen (15) days following the year in which the underperformance by Hooker occurs. 4. CONVERSION FEE. For all VCM converted for and delivered to Hooker hereunder. Hooker shall pay Shell FOB Shell's plant a conversion fee, to be nominated by Shell ninety (90) days in advance of January 1, 1979. As of the date this agreement is signed, such conversion fee is effectively 10.75 cents per pound (11.85 cents per pound conversion fee, less a Temporary Voluntary Allowance of 1.1 cent per pound). This fee may be reasonably increased at any time after it has been in effect ninety (90) days upon thirty (30) days' notice given to Hooker by Shell. OXY/HOLMES 000698 A 7/2U/T8 7 Any conversion fee in effect hereunder may be decreased by at its - option at any tine and reinstated subsequently by Shell at ^iy tine upon notice to Hooker by Shell. For any calendar year, if Hooker provides Shell satisfactory vritten evidence that a third party is willing to convert Hooker chlorine into at least 75 million pounds of VCM at an overall delivered cost including Hooker chlorine transportation fees which is lower by more than 0.25 cents ($0.0025) per pound for VCM converted hereunder for the same time period, and such competitive offer is made without disclosure by Hooker of the conversion fee hereunder, then unless Shell elects (and so advises Hooker in writing) within thirty (30) days to meet such competitive fee for the quantities so offered, the offered quantities shall be deducted from the obligated quantity of both parties hereunder for such calendar year. In the event Shell elects to meet such a competi tive offer, no later offer of the same competitor or of the same parcel, made within twelve (12) months of the date of Shell's election, shall be considered to be a competitive offer within the meaning of this Article 4. Further if Hooker provides written evidence satisfactory to Shell that Shell's chlorine conversion fee puts Hooker at a significant competitive disadvantage, i.e., 0.25 cents ($0.0025) per pound, as determined in good faith by Shell to costs for VCM otherwise actually available to Hooker from any of the three largest domestic VCM producers other than Shell, then Shell will either reduce its chlorine conversion fee to be competitive or give Hooker the option to reduce its obligated quantity by an amount equal to Hooker's actual purchases from non-Shell sources for all remaining years of the contract. OXY/HOLMES 000699 7/2U/78 5. PAYMENT. Payment of the conversion fee for ^jCM delivered % hereunder shall be made to Shell within thirty (30) days after the date - - -- v of Shell's invoice. o* ( aOs s>-* . 6. DELIVERIES. A. General: Not less than 10 days prior to the beginning of each calendar month Hooker shall, if Shell desires, advise Shell as to the quantity of chlorine it desires to have converted into VCM, at the conversion ratio set out in Article 2 for subsequent delivery to Hooker during the following three (3) months. It is intended that Hooker shall deliver liquid chlorine to Shell's facilities at Norco, Louisiana via pipeline. By mutual consent, cA liquid chlorine deliveries may be made by 90 ton tank car to such Shell -<|c location(s) as Shell shall designate. Hooker will provide and maintain necessary facilities, includ ing a pipeline to Hooker's Taft, Louisiana property line at Hooker's cost and expense, to deliver such amounts of liquid chlorine as required to produce the appropriate quantity of VCM as specified hereunder. Shell shall transport such quantities of chlorine from Hooker's property line to Shell's Norco, Louisiana Plant in a pipeline to be maintained at Shell's cost and expense. Hooker shall pay Shell on a monthly basis a reasonable pipeline charge for chlorine transported through Shell's pipeline and used for conversion to Hooker's VCM. Shell's pipeline charge will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing Shell's pipeline and on operating qosts both prorated on the basis that Hooker's throughput of chlorine for conversion to Hooker's VCM bears to the total throughput of chlorine OXY/HOLMES 000700 7/2i*/78 9 through the line provided, however, that such pipeline charge shall not exceed Hooker's equivalent rail cost for movement of chlorigie in Hooker's 90 ton rail cars from Hooker's Taft, Louisiana Plant to Shell's Norco, Louisiana Plant. It is intended that Shell shall deliver the VCM converted hereunder in tank cars acceptable to Shell and furnished by Hooker. With prior mutual agreement such deliveries may be supplemented by tank cars furnished by Shell. Deliveries shall be made from Shell's plant at Norco, Louisiana, or from other locations at Shell's option on reasonably advanced notice. If the chlorine necessary for conversion into VCM as set forth above is not in Shell's storage, or readily accessible at the time of conversion, then Shell shall be excused from delivery of the volume of VCM not produced and Hooker's entitlement to VCM for the calendar year then in effect will be correspondingly reduced. Both parties shall make best efforts to maintain the chlorine delivered in balance with VCM S'V . shipped. The intent is to maintain balance at all times but should an imbalance occur it shall be redressed during the following month. Imbalances created by planned shutdowns of tbe VCM plant for maintenance shall be redressed by means mutually agreed to prior to the shutdown. Hooker shall notify Shell in writing by the 20th of each month of the planned chlorine deliveries for the following three months. These quantities will be modified as required to redress imbalances. B. Liquid Chlorine: Measurements of the quantities of liquid chlorine shipped to Shell hereunder shall be made in accordance with the procedures set forth below: OXY/HOLMES 000701 7/2U/78 10 1. For Shipments by Pipeline. The quantity of liquid * chlorine delivered by pipeline will be determined by a turbine meter or mutually acceptable volumetric flow meter. The meter will be checked regularly by a mutually acceptable method and Shell shall have the right to have representatives present during checking and calibration of the meter. Shell shall have the right to approve the piping arrangement through the meter to the pipeline to insure accurate measurement. 2. For Shipment in Tank Cars. Measurement of the net quantity of liquid chlorine shipped to Shell in tank cars shall be made using railroad type weigh scales. The type scales, their calibration and use in weighing shall conform to the requirements set forth by American Association of Railroad (A.A.R.) rule. Cars shall be weighed at rest on stationary scales, the capacity and platform of which will enable each car to be weighed singly. Cars to be weighed shall be uncoupled from any other railroad equipment when placed on the scale for weighing. The weigh scale shall be calibrated every six months in accordance with regulations as set forth by the A.A.R. rule. Shell's designated representative from time to time, upon request to Hooker's designated representative, shall be permitted to witness the weighing of the chlorine cars to be shipped to Shell to verify the accuracy of the weights. The tare or light weight of each car to be loaded is to be measured immediately before loading with liquid chlorine. A weight document for each car shall be furnished to Shell which shall OXY/HOLMES 000702 i 7/24/78 11 include the time of day, date, weight, weigher and car numh*r for rhe > . tare and gross weight. Car seal numbers shall be recorded.* C. VCM by Tank Car. The quantity or weight of VCM delivered into tank cars for Hooker's account shall be determined on the basis of outage tables with appropriate corrections for temperature, or on the basis of certified weights of the common carrier of each loaded tank car utilizing printed tare of such tank cars or some other means which is mutually acceptable. "Heel" allowance shall be computed on the basis of the standard factor at 5 psig of 3 pounds per 100 gallons of car capacity, provided such cars are returned to Shell with a VCM pressure of between 5 and 10 psig prior to loading and with an oxygen content less than 1,000 ppm. In the event that the oxygen content exceeds 1,000 ppm, no heel allowance will be granted and Hooker shall pay the actual cost (plus plant overhead) of purging the car to make it suitable for loading. 7. GOVERNMENTAL CHARGES. All new taxes and other governmental charges other than those based on income, which are imposed on VCM, or on the raw materials, process materials or catalysts from which the VCM is produced, or on Shell (including without limitation its VCM manufac turing facility), or required to be paid or collected by Shell by reason of the production, conversion, transportation, or delivery of the VCM hereunder, shall be paid to Shell by Hooker in addition to the con version fee and within thirty (30) days after the date of Shell's state ment. 8. TITLE, COMMINGLING AND RESPONSIBILITY FOR LOSS. Title to all chlorine delivered to Shell and held by Shell for Hooker's account and all VCM converted hereunder shall be and remain in Hooker's account OXY/HOLMES 000703 7/2V78 12 but Shell shall have the right to commingle with its own chlorine all chlorine delivered to Shell and held by Shell for Hooker's Recount hereunder. Shell shall have also the right to commingle with its own VCM or other VCM held for the account of third parties, all VCM converted for Hooker's account hereunder. To the extent caused by Shell's negligence. Shell shall be responsible for all loss or damage 1) to chlorine delivered to Shell and held by Shell for Hooker's account hereunder, 2) to all VCM converted from such chlorine while on Shell's property and 3) to all Hooker tank cars, full or empty, while on Shell's property. Any chlorine required for conversion in excess of the con version ratio shall be supplied by Shell at no cost to Hooker. Any chlorine remaining in Shell's storage because of conversion efficiency shall become the property of Shell. 9. LIABILITIES - CLAIM. Hooker warrants that the chlorine delivered hereunder will meet the specifications set forth in Exhibit *'s > . "A" and Shell warrants that the VCM converted from such chlorine will meet the specifications set forth in Exhibit "B" or subsequently modified by mutual written agreement, but Shell and Hooker make NO OTHER WARRANTIES hereunder, WHETHER OF MERCHANTABILITY, FITNESS OR OTHERWISE, AND NONE SHALL BE IMPLIED. Hooker shalj. accept Shell's analysis of VCM converted hereunder as determined on the contents of Shell's storage spheres prior to delivery to Hooker and Hooker shall accept Shell's Certificate of Analysis therefore as representative of the quality of the VCM delivered hereunder with respect to meeting the specifications warranted unless proven to be in error. Hooker shall have the right on reasonable advance OXY/HOLMES 000704 7/2U/78 13 notice to obtain from Shell, from time to time, a sample o^the VCM > delivered hereunder in a sample container provided by Shells and purchased from Shell by Hooker. Shell shall have no liability for, and Hooker shall indemnify Shell against all claims, loss, liability and expense on account of any injury or death of persons (including Hooker's employees) or damage to property (including Hooker's) to the extent caused by Hooker's negligence in unloading, storage, handling or use of the VCM delivered hereunder after the VCM is safely loaded into suitable tank cars and on execution by appropriate railroad representative of a nonnegotiable bill of lading. Hooker shall have no liability for, and Shell shall indemnify Hooker against all claims, loss, liability and expense on account of any injury or death of persons (including Shell's employees) or damage to property (including Shell's) to the extent caused by Shell's negligence in unloading, storage, handling or use of the chlorine delivered here under after arrival of the chlorine upon Shell.'s premises. Neither Shell nor Hooker shall have any liability to the other for any claims arising directly or indirectly out of or in connection with this Agreement, unless the claimant gives the other party notice of the claim setting forth fully the facts on which it is based within ninety (90) days alter the date of delivery or other transaction or occurrence giving rise to the claim. 10. EXCrSES FOR NONPERFORMANCE. Neither Shell nor Hooker shall be liable for failure or delay in the performance of this Agree ment, to the extent that, in Shell's case, its ability to produce or deliver the VCM cc verted hereunder, or in Hooker's case, its ability to OXY/HOLMES 000705 7/2V78 14 produce or deliver the chlorine converted hereunder or to consume the VCM which Shell converts hereunder, is delayed. Impaired, o prevented, by any circumstances (except financial) reasonably beyond its control, or by fire, explosion, breakdown in machinery or equipment, failure of catalyst, or riots, strikes, labor disputes, condemnation or conveyance under threat of condemnation, voluntary or involuntary compliance with any law, order, regulation, recommendation, or request of any govern mental authority (including, without limitation, those relating to price controls and product allocation), or total or partial failure of the usual means of transportation of chlorine, ethylene, Dichloroethane, VCM or PVC or inability or delay in obtaining all or any part of the feed stocks, process materials or catalysts used in the manufacture of chlorine, Dichloroethane, VCM or PVC, from earlier established internal or third party sources of supply. As used herein, "labor dispute" shall mean any controversy to which either Shell or Shell's source for feedstocks, process materials or catalysts or Hooker or Hooker's source of feedstocks, process materials or catalysts has an interest involving wages, hours or working conditions, and includes any strike, picketing, lockout, suspension of construction or any other action taken in connection with or because of the labor dispute. Neither Shell nor Hooker shall have any obligation to participate in any settlement of a labor dispute, or to request its agents or contractors or raw material suppliers to do so. The quantities of VCM consequently undelivered as a result of causes so excused hereunder shall not be required to be made up by Shell upon resumption of full deliveries of VCM hereunder and such excused quantities shall be deducted from the applicable remaining obligated quantities of Shell and Hooker OXY/HOLMES 000706 7/24/78 15 under this Agreement. In the event that Shell is excused f^om delivering any quantity of VCM due to any of the causes specified abovi, Shell shall allocate a pro rata share of its remaining supply of VCM to Hooker, such share to be equal to the percentage which Hooker's nominated quantity for the year in question bears to the total of VCM commitments to all customers and Shell's internal requirements as determined by Shell for such year at Shell's Norco, Louisiana plant, times the volume available for shipment. Neither Hooker nor Shell shall have any obligation in the event of any excused causes specified above to purchase ethylene, chlorine, Dichloroethane or VCM to perform hereunder, nor to be required to supply ethylene, chlorine, Dichloroethane or VCM produced in any of its plants other than those normally used for performance hereunder, provided that available supplies of such products from sources previously used during the applicable calendar year to supply the same hereunder are apportioned equitably among customers and internal uses in such manner as Hooker and S. hell, in their sole judgment, find appropria* 'te> . If Shell's performance is excused hereunder due to inability to obtain feedstocks, process materials or catalysts used in the manufacture of VCM from Shell's earlier planned or established sources. Shell shall use diligent efforts to obtain such materials from other than earlier planned or established sources but fees hereunder shall be adjusted to reflect any increase in cost to Shell. If Shell is unable to obtain such feedstocks, Hooker, at its option, on reasonable notice may provide such feedstocks as are acceptable to Shell by mutually agreeable delivery methods and at Hooker's cost, and Shell shall convert VCM from such feedstocks provided by Hooker for delivery to Hooker for so long as Shell's excused performance OXY/HOLMES 000707 T/2i*/78 16 continues hereunder but fees shall be adjusted to reflect uiy corresponding . increase or decrease in cost of feedstocks to Shell. 11. ASSIGNABILITY. Neither this Agreement nor any claim against Hooker or Shell arising directly or indirectly out of or in connection with this Agreement shall be assignable by either party or by operation of law, without the prior written consent of the other party. 12. REMEDIES. In the event of any breach by either party of any of the provisions of this Agreement which continues for thirty (30) days after notice thereof is given by the other, such other party shall have the right, in addition to any other rights or remedies it stay have, to suspend or refuse deliveries hereunder and/or to terminate this Agreement by notice to the defaulting party, effective thirty (30) days following the date of such notice. Either party's right to require strict performance of the obligations of the other shall not be affected in any way by any previous waiver, forebearance or course of dealing. 13. NOTICES. All notices or demands under this Agreement whether required by the terms hereof or otherwise shall be in writing and shall be delivered or mailed by certified or registered mail, return receipt requested, to the following addresses of the parties or to such other addresses as may be hereafter designated in writing by the respec tive parties: OXY/HOLMES 000708 7/24/78 17 If to Hooker: Copy--to: Hooker Chemical & Plastics Corp. * Ruco Division ^ River Road c- Burlington, New Jersey 08016 Attention: Division Material Manager If to Shell: Shell Chemical Company A Division of Shell Oil Company P. 0. Box 2463, One Shell Plaza Houston;, Texas 77001 Attention: General Manager, Chemical Sales All purchase orders or purchase acknowledgements which may be used to order or acknowledge orders for delivery of VCM hereunder shall be deemed to be intended for convenience and the provisions contained therein shall not serve to add to or otherwise vary the provisions of this Agreement. when it becomes effective January 1, 1979, shall TO ENTIRETY-RELEASE. This Agreement/comprise the entire . shall Agreement and/m; Kxgssxrat supersede, all prior understandings and repre sentations (oral or written) between Shell and Hooker concerning the conversion of chlorine into VCM for Hooker, specifically including an agreement dated October 24, 1974 as amended. ' Neither this Agreement nor any subsequent Agreement amending or supplementing this Agreement shall be binding on Shell or Hooker unless and until it has been signed by the party claimed to be bound thereby, and commencement of performance hereunder or under any such subsequent Agreement shall not constitute a waiver of this requirement. 15. FAVORED NATIONS. If at any time Shell converts chlorine to VCM for a third party of substantially equal or better quality and quantity at a chlorine conversion fee or upon terms more favorable to the customer than in effect hereunder, Shell shall immediately give OXY/HOLMES 000709 T/2U/78 18 Hooker the benefit of such lower chlorine conversion fee or^pore favor** able terms for all deliveries of VCM made thereafter for so^long as such lower price or more favorable terms remain in effect for a third party. It is understood that this paragraph does not apply .to (a) chlorine con versions or deliveries by Shell to the government of the United States of America, (b) chlorine conversions or deliveries by Shell to any company which receives a functional discount for resale on that quantity which is resold, (c) chlorine conversions by Shell to customers for uses in manufacture of products not competitive with products manufactured by Hooker, (d) chlorine conversions for domestic third parties where Shell is meeting bona fide competitive situations, or (e) chlorine conversions for third parties for export outside the United States. IN WITNESS WHEREOF, the parties hereto have signed this Agree ment in duplicate as of the day and date first written above. SHELL CHEMICAL COMPANY A Division of Shell Oil Company - HOOKER CHEMICAL & PLASTICS CORP.' OXY/HOLMES 000710 7/24/78 19 EXHIBIT A CHLORINE SPECIFICATIONS % * Chlorine Chlorinated Compounds Nonvolatile Hatter Water Bromine 99.5% vol. min. 1000 ppm max. 100 ppm max. 30 ppm max. 100 ppm max. OXY/HOLMES 000711 7/24/78 MtUl, EXHIBIT B SPECIFICATIONS FOR VINYL CHLORIDE HOOKER CHEMICAL & PLASTICS CORP. Vinyl Chloride Acetaldehyde Acetylene Acidity, as HC1 Butadiene Heavy Ends* Iron Methyl Chloride Vinyl Acetylene Nonvolatiles Peroxide, as ^0^ Sulfur Water Appearance Color Stabilizer 99.9% minimum by weight 1 ppm maximum by weight 0.4 ppm maximum by weight 1 ppm maximum by weight 8 ppm maximum by weight 50 ppm maximum by weight 0.5 ppm maximum by weight 70 ppm maximum by weight 20 ppm maximum by weight 50 ppm maximum by weight 0.06 ppm maximum by weight 1 ppm maximum by weight 100 ppm maximum by weight Clear and free of suspended matter Colorless None added *Heavy ends include the following: Ethyl Chloride, 1,1-Dichloroethylene, 1,2-Dichloroethylene, Beta-Chloropropene, Dichloroacetylene, Chloroprene, Vinylidene Chloride, CIS Dichloroethane, TRANS Dichloroethane, 1,1-Dichloroethane, 1,2-Dichloroethane, Trichloroethylene, Perchloroethylene, Monochloropropane, Oichloropropane, Vinyl Bromide OXY/HOLMES 000712 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS SHELL/OCCIDENTAL VCM AND ETHYLENE SUPPLY AGREEMENTS MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding shall constitute the basis for drafting formal VCM Conversion, Ethylene Conversion, and VCM Tank Car Sub-Lease Agreements expected to be entered into by Shell Chemical Company ("Shell") and Occidental Chemical Corporation ("Occidental"). Shell and Occidental agree to develop these formal agreements in an expeditious manner. Until such agreements are executed. Shell and Occidental further agree to abide by the terms and conditions of this Memorandum of Understanding. I. VOl A. VOLUME 1985: 150 MM lb plus any excess of Occidental's total VCM requirement over 600 MM lb (such excess will be estimated and spread ratably over 1985), up to 200 MM lb total. 1986: At Shell's option (option to be exercised by July 1, 1985), any difference between 200 MM lb and the volume supplied in 1985. B. CONVERSION FORMULA (1) Occidental supplies: .485 lb ethylene/lb VCM .64 lb chlorine/lb VCM (2) Occidental pays the following monthly fee, c/lb: V - 0.3 - .485E - .64C + 0.167 for tank car earnings equalization on the first 150 MM lb of VCM. where: V Prevailing VCM Market Price to Large Buyers, c/lb E Price of Ethylene in c/lb, as determined by the Average of the Low End of the U.S. Gulf Coast Ethylene Contract Price Range published by DeWitt and Company, Inc. each month. C Prevailing Price of Chlorine in c/lb on the U.S. Gulf Coast, F.O.B. Producing Point, For VCM Production. The conversion fee cannot be less than 3.5c/lb. BSGQ8434107 OXY/HOLMES 000713 2 (3) Payment terms are net thirty days from the date of Shell's invoice C. DELIVERY (1) Chlorine will be supplied by Occidental to Shell at locations designated by Shell, but any chlorine freight chaTge in excess of $10/ton will be for Shell's account. The parties will work together to minimize freight charges. (2) VCM will be supplied by Shell F.O.B. Deer Park, Texas into railcars provided by Occidental. 2. ETHYLENE A. VOLUME 1985: 130 MM lb Plus all ethylene required for Conversion to VCM hereunder. 1986: 10.8 MM lb /month until the restart of Occidental's Lake Charles ethylene plant, estimated to be April 1986, plu6 all ethylene required for conversion to VCM hereunder. B. CONVERSION FORMULA (1) Occidental Supplies: 1.266 lb ethane/lb ethylene, either contained in an 80/20 E/P mix or contained in purity ethane at Shell's option with 30 days' notice F.O.B. Mont Belvieu, Texas. If E/P mix is supplied. Shell will return the propane portion of the mix to Occidental at a mutually agreeable location at no cost to Shell. (2) Shell will deliver all ethylene not required for conversion to VCM hereunder to Occidental, F.O.B. BFGoodrich's LaPorte, Texas plant or Convent, Louisiana plant at Occidental's option with 30 days' notice. (3) Occidental pays a monthly fee of 5.5c/lb of ethylene from January 1, 1985 through June 30, 1985 if supply of ethane is an E/P mix. If supply is as purity ethane, the fee is 5.25c/lb for this period. A 0.5c/lb premium will apply for ethylene delivered to Convent, Louisiana. (4) On or before June 1, 1985 for July 1 through December 31, 1985 and on or before December 1, 1985 for January 1 through June 30, 1986, Shell will nominate conversion fees for these periods. If Occidental objects to either nomination by BSGQ8434107 OXY/HOLMES 000714 3 June 15, 1985 or December 15, 1985, respectively, the parties will negotiate conversion fees for the periods in question. Failure to agree on a fee will result in termination of the agreement. (5) Payment terms are net 30 days from date of invoice. Invoices will be issued monthly. 3. VCM TANK CARS A. The following is the VCM tank car fleet that had previously been designated to supply 300 MM lb of VCM to Occidental's Northern Plants in 1985: Occidental-owned UTLX 114 UTLX 116 UTLX 117 UTLX 104 - 28 cars - 10 cars - 40 cars - 16 cars - 49 cars expir. expir. expir. expir. 2/28/85 10/31/85 12/31/85 6/30/89 B. CURRENT PROPOSED ARRANGEMENT (1) Effective January 1, 1985 Shell sub-leases all above leased cars to Occidental for the remainder of their lease periods. (2) Shell assigns mileage earnings on UTLX 104 to Occidental. (3) Mileage earnings on UTLX 114, 116, and 117 are retained by Shell and protected for the remaining unexpired portions of the leases as outlined in Shell's draft letter of intent "Sub-lease of VCM Rail Cars" dated October 24, 1984. (4) UTLX 114, 116, and 117 cars will be used exclusively and preferentially for Shell-supplied VCM. Occidental-owned cars will be used exclusively for VCM supplied by Occidental's other supplier. UTLX 104 cars will be used as needed for either supply. 4. WAIVER OF LIQUIDATED DAMAGES Shell agrees to waive liquidated damages for Occidental's VCM underliftings in 1984. BSGQ8434107 OXY/HOLMES 000715 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS May 30, 1985 Shell Chemical Company A Otvision of Shell Oil Company One Shell Plaza P.O. Box 2463 Houston. Texas 77001 Mr. Ronald J. Schuh Vice President, Purchasing Occidental Chemical Company RiverPark P. 0. Box 4020 Darien, CT 06820 Dear Ron: The June toll fee for VCM based upon our Chlorine/Ethylene toll is 6.25 cents per pound. As soon as possible, I will be in touch with you relative to the adjustment of the May fee. If you should have any questions, please call me. Sincerely, Manager Corporate Accounts RFW-.AC cc: L. A. Wheeler D. K. Carlson BRHK8515002 RECEIVED JUN 3 H# R. J. SCHUH OXY/HOLMES 000716 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS j 1st Quarter (1985) Ethylene Costs Arco E cost = 5.733 + .4129 (18.75) + .2435 L = 5.733 + 7.742 + .2435 = 13.719 13.9-3-f Shell Eg cost delivered LaPorte = 5.250 + .4263 (20.0) + .2435 5.250 + 8.526 + .2435 14.02 Eg cost Convent, LA = 14.02 + .50 14.52 C6W 2/28/85 1 OXY/HOLMES 000717 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Ethylene Costs 2nd Quarter (1985) Arco E, cost * 5.733 + .4129 (20.25) + .2435 c = 5.733 + 8.361 + .2435 * 14.338 Shell Eg cost delivered LaPorte Eg cost Convent, LA 5.250 .4263 (21.0) + .2435 5.250 + 8.952 + .2435 14.446 14.446 + .50 14.946 CGW 6/19/85 1 OXY/HOLMES 000718 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS 9 3rd Quarter (1985) Ethylene Costs Arco E, cost * 4.90 + .4129 (21.5) .2435 ' 4.90 + 8.877 + .2435 - 14.021 Shell E2 cost delivered LaPorte * 4.65 + .4263 (21.5) + .2435 v 4.65 + 9.165 + .2435 14.059 E2 cost Convent, LA 14.059 + .50 14.559 CGW 8/13/85 4 OXY/HOLMES 000719 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS A.T, <2.03. 4 6' ^ /33 J3. ? `/s' /3 3 /3~ce^r&' OXY/HOLMES 000720 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS March 18, 1985 Shell Chemical Company A Divinon of Sh* Oil Company One Shell Plaza P.O.Box 2463 Houston. Texas 77001 Mr. Ronald J. Schuh Vice President, Purchasing Occidental Chemical Company RiverPark P. 0. Box 4020 Darien, CT 06820 Dear Ron: The February toll fee has been finalized at 5.47 cents per pound basis our formula agreement shown below: F = V - 0.3 - 0.485 (E*) - 0.64 (Cl2*) + 0.167 Where: V = 17.0 cpp E = (15.5 + 15.5)/2 = 0.24 = 15.74 cpp Cl2 = (115 + 2.7) $/Tn = 5.89 cpp *Plus Superfund If you have any questions, please call me. Sincerely, R. F. Weyfjle Manager Corporate Accounts RFW:AC cc: L. A. Wheeler D. K. Carlson BRHK8507701 OXY/HOLMES 000721 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Shell Chemical Company February 18, 1985 Mr. Ronald J. Schuh Vice President, Purchasing Occidental Chemical Company RiverPark P. 0. Box 4020 Darien, CT 06820 Dear Ron: The retroactive toll fee for VCM for the month of January, 1985 is calculated to be 4.92 cents per pound. We have used the following input. Large buyer VCM buying price - 16.25 cpp Ethylene value per DeWitt (Avg. of 2 January letters) - 16.50 cpp Chlorine value - $100/ton Calculation as follows: 16.25 - 0.30 - 0.485 x 16.50 - 0.64 x $100 + 0.167 = 4.92 If you have any questions, please call me. Sincerely, Manager corporate Accounts RFW:AC cc: D. K. Carlson BRHK8504903 RECEIVED FEB 2 21985 Ft. J ef'HUH OXY/HOLMES 000722 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS February 28, 1985 Shell Chemical Company A Division of StwR Oil Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 Mr. Ronald J. Schuh Vice President, Purchasing Occidental Chemical Company RiverPark P. 0. Box 4020 Darien, CT 06820 hHCEiVED MAR 5 1985 R. J QOHUH Dear Ron: Per our discussion, the revised VCM toll fee for January, 1985 is 4.46 cents per pound. This takes Superfund into consideration. Fee = V - 0.3 - 0.485 E + S.F. - 0.64 C + S.F. + 0.167 Where V = 16.00 cpp E = (17 + 16)/2 = 16.54/lb. + 0.24 C = $100/ton + $2.70 + 0.167 Also, Ron, the actual VCM volume for January was 11,710,809 pounds. If you have any questions, please call. Sincerely, R. F. We^gie Manager Corporate Accounts RFW:AC cc: D. K. Carlson L. A. Wheeler BRHK8505906 OXY/HOLMES 000723 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS REQUISITION NO. MONK OR OCR REQUISITIONER D. L. Lull AF6 NO. ESTIMATE EXT. DELIVER TO ACCOUNTING CODES VEN0OR COOE L-l ROfi COMMODITY VENOOR PHONE NO. 3XY OCCIDENTAL CHEMICAL CORPORATION PVC RESINS DIVISION PVC FABRICATED PRODUCTS DIVISION SUBSIDIARY OF OCCIDENTAL PETROLEUM CORPORATION to r L Shell Chemical Company Attn: R. F. Weigle One Shell Plaza P. 0. Box 2463 Houston, TX 77001 ~i J PURCHASE ORDER DATE 12/20/84 DELIVERY DATE As Released PAYMENT TERMS Net 27 IF UNABLE TO COMPLY WITH DATE SHOWN-PLEASE ADVISE AT ONCE. PURCHASE ORDER page i of THIS NUMBER MUST APPEAR ON ALL CRATES.PACKAGES.INVOICES. TRANSPORTATION PAPERS AND CORRESPONDENCE. RELEASE NO. No- BU/PC-38702 SHIP TO Highway No. 1 at Sid Richardson Road ADDIS. LA. 70710 River Road BURLINGTON, NJ. 08016 1 Armand Hammer Boulevard POTTSTOWN.PA. 19464 Marvel Road & Goddard Parkway SALISBURY. MO. 21801 ATTN: 13 VENDOR TRUCK 13 MOTOR FREIGHT QUANTITY ups RAIL TANK TRUCK UNITS COMMODITY CODE F>*. _______ P/S; Deer Park. TX DESCRIPTION C3 FRT. ALLOWED FRT. COLLECT FR6FAY * AOO PRICE PER UNIT OF ISSUE EXTENDED PRICE - ..THIS .BLANKET-PURCHASE. ORDER COVERS OCCIDENTAL CHEMICAL'S PARTIAL .REQUIREMENTSl__OF .THE ITEM LISTED ' BELOW AS MAY BE RELEASED DURING CALENDAR. YEAR. 1985. ....... -- Chlorine to Vinyl Chloride Monomer as. per -Supply. .Agreement dated December 12, 1984. Priced a 5 per contract L50,000 ,000 lbs. OUR CODE CD-001 Sstimat 2d r 2quirement for the Pottstown and Burlington loc itions. control NO. 72969 j. F# KNIGHT/ seh - INVOICE TO NVOICES AND APPROPRIATE TRANSPORTATION PAPERS. IN TRIPLICATE. ARE TO BE SENT TO: OCCIDENTAL CHEMICAL CORPORATION P.O. BOX 699 POTTSTOWN.PA. 19464 ATTN:ACCOUNTS PAYABLE EMICAL CORPORATION THIS ORDER EXPR'WGfc* LIMITS ACCEPTANCE TO THE TERMS ON THE FACE AND BACK HEREOF AND ANY ADDITIONAL OR DIFFERENT TERMS PROPOSED BY THE SELLER ARE OBJECTED TO AND REJECTED UNLESS EXPRESSLY ASSENTED TO IN WRITING BY THE BUYER. OXY/HOLMES 000724 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS January 29, 1985 Shell Chemical Company A Division of She* Oil Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 Mr. Ronald J. Schuh Vice President, Purchasing Occidental Chemical Company RiverPark P. 0. Box 4020 Darien, CT 06820 Dear Ron: The February toll fee for VCM based upon our new Chlorine/Ethylene toll is 6.0 cents per pound. As soon as possible, I will be in touch with you relative to the adjustment of the January fee. If you should have any questions, please call me. Sincerely, Manager Corporate Accounts RFW:AC cc: L. A. Wheeler D. K. Carlson BRHK85029Q1 OXY/HOLMES 000725 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS January 29, 1985 Shell Chemical Company A Division of Shell Oil Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 Mr. Ronald J. Schuh Vice President, Purchasing Occidental Chemical Company RiverPark P. 0. Box 4020 Darien, CT 06820 Dear Ron: Attached hereto are: 1. Two executed copies of the "Rail Car Lease" 2. Two executed copies of "Ethylene Confidential Conversion Agreement" You already have the VCM Supply Agreement. After you have reviewed all the documents, please give me a call so we can discuss a convenient time to get together. Sincerely, --^ /R. F. WeigTe Manager Corporate Accounts RFW: AC Attachments BRHK8502902 received JAN 3 0 885 R.J CHUH OXY/HOLMES 000726 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS MEMO FROM DAVE MORGANS November 4, 1985 TO: R. H. Bloom Dear Bob Enclosed per your request, are signed copies of Exhibits A, B and C to the Shell/Oxy VCM Rail Car Lease Agreement. It's been a pleasure working with you! B< irds, David D. Morgans DDM:pb enclosure OXY/HOLMES 000727 RAIL CAR LEASE THIS IS A LEASE, dated January 1, 1985, between OCCIDENTAL CHEMICAL PROPERTIES CORP., a California corpora tion (LESSEE), with offices at P. 0. Box 4020, River Park, Darien, Connecticut, 06820, and SHELL OIL COMPANY, a Delaware corporation (LESSOR), with offices at Two Shell Plaza, P. O. Box 2099, Houston, Texas, 77001. 1. LEASE. LESSOR hereby leases to LESSEE and LESSEE hereby leases from LESSOR those rail cars identified in Exhibit A attached hereto, as well as each additional rail car identified in any additional Exhibit hereto, or in any amendment or replacement of either, which is executed by both LESSOR and LESSEE (including any such additional car ever substituted for any rail car at any time subject to this Lease). As used herein, "Car" means any rail car at any time subject to this Lease; and "Exhibit" means Exhibit A, the additional Exhibit, or the amendment or replacement of either in which such Car is identified. 2. TERM. The Term of this Lease, with respect to each Car, shall be that specified for such Car in the Exhibit. 3. RENT. The Rent for each Car for each calendar month during the Car's Term shall be that specified for such Car in the Exhibit, effective January 1, 1985. LESSOR will invoice LESSEE for all Car rental not offset by rental credits or mileage earnings during the Term of the Lease. LESSOR further agrees, (a) that Rent shall not commence to accrue until the Car is delivered to LESSEE, as provided in OXY/HOLMES 000728 Article 5, and (b) that the Rent for any period less than a calendar month shall be the monthly Rent prorated per diem. 3.1. Additional Charges by Railroads and Others. LESSEE agrees to use the Cars, upon each Railroad over which Cars shall move, in accordance with the prevailing Tariffs or negotiated agreements. If the operation or movement of any of the Cars during the Term hereof shall result in any charges to the LESSOR by any such Railroad or others for LESSES'S account, LESSEE shall pay to LESSOR the amount of such charges within the period prescribed by and at the rates and under the conditions of the then-prevailing Tariffs or charges. LESSEE agrees to indemnify LESSOR against any such charges and shall be liable for any switching, demurrage, track storage, detention or special handling charges imposed on any Car during the Term hereof. 4. SUBLEASE. As to each Car which is not owned but is leased by LESSOR, LESSOR warrants that this subleasing of such Car is permissible under its Lease thereof with the Baselease Owner (Union Tank Car Company, "Union") but this Lease shall be subject to operating conditions under Union's Baselease. 5. INITIAL DELIVERY. 5.1. Place-Time. LESSOR'S initial delivery of each Car to LESSEE hereunder shall be the point designated by LESSEE for transfer or delivery at a Railroad yard, and such delivery shall occur upon the Car's arrival in that yard. LESSOR'S obligation to deliver any Car on the beginning date 2 OXY/HOLMES 000729 of such Car's term shall be subject to delay or prevention by any circumstances reasonably beyond LESSOR'S control. 5.2. Initial Condition. Each Car shall be subject to LESSEE'S inspection after delivery to it and before loading; and the loading of such Car by or for the account of LESSEE shall constitute acceptance thereof by LESSEE here under and be conclusive on LESSEE as to the Car's suitable condition for transportation for LESSEE'S purposes, except as to latent defects not discoverable by reasonable visual inspection. If any car is rejected by LESSEE, LESSEE shall have no obligation to pay any Rent that may have accrued for the Car. 6. MARKINGS. Each Car, upon its delivery to LESSEE Hereunder, will be plainly marked, with the owner's identification mark. If all or any of those marks ever are removed or become illegible, LESSEE shall promptly cause them to be restored or replaced. 7. OPERATIONS. 7.1. Use-Transfer. Without Union's or LESSOR'S prior written consent, no Car shall ever be used outside the boundaries of the continental United States, Canada or Mexico, or in any unit-train operation, nor shall LESSEE ever transfer or encumber this Lease, or encumber any Car, or permit any such transfer or encumbrance by operation of law. However, any Car may be trip leased by LESSEE at any time without such consent, but also without relieving LESSEE of any of its obligations under this Lease with respect to such Car(s) . 3 OXY/HOLMES 000730 7.2. Taxes. Property taxes on the Cars are for Union's account. 7.3. Reports-Inspection. LESSEE shall furnish LESSOR, only upon request, with monthly reports of all movements of each Car (including dates loaded and shipped, commodity, destination and full junction routing), and, at LESSOR'S request, any other information reasonably required for LESSOR'S maintenance of its records and efficient admin istration of this Lease. LESSOR shall have the right, by its authorized representative and at its own expense, to inspect any or all of the Cars whenever and wherever it elects to do so, upon prior arrangements with LESSEE. 7.4. Mileage Credits. LESSOR shall receive all mileage credits paid by the Railroads to Union during the Lease Term of these Cars. LESSOR shall credit LESSEE'S rental account as soon as practicable after receipt of mileage earning payment from Union. The aggregate mileage so credited to LESSEE shall not exceed the aggregate of all rents payable by LESSEE, plus $150 per Car per month to offset LESSEE'S maintenance expense, during the continuance of this Lease. WHEREIN, LESSEE enters into non-producing mileage earning agreements in connection with contract freight agreements, LESSEE will reimburse LESSOR to extent of normal mileage earnings that LESSOR would have been entitled to without said freight agreements. LESSOR'S charges will be based on the applicable tank car rates as provided in The 4 OXY/HOLMES 000731 Mileage Allowance Tariff, PHJ 6007 H, Item 195 H, or sub sequent revisions during the term of this contract. 7.5. Excess Empty Mileage. LESSEE agrees to reimburse LESSOR for any payment LESSOR May be required to make to Union Tank Company resulting from excess empty miles incurred by these Cars during the Term of this Lease and not offset by LESSEE/LESSOR mileage earnings. Empty mileage accounting to commence from Car's origin point until returned to LESSOR'S designated redelivery point. 7.6. High Mileage. Cars are not to be used in unit-train or any other designated high mileage operation without consent of LESSOR; each Car is limited to a maximum of 36,000 miles, loaded and empty, per calendar year and if this maximum annual mileage is exceeded, LESSEE agrees to reimburse LESSOR, in addition to monthly rental, for charges assessed by Union for all miles in excess of 36,000 miles. For Lease terms less than a calendar year, the 36,000 will be prorated x number of months in service. The fee LESSOR pays Union for exceeding 36,000 miles per calendar year is $.0275. 7.7 Preferential Use. LESSEE agrees that to the extent of their control. Cars will be used exclusively and preferentially for the shipment of LESSOR'S products to LESSEE. 8. PHYSICAL CONDITION. 8.1. Alterations. Without LESSOR'S prior written consent, LESSEE shall not alter the physical structure of any Car. 5 OXY/HOLMES 000732 8.2. Maintenance-Replacements. LESSEE shall maintain every Car in good operating condition, and shall make all repairs and replacements thereof necessary to that end, all in accordance with the standards of the Association of American Railroads at the time in effect, but subject always to the following: (a) LESSEE is responsible and shall at its expense make all necessary repairs and replacements of any removable parts. If repairs are for Owner's account, LESSEE will coordinate maintenance and repairs directly with Union, and Union's credits for out-of-service time will be reflected in the monthly billing when passed to LESSEE. The expense of interior product cleaning required in conjunction with any repair or maintenance, including tank and valve tests, will be for LESSEE'S account, as well as the expense of tank preparation for the return of Cars to LESSEE'S service. (b) LESSEE shall reimburse LESSOR on demand for the actual cost to LESSOR of repairing or replacing any damage or loss of any Car except for normal wear and tear: (1) caused by any commodity loaded in the Car; (2) occurring while the Car is on any track owned or leased by LESSEE, or on any other private track for 6 OXY/HOLMES 000733 LESSEE'S account, and not, in either case, in actual custody and control of any Railroad; (3) occurring while the Car is in actual custody and control of any Railroad, but only to the extent caused or contributed to by negligent or otherwise wrongful acts or omissions of LESSEE; or (4) if LESSOR makes such repairs or replacements when necessary to maintain loading schedules and the continuity of product supply to the LESSEE. (c) If any Car is destroyed or so damaged as, in LESSOR'S judgment, to be unfit for service, LESSOR shall not be obligated to make any repair or replacement of such Car, and will terminate this Lease with respect to such Car. The rental on any Car which may be destroyed or damaged beyond repair, in LESSEE*S/LESSOR'S judgment, shall cease on the day the LESSEE, LESSOR and Baselease Owner all agree upon settlement. Said date will be governed by the disposition of Car and product. (d) LESSEE agrees that if a Car is lost or de stroyed or in such physical condition that it cannot be operated in Railroad service solely 7 OXY/HOLMES 000734 by reason of misuse or negligence of LESSEE or its consignee, agent, or sublessee, or while on a Railroad that does not subscribe to the AAR Interchange Rules, or while on any private siding or track or any private or industrial Railroad, LESSEE will settle with Union for the value established for said Car(s). 8.3. Rent Abatement. With respect to any Car that is unfit for service because of needed repairs or replace ments which Union is obligated to make under Article 8.2., other than repairs by Railroads, the Rent abatement will commence upon notification to Union that the Car is ready. If internal tank repairs are required, the car must be safe for entry in accordance with Union's requirements in order to be declared ready. Rent will resume when the Car is forward ed from the repair facility for return to LESSEE'S service. 8.4. Cooperation. LESSOR and LESSEE shall always cooperate, and assist each other in any reasonable manner requested, in determining and prosecuting claims against third parties responsible for damage or destruction of the Cars, without, however, any prejudice to their respective rights and obligations under this Article 8 or Article 10. 9. RETURN OF CARS. At the termination of this Lease, with respect to each Car, LESSEE shall, at its own cost, either (a) return all Cars to Union at such point within the continental United States and date mutually agreed upon and in accordance with Union's requirements for product removal from tank interiors, or (b) execute a lease to 8 OXY/HOLMES 000735 continue the Cars in service under an Occidental/Union lease arrangement. LESSEE'S responsibility to LESSOR will, under this Lease, terminate with the satisfactory completion of the return provisions outlined. 10. RELEASE-INDEMNITY. LESSEE hereby releases LESSOR from, and shall indemnify LESSOR against, all liabil ity on account of loss or damage of any commodity ever loaded or transported in any of the Cars while under this Lease, by any cause other than any negligent or otherwise wrongful act or omission of LESSOR or any agent or contractor of LESSOR or Acts of God or acts beyond the reasonable control of LESSEE. LESSEE shall also indemnify LESSOR against all claims, suits, liability and expense because of injury or death of persons and/or damage to property (other than the Cars and commodi ties therein) caused by or happening in connection with any of the Cars while under this Lease, and not caused or con tributed to by any negligent or otherwise wrongful act or omission of LESSOR or any Railroad or any agent or contractor of either or Acts of God or acts beyond the reasonable con trol of LESSEE. 11. REMEDIES. In the event (a) LESSEE defaults in performance of any of its obligations hereunder, and fails to remedy the default within 30 days after receipt of notice thereof from LESSOR, or (b) any bankruptcy, insolvency, receivership or other like proceeding is initiated by LESSEE, and thereupon take possession of all of the Cars wherever they may be found without prejudice to any other rights or remedies LESSOR may have against LESSEE hereunder or by law. 9 OXY/HOLMES 000736 12. NOTICES. Every notice hereunder, except those relating to routine operations, shall be in writing and given by certified or registered letter or telegram directed to LESSOR or LESSEE (as the case may be) at its address first herein specified, or at such other address as it may have substituted therefor by notice so given to the other. 13. GOVERNMENT SUBCONTRACT. Since this Agreement may, as to either Party, be a subcontract under contract(s) with the United States Government, it incorporates by this reference all required provisions of, and each Party shall comply with, all United States laws, regulations and orders (including Executive Orders) applicable to its performance of such a subcontract, including (without limitation) those relating to Equal Employment Opportunity, listing of employ ment openings, utilization of minority business enterprise, and employment of the handicapped. 14. ENTIRETY CHANGES. This Lease (a) comprises the Agreement, and merges and separates all prior representa tions and understandings, between LESSOR and LESSEE concern ing the subject matter or in consideration hereof, and (b) shall not be amended, supplemented, or wholly or partially terminated except in writing executed by both LESSOR and LESSEE by their respective duly authorized representatives. 10 OXY/HOLMES 000737 EXECUTED as of the date first herein specified. OCCIDENTAL CHEMICAL PROPERTIES CORP. David D. Morgans Director-Transportation SHELL OIL COMPANY Bv; 0` & _______ O. D. Long, Mahager, Rail Car Acquisition and Maintenance Land Transportation Department Legal Review (CRF 10/84) 11 OXY/HOLMES 000738 SUBLEASE OF VCM RAIL CARS To Rail Car Lease, dated January 1, 1985, between OC PROPERTIES CORP. (LESSEE) and SHELL OIL COMPANY (LF Car Number UTLX 93134, 93140, 93382, 93483, 93505, 93538, 93634 UTLX 93292, 93797, 93875 $625.50 The ten (10) 105A300W tank cars identified in this Exhibit are furnished for a rental charge of $621.50 to $625.50 (see above) per car per month beginning January 1, 1985, but subject to provisions of Paragraph 3. RENT. This Lease terminates February 28, 1985, and the release of cars will be handled in accordance with Paragraph 9. RETURN OF CARS. ACCEPTANCE: OCCIDENTAL CHEMICAL PROPERTIES CORP. Director-Transportation SHELL OIL COMPANY 0.Long,Manager, Rail Car Acqyis. & Maint. Land Transportation Dept. OXY/HOLMES 000739 EXHIBIT B SUBLEASE OF VCM RAIL CARS To Rail Car Lease, dated January 1, 1985, between OCCIDENTAL CHEMICAL PROPERTIES CORP. (LESSEE) and SHELL OIL COMPANY (LESSOR). UTLX 26000, 26009, 26018, 26027, 26036, 26001, 26010, 26019, 26028, 26037, 26002, 26011, 26020, 26029, 26038, 26003, 26012, 26021, 26030, 26039 26004, 26013, 26022, 26031, 26005, 26014, 26023, 26032, 26006, 26015, 26024, 26033, 26007, 26016, 26025, 26034, 26008 26017 26026 26035 The forty (40) 105A300W tank cars identified in this Exhibit are furnished for a rental charge of $638.50 per car per month beginning January 1, 1985, but subject to the provisions of Paragraph 3. RENT. This Lease terminates October 31, 1985, and the release of cars will be handled in accordance with Paragraph 9. RETURN OF CARS. ACCEPTANCE: OCCClIDENTAL CHEMICAL PROPERTIES CORP =By FLJfA , David D. Morgans v Director-Transportation SHELL OIL COMPANY By: 0. D. Long, Manager, Rail Car Acqyis. & Maint. Land Transportation Dept. OXY/HOLMES 000740 EXHIBIT C SUBLEASE OF VCM RAIL CARS To Rail Car Lease, dated January 1, 1985, between OCCIDENTAL CHEMICAL PROPERTIES CORP. (LESSEE) and SHELL OIL COMPANY (LESSOR) . UTLX 89890, 89891, 89894, 89896, 89898, 89899, 89900, 89904, 89905, 89906, 89907, 89911, 89913, 89915, 89917, 89919 The sixteen (16) 105A300W tank cars identified in this Exhibit are furnished for a rental charge of $648.50 per car per month beginning January 1, 1985, but subject to the provisions of Paragraph 3. RENT. The Lease terminates December 31, 1985, and the release of cars will be handled in accordance with Paragraph 9. RETURN OF CARS. ACCEPTANCE; OXY/HOLMES 000741 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS -/ r < t' < \ t/ ^ 9 g) /7'7 -' ~7 -9 .w . j <-- -- ...... ________ _^/A*" */7 / G? STT. \/J fv . / ,: ?-,-- ;y~ ' /, . <* ' - v /> . - / -_________ ---2____ ________ / -' - /C"' . ' ^- OXY/HOLMES 000742 Occidental Chemical Corporation Ronald J. Schuh Vice President - Purchasing December 16, 1985 Mr. Robert F. Weigle Manager Corporate Accounts Shell Chemical Company P. 0. Box 2463 Houston, TX 77001 Dear Bob: In reference to your letter of December 3rd the October VCM conversion fee should be 3.50<t/lb - the floor price, (calculation would give 3.33tf/lb) not 3.58^/1b. It is based on: VCM - 14.5t/lb Cl - $115.00 + superfund Ethylene - 14.-7^- sxiperfund (Dewitt low was lb.v'a'an^ida 14.5 for a 14^75 average low) Please correct. Sincerely, //, ^ 4$ Ron J\ Schuh Vice President Purchasing and Transportation RJS/cgw cc: D. J. Massi OXY Corporate Office CGW 12/16/85 1 OXY/HOLMES 000743 OXY/HOLMES 000744 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS SHELL CHEMICAL COMPANY A .O': tit ,, O!. COv."ANY ONf SHtlL PLAZA P.O BOX 7463 HOUSTON. TtXAS 77001 October 14/1974 RECEIVED V. w* iV i : ) Wm. L Sholl Hooker Chemicals & Plastics Corp. ' P. 0. Box 8 Niagara Ralls, New York 14302 Attention Mr. W. E. Sholl, Vice President-Purchasing Gent!emen: Based on discussions between our companies regarding changes in the conversion fee escalation formula, we propose the Vinyl Chloride Monomer Agreement submitted for review and signature on July 2, 1974 be amended as follows: 1) Appendix I, page 4, D, EXTRAORDINARY COSTS, is amended by adding the following." "Shell's notice of an increase based on said extraordinary cost shall; (1) Specify the dollar amount of such extraordinary capital charge allocatable to Hooker. (2) Translate the dollar amount so specified into a capital charge adjustment in cents per pound of VCM converted hereunder predicated upon recovery of said extraordinary cost evenly over a five (5) year period, assuming such fee adjustment (surcharge) applies to conversion of the minimum quantity rates set forth in Paragraph 3.2. If the term of the Agreement will have expired prior to the end of such five year period, the minimum quantities specified for the last year of the contract term shall apply as the minimum quantities for eaci remaining year of the balance of the five (5) year period. The conversion fee will be readjusted dov/nward to eliminate the surcharge for each extraordinary capital charge when Hooker has repaid such extraordinary capital charge allocatable to Hooker in full. If such ext 'aordinary capital charge has not been fully repaid when the Agreement OXY/HOLMES 000745 Hooker Chemical Corp. 2 terminates, Hooker shall pay the balance as either a lump sum payment or, as mutually agreed, in equal installments, including reasonable interest, over a five (5) year period." 2) In all other respects, the Agreement as amended shall remain in full force and effect. If you agree with the foregoing relative to the conversion of chlorine into VCM and the conversion fee parameters attendant with the conversion, please signify your agreement by signing and returning the enclosed copy of this letter. Very truly yours, SHELL CHEMICAL COMPANY Enclosure Chemical Sales AGREED AND ACCEPTED DATE: _________ BY: i^pdKER chemicals .Elastics cgrp TITLE: OXY/HOLMES 000746 AGREEMENT THIS IS AN AGREEMENT, dated and effective -/7j by and between SHELL CHEMICAL COMPANY, a division of SHELL OIL COMPANY, a Delaware Corporation, having an office at One Shell Plaza, P. 0. Box 2463 Houston, Texas 77001 (hereinafter referred to as "Shell"), and HOOKER CHEMICAL CORPORATION, a subsidiary of Occidental Petroleum Corporation, a California Corporation, having an office at 1515 Summer Street, Stamford, Connecticut 06905 (hereinafter referred to as "Hooker"). WHEREAS Shell and Hooker desire to enter Into a mutually beneficial long term Agreement for the conversion of Hooker chlorine Into Vinyl Chloride Monomer (hereinafter referred to as VCM) by Shell and for which Hooker Is pre pared to expand Its chlorine manufacturing capacity and for which Shell Is prepared to provide VCM conversion capacity on a long term basis from Its VCM plant being constructed at Norco, Louisiana; and WHEREAS, In respect of such a long term conversion agreement. Shell and Hooker each desire, nevertheless, that equitable conversion fees be established for such use of Shell's VCM capacity; and WHEREAS, Shell and Hooker each recognize, owing to the uncertainties attached to future costs and values of ethylene and to future costs of other raw and process materials, of utilities, fixed costs and to future capital and operating costs to meet Federal and State and Local operating requirements and environmental standards, that It Is Impractical as of the date of this Agreement OXY/HOLMES 000747 2 to establish fixed conversion fees and a basis for their escalation which can be foreseen to prove equitable for as many future years as the Intended duration of this Agreement; THEREFORE, Shell and Hooker hereby agree and covenant as follows: WITNESSETH: 1. Term This Agreement shall be In effect for a primary period of four (4) calendar years beginning January 1, 1974 and ending on December 31, 1977, and from calendar year to calendar year thereafter, either party being able to terminate this agreement effective at the end of the primary period or at any time there after, by giving the other party at least eighteen (18) months prior written notice. In the event either party exercises the right to terminate this Agreement on eighteen (18) months prior notice any time subsequent to the primary period and the effective date of such termination shall not be at the conclusion of a calendar year, the rights and duties of the parties with respect to the applicable calendar year shall be prorated on the basis that the days prior to the effective date of the termination bear to the applicable calendar year. 2. 1974 Purchase During the calendar year 1974 Shell shall sell and deliver and Hooker shall purchase and receive a minimum of 159,000,000 pounds and a maximum of 193,000,000 pounds of VCM F. 0. B. Shell's Plant. Hooker and Shell shall have the delega tions and rights with regard to these quantities as set out in Paragraphs 3.2 and 3.3 hereof. The price of VCM for the calendar year 1974 shall be 4.34 cents OXY/HOLMES 000748 3 per pound of VCM actually accepted during the year, subject to Increase or decrease effective January 1, 1974 In accordance with the formula set out In Exhibit "A" attached hereto. 3. Quantity - Conversion 3.1 During the term of this Agreement after the calendar year 1974 Hooker shall deliver liquid chlorine to Shell, to be held by Shell for Hooker's account and to be converted Into such amounts of Vinyl Chloride Monomer (VCM) as Hooker shall order at a conversion ratio of 0.64 pounds of chlorine to 1.0 pounds of VCM. 3.2 Shell shall convert and deliver to Hooker and Hooker shall accept VCM from Shell In an amount not less than nor more (except with Shell's written approval) than the respective mlnlmums and maxlmums set forth In this Agreement but not exceeding, except with Shell's approval, one-tenth (1/10) of the appli cable maximum calendar year quantity during any calendar month, or cumulatively one-fourth (1/4) of the applicable calendar year maximum in three (3) succeeding months. MAXIMUM - MINIMUM QUANTITIES OF VCM CONVERTED (LBS) PerTADMOEAR Year Minimum Quantity Maximum Quantity 1975 160,000,000 196,000,000 1976 167,000,000 203,000,000 1977 171,000,000 209,000,000 3.3 Hooker shall give written notice to Shell not less than six (6) months prior to each calendar year hereof as to the quantity of VCM it estimates OXY/HOLMES 000749 4 It will require to be converted and/or delivered by Shell during that calendar year within the range of the calendar year minimum and maximum amounts as specified in this Agreement. Subject to the minimum and maximum quantities stated In Paragraphs 2 and 3.2 Hooker shall be required to receive not less than ninety-five (95) percent of the estimated calendar year quantity and Shell shall be required to deliver not more than one hundred five (105) percent of the estimated calendar year quantity In each calendar year covered by this Agreement, unless Shell shall agree in writing to deliver a greater or lesser quantity ordered by Hooker. In the event that Hooker requires and Shell agrees to sell VCM or to convert hereunder amounts of liquid chlorine Into VCM In excess of the calendar year maximum stated In Paragraphs 2 and 3.2 then the said calendar year maximum and minimum shall be of no further effect for such year and that amount requested by Hooker and agreed to by Shell shall be considered a commitment for such calendar year, and for such calendar year Hooker shall be required to receive not less than 95% and Shell shall be required to deliver not more than 105% of the commitment for such calendar year. 3.4 Shell hereby extends to Hooker a right of first refusal to Increase both the 1976 and 1977 quantities of VCM listed In Paragraph 3.2 to 210,000,000 pounds minimum and 260,000,000 pounds maximum per year. To exercise this right of first refusal. Hooker must give Shell written notice prior to March 1, 1974. If at any time prior to the exercise of this right by Hooker, Shell has an opportunity to utilize the conversion capacity represented by the quantities subject to this right of first refusal for sales to or for conversions for third parties. Shell shall notify Hooker to this effect in writing setting out the quantity Involved and Hooker shall have three (3) months thereafter to exercise OXY/HOLMES 000750 5 Its right of first refusal to accept such quantities of VCM according to the terms hereof with delivery beginning 22 months following the date of Shell's notice. In the event Hooker elects not to accept such quantities of VCM, then Shell shall be relieved from any further obligation under this subsection. All of the foregoing relative to said right of first refusal Is valid to exercise at Hooker's Initiation only If, at the time Hooker gives written notice of its desire to exercise its right of first refusal. Shell has available to it at Its Norco, Louisiana Plant, the raw materials needed to manufacture the increased quantities at costs no greater than for raw materials used to manufacture VCM not subject to this right for the same calendar years (1976 and 1977). Pricing for the optional amounts of VCM above the applicable maximum quantity in Paragraph 3.2 shall be determined In the following way. Shell will propose a range In conversion fees for the 1976 optional quantities by April 30, 1974. The parties shall have until June 30, 1974 to agree In writing on the range in conversion fees for the optional quantity of VCM. Should the parties fall to agree In writing on a range In conversion fees for the 1976 optional quantities of VCM by this date, then the Hooker right of first refusal on these optional quantities for 1976 and 1977 is revoked and the applicable maximum quantities of VCM shall revert to those designated in Paragraph 3.2. The conversion fee for the 1976 optional quantities of VCM within the above range shall be negotiated In addition to and according to the procedures designated in Paragraph 4.1. If Hooker exercises its said first right and provided the parties agree on the conversion fee applicable to the optional quantity for 1976 by March 31, 1975 as provided by the procedure In Paragraph 4.1 then the minimum and maximum OXY/HOLMES 000751 6 quantities for 1977 under Clause 3.2 shall become 210,000,000 and 260,000,000 respectively and the ranges and conversion fees applicable thereto will be determined in accordance with Clause 4.1. If the parties do not agree on a conversion fee for the optional quantity for 1976 and the conversion fee for said optional quantity becomes the median of the range in conversion fees proposed by Shell then either party has the right to revoke the optional quanti ties for 1977 by giving written notice prior to April 16, 1975. 3.5 Twenty-seven (27) months prior to the commencement of each calendar year subsequent to 1977 (if neither party has terminated this Agreement) each party shall propose for the applicable year the quantities of VCM to be delivered to Hooker, whether the VCM shall be purchased or converted and the prices or fees as developed pursuant to Paragraph 4.1. If the parties fail to agree on the aforesaid terms in writing within six (6) months of the coronencement of said proposal period, either party may upon written notice within fifteen (15) days thereafter terminate this Agreement as of December 31, 1977 or as of the end of the pertinent calendar year. 4. Conversion Fees - Terms of Payment 4.1 Fifteen (15) months prior to the beginning of each succeeding calendar year subsequent to the calendar year 1974, Shell shall propose in writing a conversion fee falling within the applicable minimum and maximum range set out hereunder for the succeeding year and the range in conversion fees to be ap plicable to the next following year. The parties shall have six (6) months thereafter to reach written agreement on a conversion fee for the succeeding year and a range in conversion fees to apply for the next following year. Failing agreement within said six (6) months negotiating period, then the OXY/HOLMES 000752 7 applicable conversion fee for said succeeding year shall be the median of the acceptable conversion fees proposed by the two parties for said year. In the event that by the end of the negotiating period the parties have not agreed on a conversion fee for the succeeding year (and the conversion fee for such succeeding year becomes the median as provided above) whether or not the parties have agreed on a range In conversion fees for the next following year, either party may terminate this Agreement effective at the end of such succeeding year by giving written notice to the other within fifteen (15) days after the end of the negotiating period. In the event that by the end of the negotiating period the parties have agreed on a conversion fee for the succeeding year but have not agreed on a range In conversion fees for the next following year, then either party may terminate this Agreement effective at the end of such succeeding year by giving written notice to the other within fifteen (15) days after the end of the negotiating period. CONVERSION FEES. CENTS PER POUND. F.O.B. SHELL'S PLANT 1975 1976 1977 Minimum conversion fee 3.30 To be negotiated Maximum conversion fee 3.70 To be negotiated 4.2 For example, on October 1, 1973 Shell will propose In writing the conversion fee for 1975 and the range In conversion fees for 1976. The parties shall have until March 31, 1974 to agree In writing on such conversion fee and range In conversion fees or set forth In writing their respective acceptable conversion fee for 1975 within the range of 3.30 to 3.70 cents per pound and agree In writing on a range In conversion fees for 1976. Should the parties fall OXY/HOLMES 000753 8 to agree on a conversion fee for 1975 within this range, the conversion fee applicable to deliveries In the calendar year 1975 will be the median of the acceptable conversion fees set forth In writing and either party then has option to terminate this Agreement effective December 31, 1975 by giving written notice before April 16, 1974. Should the parties fail to agree In writing on a range In conversion fees for 1976 then either party may terminate this Agreement effective December 31, 1975 by giving written notice before April 16, 1974. If the parties agree on a conversion fee for 1975 and a range In conversion fees for 1976 Is established as set out above. Shell will, on October 1, 1974, propose In writing the conversion fee for 1976 within the established range for 1976 and a range in conversion fees for 1977. It Is the Intent that minimum and maximum conversion fees to be proposed by Shell on October 1, 1973 for the calendar year 1976 and on October 1, 1974 for the calendar year 1977 will be escalated from the minimum and maximum fees for the calendar year 1975 solely according to Shell's evaluation on such dates of anticipated changes In costs or values from those anticipated by Shell as of July 12, 1972 for the calendar year 1975 for ethylene and other raw and process materials, for utilities, for fixed costs and for additional capital equipment and cost to meet Federal, State and Local Government operating require ments and environmental standards as deemed necessary by Shell to the performance of this Agreement. 4.3 For any calendar year after 1975, if Hooker has provided to Shell at least 21 months prior to the commencement of such calendar year satisfactory evidence of any offer from a third party of a conversion fee or range In OXY/HOLMES 000754 9 conversion fees applicable to the conversion for Hooker of at least 75,000,000 pounds of VCM In said calendar year and said offered conversion fee Is lower by more than O.U ($0,001) per pound of VCM converted than the median of the range in conversion fees then proposed by Shell for such year or If the minimum and maximum of said offered range in conversion fees each are lower by more than O.lt ($0,001) per pound of VCM converted than the minimum and maximum of the range in conversion fees then proposed by Shell for such year, then Shell shall notify Hooker no later than 20 months and 15 days prior to the commencement of such calendar year whether or not Shell elects to meet said third party offer and convert for Hooker, subject to all other applicable terms of this Agreement, volumes of VCM equal to said volumes offered for said con version fee offered or said range in conversion fees offered. If Shell elects not to meet said third party offer, then Hooker shall notify Shell no later than 20 months prior to the commencement of such calendar year that Hooker elects either to cancel this Agreement at the end of such 20 month period or that Hooker elects to accept said third party offer In which case such offered volumes of VCM shall be deducted from the minimum and maximum volumes applicable to this Agreement for said calendar year and each calendar year thereafter. 4.4 Hooker is hereby extended the option to purchase from Shell the respective quantities of VCM set out in Paragraph 3.2, instead of having chlorine converted to VCM during calendar years of 1975, 1976, and 1977. To exercise such option, as to any such year. Hooker shall give Shell written notice at least eighteen (18) months prior to the beginning of the affected year of Hooker's intent to purchase rather than have chlorine converted to VCM. The price on any VCM purchased by Hooker from Shell during any such year shall OXY/HOLMES 000755 10 be the conversion fee agreed on as outlined above for that year plus Shell's actual cost of chlorine purchased specifically for use in production of said VCM for Hooker for the year at the rate of 0.64 pounds of chlorine per pound of VCM actually delivered to Hooker and said option to purchase shall be subject to the availability to Shell, after receipt of Hooker's written notice, of a firm contract for supply of chlorine in sufficient quantities to manufacture the quantity of VCM desired to be purchased. 4.5 Payment shall be made to Shell within fifteen (15) days after receipt of Shell's statement for VCM shipped during any month. Invoices will be collected and statements Issued twice per month. In the event that in any calendar year Hooker fails to accept the required minimum quantity of VCM as specified In Paragraphs 2 and 3.2 (as the same may be reduced under Paragraph 9), or as may be modified by Paragraphs 3.3 and 3.4, Hooker shall pay Shell within 30 days after the beginning of the next calendar year the sum 0.754 multiplied by a figure equal to the difference between the number of pounds actually accepted by Hooker during such calendar year and the required minimum quantity, subject to the following conditions. After It has sold all of the VCM production capacity of its Norco, Louisiana and Houston, Texas Plants for such year, exclusive of Hooker's minimum quantity hereunder for that year. Shell shall use diligent efforts to sell that portion of such minimum quantity not accepted by Hooker; and Hooker will be allowed a credit against the amount due to Shell hereunder for such unaccepted quantity equal to the amount received by Shell from the sale of such quantity, or any part thereof, to the extent only, however, that the amount so received by Shell from any such sale exceeds Shell's actual cost of chlorine for production of OXY/HOLMES 000756 n the said quantity of VCM plus an amount determined by subtracting 0.75 per pound from the amount Hooker would have paid Shell for such quantity of VCM had It accepted the same hereunder. Shell shall not be obligated however, to sell VCM specified In the foregoing sentence at a price, which In Shell's sole judgment, would be lower than fair market value and In no event shall Hooker be allowed a credit exceeding 0.75$ per pound for sale by Shell of VCM not accepted by Hooker. It Is expressly understood, however, that If during the term of this Agreement, Shell supplies VCM produced at its Norco, Louisiana and Houston, Texas Plants to parties other than Hooker under contract requiring such parties to take minimum annual quantities of VCM so produced, any sales by Shell of minimum quantities not accepted by Hooker and such other parties shall be attributed to such parties ratably for purpose of computing the above credit to Hooker. If for any reason other than provided for In Paragraph 9, Shell falls to deliver VCM up to the required maximum quantity as may be ordered by Hooker In accordance with provisions of this Agreement, Shell shall pay Hooker 0.75 cents per pound for such undelivered VCM so ordered by Hooker. 5. Orders - Deliveries 5.1 Not less than ten (10) days prior to the beginning of each month hereof Hooker shall submit to Shell a notice setting out the quantity of VCM ordered during such month. 5.2 Subject to receipt of written notice from Shell on or before March 1, 1974 indicating the availability of a connecting chlorine pipeline proposed by Shell hereunder. Hooker will provide and maintain necessary facilities including a pipeline to Hooker's Taft, Louisiana property line at Hooker's OXY/HOLMES 000757 12 cost and expense to deliver such amounts of liquid chlorine as required to produce the appropriate quantity of VCM as specified hereunder. Shell proposes to transport such quantities of chlorine from Hooker's property line to Shell's Norco, Louisiana Plant In a proposed pipeline to be built and maintained at Shell's cost and expense. Hooker shall pay Shell on a monthly basis a reasonable pipeline charge for chlorine transported through Shell's pipeline and used for converting to Hooker's VCM. Shell's pipeline charge will be computed by Shell and be comprised of a reasonable capital charge based on costs for Installing Shell's pipeline and on operating costs both prorated on the basis that Hooker's throughput of chlorine for conversion to Hooker's VCM bears to the total throughput of chlorine through the line, provided however, that such pipeline charge shall not exceed Hooker's equivalent rail cost for movement of chlorine In Hooker's 90 ton rail cars from Hooker's Taft, Louisiana Plant to Shell's Norco, Louisiana Plant. The weight of chlorine delivered by pipeline for conversion to VCM hereunder shall be determined by Hooker's weigh tanks or by other means as may be mutually acceptable. Should Shell's Board of Directors not approve said chlorine pipeline or should Governmental restrictions prevent Installation or usage of such pipeline for chlorine transportation, then Hooker shall deliver, at Hooker's expense, the aforementioned chlorine to Shell's Norco, Louisiana Plant by 90 ton rail cars or other means agreeable to both parties; provided however, that on or before March 1, 1974 Shell shall have notified Hooker that the pipeline will not be ready by January 1, 1975. In the event that Shell advises Hooker that the pipeline will be available for delivery of chlorine by January 1, 1975 and said pipeline is not so available. Hooker shall OXY/HOLMES 000758 13 use Its best efforts to commence deliveries by 55 and/or 90 ton tank cars at Hooker's expense. Shell shall provide suitable facilities for receipt of such chlorine at the locations described herein. The weight of chlorine, delivered into Shell's facilities by tank car sufficient to satisfy the conversion ratio stated hereunder, shall be determined as specified In Exhibit D. 5.3 Shell shall deliver all VCM converted (or sold) hereunder F.O.B. Shell's Norco, Louisiana Plant into Hooker's tank cars, of a capacity to be mutually agreed upon. The quantity or weight of VCM delivered Into Hooker's tank cars shall be determined on the basis of outage tables with appropriate corrections for temperature with details to be mutually agreed upon. In the event Hooker elects to verify Shell's measurements of the quantity of VCM delivered hereunder and differences in excess of IE are uncovered In any car, such excess overages or shortages, if substantiated, shall be subject to billing adjustments. Tank Car "heel" allowance for VCM shall be computed on the basis of the standard factor at 5 psig of three (3) pounds per 100 gallons of car capacity. 6. Taxes All new and increased taxes and other Governmental charges (other than those based on income) which are imposed after September 15, 1972 on the VCM, or on the raw or processed materials from which the VCM is produced, or on Shell (Including without limitation, its VCM manufacturing facility), or required to be paid or collected by Shell, by reason of the production, con version, transportation, sale or delivery of the VCM hereunder, shall be paid to Shell by Hooker in addition to conversion fees or sale price. OXY/HOLMES 000759 14 7. Title Title to all chlorine delivered to Shell and held by Shell for Hooker's account and all VCM converted hereunder shall be and remain in Hooker, but Shell shall have the right to commingle the same with its own chlorine and VCM. Responsibility for all losses or damage of the chlorine delivered hereunder shall be in Shell after receipt of the same by It in Shell's facilities as stated herein, except where the same arises out of the sole negligence of Hooker. Responsibility for all losses or damage of the VCM converted (or sold) hereunder shall be in Shell until the same is delivered to Hooker into tank cars as provided for hereunder except where the same arises out of the sole negligence of Hooker. Any chlorine required for conversion in excess of the conversion ratio shall be supplied by Shell at no cost to Hooker. Title to any chlorine re maining in storage at the end of the term because of conversion efficiencies shall transfer to Shell. 8. Liabilities - Claim Hooker warrants that the chlorine delivered hereunder and Shell warrants the VCM converted (or sold) hereunder will meet the specifications set forth respectively in Exhibit 0 and Exhibit C, but Shell and Hooker make NO OTHER WARRANTIES hereunder, WHETHER OF MERCHANTABILITY, FITNESS OR OTHERWISE AND NONE SHALL BE IMPLIED. Hooker shall accept Shell's analysis of VCM converted or sold hereunder as determined on the contents of Shell's storage spheres prior to delivery to Hooker and Hooker shall accept Shell's Certificate of Analysis therefor as representative of the quality of the VCM delivered hereunder with respect to meeting the specifications warranted. OXY/HOLMES 000760 15 Responsibility for all claims arising directly or indirectly out of the chlorine delivered hereunder shall be in Shell during unloading and discharge and after receipt of the same by Shell In Its facilities as stated herein, except where the same arises out of the sole negligence of Hooker. Responsibility for all claims arising directly or indirectly out of the VCM converted (or sold) hereunder shall be in Shell until the same is delivered to Hooker into tank cars as provided for hereunder, except where the same arises out of the sole negligence of Hooker. Shell shall have no liability for, and Hooker shall indemnify Shell against all claims, loss liability and expense on account of, any Injury or death of persons (including Hooker's employees) or damage to property (Including Hooker's) caused by or happening in connection with Hooker's unloading, storage, handling or use of the VCM delivered hereunder, unless due to negligence of Shell, Its agents or employees In the manufacture or loading of the product, or defects In the tank cars furnished for transportation of the product. Hooker shall have no liabilities for, and Shell shall indemnify Hooker against all claims, loss liability and expense on account of, any Injury or death of persons (including Shell's employees) or damage to property (including Shell's) caused by or happening In connection with Shell's receiving, unloading, transporting, storage, handling or use of chlorine delivered hereunder, unless due to negligence of Hooker, its agents or employees, in the manufacture or handling of the product or facilities for transportation of the product. Neither Shell nor Hooker shall have any liability to the other for any claims arising directly or indirectly out of or in connection with this OXY/HOLMES 000761 16 Agreement, unless the claimant gives the other party notice of the claim (setting forth fully the facts on which it is based) within ninety (90) days after the date of discovery, or other transaction or occurrence giving rise to the claim. 9. Excuses for Non-Performance Either Shell or Hooker shall be excused from its obligations hereunder when and to the extent that performance is delayed or prevented by any circumstances (except financial inability of the party In default not resulting from bank moratoriums or other governmental order, decree or law) reasonably beyond its control, or by fire, explosion, breakdown of machinery or equipment, riots, strikes, labor disputes, voluntary or involuntary compliance with any law, order regulation, recommendation, or request of any governmental authority, or total or partial failure of the usual means of transportation of the VCM or chlorine, or inability to obtain raw materials used in the manufacture of VCM from Shell's earlier established sources, or by Act of God. As used herein, "labor dispute" means any controversy to which either Shell or Hooker, its agents or contractors, are parties or in which either Shell or Hooker has an interest, involving wages, hours, or working conditions and includes any strike, picketing, lockout, suspension of construction or any other action taken in connection with or because of the labor dispute. Neither Shell nor Hooker shall have any obligation to participate in any settlement of a labor dispute, or tc request its agents or contractors to do so except where the same is acceptable to such party In Its sole judgment. If Shell's performance is excused hereunder due to inability to obtain raw materials used in the manufacture of VCM fron Shell's earlier established sources. Shell shall use diligent efforts to obtain such raw materials from other than earlier established sources but conversion fees hereunder shall OXY/HOLMES 000762 17 be adjusted to reflect any increase in cost to Shell. The quantities of VCM or chlorine consequently undelivered as a result of causes excused hereunder shall not be required to be made up by Shell or Hooker upon resumption of full deliveries hereunder and shall be deducted from the applicable calendar year quantities. In the event of any such causes excused hereunder Shell shall have no obligation to purchase supplies of VCM to perform hereunder. Should excused deliveries of VCM or chlorine hereunder continue for a period in excess of one hundred twenty (120) days, the party whose performance is not excused during this period may cancel this Agreement sixty (60) days after written notice given after the aforesaid one hundred twenty (120) day period if deliveries have not resumed at a rate corresponding to the minimum required by this Agreement before expiration of the sixty (60) day notice. 10. Assignability Neither this Agreement nor any claim arising directly or indirectly out of or in connection therewith shall be assignable by either party or by operation of law without the written consent of the other party, which consent shall not be unreasonably withheld, except that either party may assign Its rights hereunder, subject to the obligation thereof, to any successor of substantially all of its business assets pertaining to VCM or chlorine production or the use thereof as a raw material, as applicable. 11. Remedies In the event of any breach by either party of any of the provisions of this Agreement, the other party shall have the right in addition to any other rights or remedies it may have to suspend or refuse deliveries hereunder and/or to terminate this Agreement by notice to the defaulting party effective as of the OXY/HOLMES 000763 18 date of such notice. Either party's right to require strict performance of the obligation of the other shall not be affected in any way by any previous waiver, forebearance or course of dealing. 12. Notices All notices or demands under this Agreement whether required by the terms hereof or otherwise shall be in writing and shall be delivered or mailed by certified or registered mail, return receipt requested, to the following addresses of the parties or to such other addresses as may be hereafter designated in writing by the respective parties: If to Hooker: Hooker Chemical Corporation 1515 Summer Street Stamford, Connecticut 06905 If to Shell: Shell Chemical Company A Division of Shell Oil Company Industrial Chemicals Division P. 0. Box 2463 One Shell Plaza Houston, Texas 77001 Attention Manager Vinyl Chloride 13. Laws Governing Contract This Agreement shall be governed under the laws of the State of New York. 14. Entirety - Execution This Agreement comprises the entire Agreement and merges and supersedes all prior understandings and representations (oral or written) between Shell and Hooker concerning the subject matter hereof. Neither this Agreement nor any subsequent Agreement amending or supplementing this Agreement shall be binding on Shell or Hooker unless and until it has been signed on Shell's or Hooker's behalf by a duly authorized representative, and commencement of performance here under or under any such subsequent Agreement shall not constitute a waiver of this requirement. OXY/HOLMES 000764 19 IN WITNESS WHEREOF, the parties hereto have signed this Agreement In duplicate as of the day and date firest written above. SHELL CHEMICAL COMPANY A Division j)^Shell 01J_ Company By: -- -- // / HOOKER CHEMICAL CORPORATION OXY/HOLMES 000765 EXHIBIT A PRICE ADJUSTMENT The base price per pound of Vinyl Chloride set forth in Paragraph 2 shall be increased or decreased effective on the first day of the calendar year 1974'in accordance with the following formula: BCF + 0.0016 (A-A-j) + 0.0014' (B-B}) + 0.0057 (C-C-|) = escalated price In cents per pound. The terms used in such formula shall have the following definitions: BCF base price as set forth in Paragraph 2. A * crude oil price in cents per barrel. B = average labor rate in cents per hour. C Commodity Index number. These terns are more specifically defined in Appendix I attached hereto and made a part hereof. A-j, B-j and C-j shall be the base numbers as defined in Appendix I, upon which the escalated fee shall be computed. OXY/HOLMES 000766 Appendix I A and A-j CRUDE OIL PRICE "A" shall equal the arithmetical average, expressed In cents per barrel, of the average of prices as published in Platt's Oil gram Price Service - Crude Supplement for West Texas (Sour) crude. In effect on the fifteenth (15th) day of each of the twelve (12) months ending with and Including September in the year preceding each year during which the escalated conversion fees are to be computed. The prices to be averaged shall be the arithmetical average of West Texas (Sour) crude prices as posted, for crude oil of 32.0 - 32.9 degrees A.P.I. by Humble Oil and Refining Company, Texaco, Inc., and Gulf Oil Corporation (or their successors). "A]" shall be the arithmetical average, expressed In cents per barrel, of the average prices of the crude oil specified above for the twelve (12) months, October, 1970, to and including September, 1971, as reported in the above-mentioned publication. If any of the companies named above (or their successors) cease to post prices for these crudes, then the prices posted by the remaining companies named above shall be used. If all the companies cease to post prices for these crudes, the crude oil prices to be used shall be determined by a method mutually satisfactory to Hooker and Shell. If the publication of Platt's Oil gram Price Service - Crude Supplement is discontinued, then the crude oil prices shall be determined by a method mutually satisfactory to Hooker and Shell. OXY/HOLMES 000767 B and B] Labor Rates "B" shall equal the arithmetical average in cents per hour of the final average hourly earnings. Industrial Chemicals, for the twelve (12) months ending with and Including the month of September of the year preceding each year during which escalated prices are to be computed as reported by the United States Bureau of Labor Statistics in Table C-2 In the publication, "Employment and Earnings." "Bi" shall be the arithmetical average, expressed In cents per hour, of the average hourly earnings. Industrial Chemicals, for the twelve (12) months October, 1970, to and Including September, 1971, as reported In the above-mentioned publication. Should the method of computing the hourly earnings referred to herein be changed, or should publication of same be discontinued or substantially delayed, the parties hereto shall agree upon the use of another similar labor rate compilation and shall adjust the Labor Rate Base to conform to the calculation method of the new compilation. C and C] Commodity Indices "C" shall equal the arithmetical averages of the latest final Wholesale Commodity Price Indices for Industrial Commodities for the twelve (12) months ending with and including the month of September in the year preceding each year during which escalated prices are to be computed hereunder reported by the United States Bureau of Labor Statistics in the publication "Wholesale Prices and Price Indices." OXY/HOLMES 000768 "Ci" shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Comnodlties for the twelve (12) months October, 1970 to and Including September, 1971 as so reported In the above-mentioned publication. Should the method of computing the Wholesale Conanodlty Price Index referred to herein be changed, or should publication of same be discontinued or substantially delayed, the parties hereto shall agree upon the use of another similar Index and shall adjust the Wholesale Commodity Price Index Base to conform to the calculation method of the new Index selected. If a new reference base is established, the Wholesale Conmodlty Price Index Base shall be converted to the new base by factors published by the Bureau of Labor Statistics. If the weighting structure Is revised, the unofficial index will be used until the official index Is released. OXY/HOLMES 000769 EXHIBIT B CHLORINE SPECIFICATIONS Chlorine Chlorinated Compounds Non-volatile Matter Water 99.5* Volume 1,000 ppm max. 100 ppm max. 30 ppm max. OXY/HOLMES 000770 EXHIBIT C SPECIFICATIONS FOR VINYL CHLORIDE SPECIFICATIONS Acetylene, mol ppm Acetaldehyde, mol ppm Butadiene, mol ppm Water, weight ppm Acidity, (as HC1), weight ppm Non-volatiles, weight ppm Iron, weight ppm Color Appearance Stabilizer MAXIMUM 3.0 5.0 10.0 100.0 2.0 200.0 0.5 Colorless Clear and free from suspended matter None OXY/HOLMES 000771 EXHIBIT D Measurements of the net quantity of chlorine shipped to Shell in tank cars shall be made using railroad type weigh scales. The type of scales and their calibration and use in weighing shall conform to requirements as set forth in the National Bureau of Standards in N. B. S. Handbook 44; the latest edition, or a maintenance measuring tolerance of 0.2% of true weight. The weigh scale used shall be the stationary weighing type for weighing cars at rest. The weigh scale weight capacity and weighing platform length shall enable weighing cars in a single weighing or draft. Cars to be weighed shall be uncoupled from any other railroad equipment when placed on the scale for weighing. The weigh scale shall be calibrated monthly. Shell representatives shall have the privilege of witnessing each weigh scale calibration in addition to the routine weighing of cars. The supplier shall furnish copies of documents that will establish that calibration test weight cars are certified by N. B. S. weigh scales. Documents shall also be furnished for evidence and the Integrity of all calibration and maintenance work. Copies of N. B. S. certificates shall be furnished by the supplier to Shell for all test weight cars used for weigh scale calibration. Weigh scale calibration shall include using N. B. S. certified weights for 100% of maximum gross weight of cars loaded with chlorine. Weigh scale repeatability shall be determined from three successive weight measurements of a test weight for 100% of the range of measurement. OXY/HOLMES 000772 2- - The weighing procedure used, including test weight car placement, re-zeroing of scales, etc. shall be based upon N. B. S. Handbook 44'and should be included in written procedures to be furnished by the supplier for the mutual use of the supplier and Shell in all calibration and routine weighing. The weigh scale repeatability shall not exceed the minimum weigh scale indicated weight graduation. Shell shall have the privilege of witnessing or requesting that routine spot checks be made by the supplier of the weigh scale performance by determining the weigh scale repeatability by successively weighing a selected car loaded with chlorine three separate times. Security measures shall include the use of serially numbered security seals. Seals shall be provided to assure that the Integrity of measurement is assured by prevention of unauthorized tampering or adjustment of any weigh scale mechanism following its calibration. Sealing devices shall be installed after each weigh scale calibration and this action witnessed by a Shell representative. The supplier shall record all seal serial numbers and Shell shall be contacted and advised whenever removal of a seal is necessary. Verification of seal serial numbers shall be done and witnessed by Shell prior to that removal for weigh scale maintenance and calibration. The number and location of all seals shall be mutually agreed upon by the supplier and Shell to assure realizing adequate security. The tare or light weight of each car to be loaded is to be measured immediately before loading with chlorine. A weigh document for each loaded car shall be furnished to Shell which shall include the time of day, date, weight, weigher and car number for the tare and gross weight. Car seal numbers shall be recorded for the gross weight. In each weighing, the weigh scales shall be re-zeroed before the car to be weighed is placed on the scales. OXY/HOLMES 000773 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Shell Oil Company TwcrShell Plaza P.O. Bex 2039 Houston, Texas 77001 December 19, 1984 Mr. C. V. Snyder Senior Sales Representative Union Tank Car Company 4800 Sugar Grove Boulevard Suite 254 Stafford, Texas 77477 Dear Cliff: An arrangement has been proposed whereby Shell Chemical Company will sublease one hundred fifteen (115) UTLX VCM tank cars to Occidental Chemical Corporation. In accordance with the provisions of our Master Contract, we are requesting Union Tank Car Company approve the sublease arrangement. The proposal involves the VCM cars on Riders 104, 114, 116 and 117 for the remaining contract term. Car details are listed on the enclosures. Special instructions pertaining to each Rider would apply as follows: Rider 104, 49 ca^s, effective January 1, 1985; rentals are to be billed directly to Occidental. All mileage earnings after January 1, 1985, will be passed along to Occidental by Union after receipt from the Railroads. Shell plans to relinquish the full operating responsibility and control for this group of cars to Occidental. Union will issue a sublease agreement to Occidental, but Shell remains the primary lessor because of contractual requirements until the lease expires on June 30, 1989. The cars on Riders 114 (10 cars), 116 (40 cars) and 117 (16 cars) will be subleased to Occidental under a Shell lease agreement, effective January 1, 1985. The rental invoices and mileage credits should be set up in a special account (Shell/^xy). The rental portion will be passed directly to Occidental for a direct payment to Union. hell will collect the mileages when passed t>.y Union and provide allowances to Occidental in accordance with the sublease agreement for these Riders. BVJP8435402 H i v' t D 2^ 1991 R. ' " HUH OXY/HOLMES 000774 Mr. C. V. Snyder December 19, 1984 Page 2 We trust the proposal is acceptable and that the accounting changes can be implemented with the January, 1985, billings. Your cooperation and handling of this project is greatly appreciated. Very truly yours. R. H. Bloom Senior Transportation Representative Land Transportation Department (713) 241-3573 RHB/kbs Enclosures cc: Mr. Fred Dugen Occidental Chemical Group P. 0. Box 699 Pottstown, Pennsylvania 19464 Mr. K. P. Fischl Vice President, Fleet Management Union Tank Car Company 111 West Jackson Boulevard Chicago, Illinois 60604 Mr. R. J. Schuh Vice -President, Furchasing Occidental Chemical Corporation P. 0. Box 4020 Darien, Connecticut 06820 be: C. Alexander J. D. Featherston W. F. Hurry W. Rivera L. A. Wheeler B. K. Wooten OXY/HOLMES 000775 i ! i | . > 631 105A300H 8C9 105A300W 826 105A300K 1! 232333 222i 3^.13t ooooooooooooo ooooooooooooo <<<<<< <<<<<<< in ia l.-! ia ut m u\ it. io in OHOHOHOHOHOHOHOHOriKOHOrOt'OS OI.6) O 4 4i ^ Hi K M m e* (w9c0i (r0> 0cm<jnj oh(0wc*;jaw}^n(0r(i 0cifi:}* I 0lfe|H4hOl0ACC`!J>0<9t'H60N0^ri -40ph-OfCH>t cy w m v eg sv* c-j o* m r* r, m cojcovoi<on<ooo^<ooo<oocoooooooo4 :/ C 7 O*rfl n j <t *t ? c ^ -t <r ^ >r .9460 24930 .9 3 2 0 C494C .9320 24330 <<641t&i *r*r to+*.t H H H H rj eg oOCoMo>too o o oooo 9O X *23 2 22222322 22 22 22 2 22 22,2l X -J X -I X --I 22 55^5 5 55 5 5 5555&5555g555 555555 555|5555555S3K 3< 3h3^ W(O> fhCOUM-ii)CHr1 0C* 99 00* 0O o oo e *ft<tU)l/>IA<6<tftO^^NNNNNNNN fsl N 0 0 CO Q O O O IHMMNM7 cvlf* 9?o9So'Co'So779o7?oC?oMo3>o^^o070o2<o97o9^o77o00o0'7o0(Ao07o^7o9o09o>900'*l,9007oO9oO>5oO>oOl>O-cf9O-`p9O>i ir o ir o w o w o:o j^j'J2jj'J2^22,jj2233232333332QJS225 O 690630 UT1X090029 UTLX0900':S UTLX090112 oi i ir OXY/HOLMES 000776 37i Otn'. U< c-oV~o-z< a<e o>s: 3O 3O 3O 3O 3O3Q no 3o 3Cl 3o ooo e oo oo in tn in in in in m o t- o K<) ion HI mo nktH NNN mt ..m (M N M <nr CD <cm O oj 0<n3j n 4r-3i d2 i S5J 2 ! ! c5 IU 1 'O'T**IO*^O'?O* m<r ^CO mm >coy MMNMMNMN CM CM Ii 0lfll0>C0'00>90*0>00>00 oo eo> OAOtO>9>9'9>Ok CM O' CM O' 3a i OMN(OlAO N II) HHNncW`iA<0 o* c> o o* o* o* O' o- O' OHH;I rv <rOO0' oooooooo o o 22222252 X X 3333333^ 3 3 a3= *iu- i in ii <o OXY/HOLMES 000777 r. s -j u ---./ >cJ c* iQ *6 u q3 UJ 0 i i i iiiti I OXY/HOLMES 000778 II DEC 14, 1934 .... -------- --------------------------------------------------- SiiEU.-UCCIDcHfAL SUBLEASE veil RAILCARS 0117 32232233223333 o oOOOOOOOOOOOOOO mo ooooooooooooooo $* IflUHAtALHAWirUtMUllMniA oooooooooooooo < ion < uo> I. I IHoooMowoNoHo,<oHo oM^ooH>o>etvoolHo4CoJoNonNooNohN o O a CIJ I H^OHMorOl*AUOr*t.OlfA'lOhA,WrOI.OrlfvlUOr-.) o in N o in S o in N is. O' ^ o li> I-, o O' fs* 4* o to mnnnmmncun <r <t NOIN ^^ ^ NNNN roioood " O O *0* o <o' o o o 22mww vt in in <M7> O in ^ O<0 in <OD in OO in j oOinUo4HoAIo4d) C O O' o- I Ii tOioOf'OisI^sOc'Oe'oOoOoO ooooooooo 0 OOoo N ooPO H VHo>) 2OO2O2O2O2O2O3O2O2oX__Xo__Xo KN.O H<(<o>0Hoo00Ho0o^`0doHc* ii Li:*3 655555555555 D 3 3 I *4 7Z tel fO a i- <g tei < 1 - O 1 *o j ii i i OXY/HOLMES 000779 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS October 24, 1984 Shell Chemical Company A Gwaon d Shrt Oi Company One Shell Plaza P.O. Box 2463 Houston, Texas 77001 Occidental Chemical Corporation P. 0. Box 4020 Darien, Connecticut 06820 Attention: Mr. Ronald J. Schuh Vice President - Purchasing Gentlemen: Subject: Sub-lease of VCM Rail Cars Confirming our recent discussions relating to the sub-lease to Occidental of VCM rail cars currently leased by Shell, this letter outlines the principles upon which Occidental and Shell agree to proceed in this matter. 1. Shell estimates that 115 rail cars in its existing fleet are required to meet Occidental's projected 300 MM lb of VCM requirements in 1985. This number of rail cars is in addition to Occidental's own fleet of 28 rail cars in this service. The 115 rail cars have the lease profile shown in the attached Exhibit A. 2. Shell will sub-lease to Occidental the rail cars shown in Exhibit A beginning January 1, 1985 and continuing for the unexpired period of each lease. Once the UTLX 114 and 116 leases expire. Occidental will assume responsibility for providing an equivalent number of rail cars to maintain the VCM fleet size until the end of 1985. 3. Occidental will make monthly rail car rental payments directly to Union Tank Car Company. When Shell receives the mileage earnings for each corresponding month. Shell will reimburse Occidental for the rental payments plus a maintenance allowance of $150 per month per rail car. Occidental will be responsible for maintenance on the sub-leased rail cars. 4. If the monthly mileage earnings for the sub-leased rail car fleet, after deducting rental payments and maintenance allowances, fall short of the estimated net earnings per month shown on Exhibit A for reasons under the control of Occidental, then Occidental will reimburse Shell for the shortfall. A reduction in Occidental's total VCM requirements will not be considered to be within Occidental's control. BSGQ8429801 OXY/HOLMES 000780 2 5. Beginning in 1986, mileage earnings under UTLX 104 will be paid directly to Occidental by Union Tank Car Company to the extent that such earnings can be utilized by Occidental. Very truly yours. R. F. Weigle Corporate Account Manager ACCEPTED AND AGREED TO THIS DAY OF , 1984. Occidental Chemical Corporation By Title________________________________ BSGQ8429801 OXY/HOLMES 000781 tni- J f-l W o zW 2H oH 2 oON pH o oCM o pH 0O0x o COmMX CM o<r CM o cm p On 44 p nmO 4^- p m pH 44 p 4OO4n k Ox O P OO P ^NO pH pH 44 44 41- SX(-1 Hui OX % HWCO MH z 2WPu o pwPdu ON pH Ox 4^ in Oox 44- 'OOx 44- CM O o 4p4H- 0m0 0m0 0m0 CCMO ^ co pcoH (IMON omo mi mi 00 00 O uU 4wH Z<ahs m2SU2< XM WH H H2 2 HWw <H85OuWSOfIcd om ou-l om ou-i w id M lx O 2 2 < W to H< Mu J H 22 X Id o H2 2 Pd H 2 Pd Id u 2 Id < 2 Ah O 2 O X CO w ts oz Pd 2< < M 06 H Id 2 Id 2 J CB 2 O pd l-M < X pa X Oh Id O Q U 2 I2d >p--H 2 P<d g Id >< OJ twfJl M H O2 x U 2 u2 X E-> tOo O 22 2 Id Id 026 5 M 2 06 < w22 Oid X UU CO CM OCON ON pH xO NO NO m 44 44 44- 44 CM co CO OX On CM xO NO r*. pp p pH pH ph pH 44 44 44 CO CO CO CO C0pM0Hp 0pCM0Hp 0pCHM0p CCOM pH 0o0 o ON 4> NO m4> CM CM m *3- ON On ON Ox 2 Ol-M H Id 23 MQ Ah X pa Pd pa in CQ Ph 06 < JzD o L 0 pa os tn pa <O pa m i-9 Pd sc 0*n0 m GO m go 0O0n CO pH pH O CM CO CO CO "h* -Nm* CM o CM NO pH O o xO pH Ox| <r j mppHH < NO r>- *4- ^HH ^H Hp popH pH pH XX X X< pj d p-3 i-9 H H H H* H O ZD 2 Z S3 2 \r. >/- K .. .4ccJ oE V4C)Ui c3o o Vl CcD 4V3Ji 4) Co IH0 04)0 CD v V > CD 4J o0) Uh CD CD V E3 CD CD < s. pH OXY/HOLMES 000782 BSGQ8429803 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS T-f. October 24, 1984 Shell Chemical Company A fw^on el SmI Oti Cewim One SneH Piaza P.0. Bo* 2463 Houston. Texas 77001 Occidental Chemical Corporation P. 0. Box 4020 Darien, Connecticut 06820 Attention: Mr. Ronald J. Schuh Vice President - Purchasing Gentlemen: Subject: Sub-lease of VCM Rail Cars Confirming our recent discussions relating to the sub-lease to Occidental of VCM rail cars currently leased by Shell, this letter outlines the principles upon which Occidental and Shell agree to proceed in this matter. 1. Shell estimates that 115 rail cars in its existing fleet are required to meet Occidental's projected 300 MM lb of VCM requirements in 1985. This number of rail cars is in addition to Occidental's own fleet of 28 rail cars in this service. The 115 rail cars have the lease profile shown in the attached Exhibit A. 2. Snell will sub-lease to Occidental the rail cars shown in Exhibit A beginning January 1, 1985 and continuing for the unexpired period of each lease. Once the UTLX 114 and 116 leases expire. Occidental will assume responsibility for providing an equivalent number of rail cars to maintain the VCM fleet size until the end of 1985. 3. Occidental will make monthly rail car rental payments directly to Union Tank Car Company. When Shell receives the mileage earnings for each corresponding month. Shell will reimburse Occidental for the rental payments plus a maintenance allowance of $150 per month per rail car. Occidental will be responsible for maintenance on the sub-leased rail cars. 4. If the monthly mileage earnings for the sub-leased rail car fleet, after deducting Tental payments and maintenance allowances, fall short of the estimated net earnings per month shown on Exhibit A for reasons under the control of Occidental, then Occidental will reimburse Shell for the shortfall. A reduction in Occidental's total VCM requirements will not be considered to be within Occidental's control. BSG084293CI OXY/HOLMES 000783 2 5. Beginning in 1986, mileage earnings under UTLX 104 will be paid directly to Occidental by Union Tank Car Company to the extent that such earnings can be utilized by Occidental. Very truly yours. R. F. Veigle Corporate Account Manager ACCEPTED AND AGREED TO THIS DAY OF, 1984. Occidental Chemical Corporation By Title ' _____________________ ESG03429E01 OXY/HOLMES 000784 < CO t-- c: o z s u -* H HZ z <a Z < z Of <-4 U < H BU MH u li] U B Of zu a. a iod Id H z < b u ec < ss.z b o Id hHH 2H K uH<A <ZH MuO O &Ui o o 3 oo CM CM CM Ox ^4 o fM o --4 Ox o Cx o o m -3 CM > * * * Ox A in Ox Ox O *3 cn 3 o A 44 44- 44 Ox in 3 CM m m m O 3 o CO 00 00 Ox Ox Ox o "s. ^ 00 CM cn cn 44 44 4% 44 PM "N* 'CXM*. mI i ^i oo iono tono oooo mm mm 44 44 44 44 Hz B z H B B td Id Z Id < 00 B O B O z CO u zo B X< < id lz-H B Id hz a B BOB #--1 < zA Z Id B cn Ox Ox CM cn -3 a. A NO A in 44 44 44 44 CM 3 cn cn Ox Ox 3 CM NO N0 a* a* * k 4 44 44 44 44 Bw u A Id B u Id B = < cn m cn cn >u < b A < Cfi tz- O US O Id O B CM CM CM CM CD A A A * ** > ZW *4 <zB A r fz.> oz H B a Id Q Id J B Id < ec B B O Z r> < a Id V OoO CD Ox A m * CM CM m mt OX Ox Ox Ox z o iH H Id <H B< A B X u B U CO A z B O 5 < z o id B US Ul --- --B m m m Ox A A AA 1-- A W>4 O CM cn cn m CM o CM A o o A Oxl m 3 3| -3 A a. 3 O M X X X X <: -J ^; i-- H H H -- -- -c 4J co E d 0) B T3 C 3 O *4 Q C d 3 4J Vco IW o 0J A a d 4/ > 4J t) 4> H XM CO a a e 3 CD OD < 'w' OXY/HOLMES 000785 BSGQ8429803 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS December 19, 1984 . TM Shell Chemical Company One Shet Plaza P.O.Box 2463 Houston. Texas 77001 Mr. Craig W. Hull, Jr. Vice President, Commercial Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 'u Dear Craig: Attached hereto are copies of our proposed VCM agreement according to conditions and terms as discussed with you previously and a copy of Rider No. 104 covering certain rail cars between Union Tank Car Company and Shell Oil Company. After the first of the year, we will forward to you a copy of the proposed contract covering ethylene requirements in 1985 and sublease agreements covering the remaining rail cars. Union Tank Car Company has advised us that they would prefer that Occidental accept an assignment of Rider No. 104 and that all future transactions regarding that rider be between Union Tank Car Company and Occidental. Occidental is to send a letter to Union Tank Car Company accepting an assignment of this rider. Should you have any questions regarding these matters, please call me at your convenience. Very truly yours, l/' R. F. Weigle Manager, Corporate Accounts Attachments cc: L. A. Wheeler (w/attach.) BRHK8435401 OXY/HOLMES 000786 . 'B *i RIDER NO. ___________ TO CAR SERVICE AGREEMENT Ef,,fective th. i. s________fidrs-.ytof___________________________________________J__a_n__u_a_r_y_,__1__983 this rider shall beccme a part of the Car Service Agreement between Union Tank Car Company, Lessor, and SHELL Oil. COMPANY Lessee, dated January 1, 1983 -------- ----------------- ---------------- ;--------- ------------------ - , and the cars descriubeod nheremin snhaill Dbe leased to Lessee subject to the terms and conditions in said Car Service Agreement during the term and for the rental shown beio.v: ______________ CLASS OR TYPE OF CAR DCT 105--A--300--W, equipped with double shelf couplers. UTLX 90024 90046 90112 50126 90154 50174 90204 UTLX 90235 90289 90351 90413 90554 90635 APPROXIMATE CAPACITY (Gallonage) ZT7BIT0------ MONTHLY RENTAL (Per Car) 3579.50 DOT 105-A-300-W, equipped with double shelf couplers. UTLX 90179 90318 90411 90508 90512 90550 90643 50678 60689 90692 9C715 90726 UTLX 90738 90753 3C765 90763 9C772 90773 90776 90778 90046 90860 90875 90382 UTLX 90398 90943 90574 90992 91004 91136 91200 91212 91279 91299 91327 91372 24,800 572.50 OXY/HOLMES 000787 Rental`hereunder begins on January 1# 1983, however for the purpose of determining fulfill ment of term. Lessor and Lessee will use July 1, 1979 as the beginning data of the minimum rental period for the care hereunder. Per Section 2.05. The sun to be added to the monthly rental rate for a oodifleation with a useful life equal to that of the car itself will be 1.45% of the cost of the modification, and the sun to be added to the monthly rental rate for a modification with a useful life less than that of the car will be an amount which will recover the cost of the modification, including the inplicit cost of money at 10% per annua, over the estimated life of such a modification. Per Section 3.04. The mileage limitation hereunder is 36.000 miles per calendar year per car and Lessee shall be charged SO.0275 per mile Icr each mile in excess of such limi tation. The minimum rental period for the cars leased hereunder shall be one hundred eighteen (118) months, and the cars will continue under lease thereafter until canceled by' ' months notice given after expiration of the minimum period. Thereafter, this rider will terminate automatically upon the date of release of the last car covered by this rider. Effective Riders S3 through 121 Cancels Rider No. Union Tank Car Company (Lessor) Bv ^/ SHELL OIL CCMPMTX (Lessee) Manager - Land Transportation OXY/HOLMES 000788 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS %!LL Jy? /If lA-sfcn- f /-AG P&Sl- AlO A^f^PTCD < j' V HCOf I j fc/L U /V C,- ft_ON Scf/U/4 70 cS'/^A' /\pPftn><J\Zrt AfSCZ St^'-o ?Y 'j 0^ At/)SS( '' / /*S` 'j> V SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS 3 June 15, 1985 or December 15, 1985, respectively, the parties will negotiate conversion fees for the periods in question. Failure to agree on a fee will result in termination of the agreement. (5) Payment terms are net 30 days from date of invoice. Invoices will be issued monthly. 3. VCM TANK CARS A. The following is the VCM tank car fleet that had previously been designated to supply 300 MM lb of VCM to Occidental's Northern Plants in 1985: Occidental-owned UTLX 114 UTLX 116 UTLX 117 UTLX 104 - 28 cars - 10 cars - 40 cars - 16 cars - 49 cars expir. expir. expir. expir. 2/28/85N 10/31/85 12/31/85 C 6/30/89 /l^S-C/ B. CURRENT PROPOSED ARRANGEMENT (1) Effective January 1, 1985 Shell sub-leases all above leased cars to Occidental for the remainder of their lease periods. (2) Shell assigns mileage earnings on UTLX 104 to Occidental. (3) Mileage earnings on UTLX 114, 116, and 117 are retained by Shell and protected for the remaining unexpired portions of the leases as outlined in Shell's draft letter of intent "Sub-lease of VCM Rail Cars" dated October 24, 1984. (4) UTLX 114, 116, and 117 cars will be used exclusively and preferentially for Shell-supplied VCM. Occidental-owned cars will be used exclusively for VCM supplied by Occidental's other supplier. UTLX 104 cars will be used as needed for either supply. 4. WAIVER OF LIQUIDATED DAMAGES Shell agrees to waive liquidated damages for Occidental's VCM underliftings in 1984. k OXY/HOLMES 000790 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS s no -- /t/o ^ Tt5 r=?(" Pl/C_ 0! cr /' O M( M Oy"Y ( '/ QOrs OXY/HOLMES 000791 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS September 4, 1984 Shell Chemical Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 Mr. Ronald Schuh Vice President, Purchasing Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 Dear Ron: The VCM toll fee for August, 1984, has been adjusted as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 12.98 12.73 Also, the toll fee for September has been adjusted to: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 12.48 12.23 The nominated fee for October is the same as September. If you have any questions, please call. As usual, let's keep in touch with each other relative to market developments. Very truly yours. R. F. Weigle Manager Corporate Accounts BRHK8426501 RECEIVED SEP ^ 5 1984 R. J STHUH OXY/HOLMES 000792 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Shell Chemical Company A OMvon of Shal OH Company One Shel Plaza P.O.Box 2463 Houston, Texas 77001 September 4, 1984 Mr. Ronald Schuh Vice President, Purchasing Occidental Chemical Company P. 0. Box 4020 Darien, CT 06820 Dear Ron: The VCM toll fee for August, 1984, has been adjusted as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over /MM lbs. 13.48 12.98 Also, the toll fee for September has been adjusted to: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 14.00 13.50 If you have any questions, please call. As usual, let's keep in touch with each other relative to market developments. Very truly yours, // "'/ ./ R. F. We/gle Manager Corporate Accounts BRHQ8424804 RECEIVED SEP 1 0 1984 r. : 'jh OXY/HOLMES 000793 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Shell Chemical Company A Otwon of Shell OH Compwiy One Shell Plaza July 16, 1984 Mr. Craig W. Hull Vice President, Commercial Occidental Chemical Company P. 0. Box 4020 River Park Darien, CT 06820 Dear Craig: Basis our conversation the total fee for July has been adjusted as follows: VOLUME CPP Up to 15MM pounds Over 15MM pounds 15.02 14.52 Yours very truly, RFW:AC cc: L. A. Wheeler J. B. Flint BRHK8419401 OXY/HOLMES 000794 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS SHELL/OCCIDENTAL VCM AND ETHYLENE SUPPLY AGREEMENTS MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding shall constitute the basis for drafting formal VCM Conversion, Ethylene Conversion, and VCM Tank Car Sub-Lease Agreements expected to be entered into by Shell Chemical Company ("Shell") and Occidental Chemical Corporation ("Occidental"). Shell and Occidental agree to develop these formal agreements in an expeditious manner. Until such agreements are executed. Shell and Occidental further agree to abide by the terms and conditions of this Memorandum of Understanding. 1. VCM A. VOLUME 1985: 150 MM lb plus any excess of Occidental's total VCM requirement over 600 MM lb (such excess will be estimated and spread ratably over 1985), up to 200 MM lb total. 1986: At Shell's option (option to be exercised by July 1, 1985) , any difference between 200 MM lb and the volume supplied in 1985. B. CONVERSION FORMULA (1) Occidental supplies: .485 lb ethylene/lb VCM .64 lb chlorine/lb VCM (2) Occidental pays the following monthly fee, c/lb: V - 0.3 - .485E - .64C + 0.167 for tank car earnings equalization on the first 150 MM lb of VCM. where: V Prevailing VCM Market Price to Large Buyers, c/lb E Price of Ethylene in c/lb, as determined by the Average of the Low End of the U.S. Gulf Coast Ethylene Contract Price Range published by DeVIitt and Company, Inc. each month. C * Prevailing Price of Chlorine in c/lb on the U.S. Gulf Coast, F.O.B. Producing Point, For VCM Production. The conversion fee cannot be less than 3.5c/lb. BSGQ8434107 OXY/HOLMES 000795 2 (3) Payment terms are net thirty days from the date of Shell's invoice C. DELIVERY (1) Chlorine will be supplied by Occidental to Shell at locations designated by Shell, but any chlorine freight charge in excess of $10/ton will be for Shell's account. The parties will work together to minimize freight charges. (2) VCM will be supplied by Shell F.O.B. Deer Park, Texas into railcars provided by Occidental. 2. ETHYLENE A. VOLUME 1985: 130 MM lb Plus all ethylene required for Conversion to VCM hereunder. 1986: 10.8 MM lb/month until the restart of Occidental's Lake Charles ethylene plant, estimated to be April 1986, plus all ethylene required for conversion to VCM hereunder. B. CONVERSION FORMULA (1) Occidental Supplies: 1.266 lb ethane/lb ethylene, either contained in an 80/20 E/P mix or contained in purity ethane at Shell's option with 30 days' notice F.O.B. Mont Belvieu, Texas. If E/P mix is supplied. Shell will return the propane portion of the mix to Occidental at a mutually agreeable location at no cost to Shell. (2) Shell will deliver all ethylene not required for conversion to VCM hereunder to Occidental, F.O.B. BFGoodrich's LaPorte, Texas plant or Convent, Louisiana plant at Occidental's option with 30 days' notice. (3) Occidental pays a monthly fee of 5.5c/lb of ethylene from January 1, 1985 through June 30, 1985 if supply of ethane is an E/P mix. If supply is as purity ethane, the fee is 5.25c/lb for this period. A 0.5c/lb premium will apply for ethylene delivered to Convent, Louisiana. (4) On or before June 1, 1985 for July 1 through December 31, 1985 and on or before December 1, 1985 for January 1 through June 30, 1986, Shell will nominate conversion fees for these periods. If Occidental objects to either nomination by BSGQ8434107 OXY/HOLMES 000796 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS November 16, 1984 Shell Chemical Company A Division of Stefl Oi Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 Mr. Ronald Schuh Vice President, Purchasing Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 Dear Ron: The adjusted VCM toll fee for October, 1984 is as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 10.80 10.55 If you have any questions, please call. Very truly yours. Manager Corporate Accounts BRHK8426501 K E (J t I V b D NOV 3 q 1991 OXY/HOLMES 000797 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS November 2, 1984 Shell Chemical Company One She! Plaza P.O.Box 2463 Houston, Texas 77001 Mr. Ronald Schuh Vice President, Purchasing Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 Dear Ron: The nominated VCM toll fee for November, 1984 is as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 13.30 12.80 We will monitor closely for the first 10 days and adjust accordingly. Very truly yours. Manager Corporate Accounts BRHK8426501 OXY/HOLMES 000798 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS October 15, 1984 Shell Chemical Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 Mr. Ronald Schuh Vice President, Purchasing Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 Dear Ron: This confirms our telephone conversation. The VCM toll fee for September, 1984 has been adjusted as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 11.48 11.23 Also, the toll fee for October has been adjusted to: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 11.48 11.23 If you have any questions, please call. Very truly yours. r+ S R. F. We'igle Manager Corporate Accounts BRHK8426501 RECEIVED OCT 1 91991 R. J rHUH OXY/HOLMES 000799 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS September 4, 1984 Shell Chemical Company A OMrion of the! CM Company OnaShel Plaza P.O.Box 2463 Houston, Taxas 77001 Mr. Ronald Schuh Vice President, Purchasing Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 Dear Ron: The VCM toll fee for August, 1984, has been adjusted as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 12.98 12.73 Also, the toll fee for September has been adjusted to: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15W lbs. 12.48 12.23 The nominated fee for October is the same as September. If you have any questions, please call. As usual, let's keep in touch with each other relative to market developments. Very truly yours, fi-d- R. F. Weigle Manager Corporate Accounts BRHK8426501 RECEIVED SEP 'l 5 1984 R. J rHUH OXY/HOLMES 000800 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS RECEIVED AUG 1 71984 R. J ^HUH iA/As/du Shell Chemical Company A DMtiiinol8h*l 01 Company One Shsl Plaza P.O. Box 2463 Houston, Texas 77001 August 13, 1984 Mr. Craig W. Hull, Jr. Vice President, Commercial Occidental Chemical Company P. 0. Box 4020 Darien, CT 06820 RE. ',VED AUG 1 5 884 C. W. HULL. JR. Dear Craig: The VCM toll fee for June, 1984 has been adjusted as follows: VOLUME PRICE PER POUND Up to 8MM lbs. Over 8MM lbs. 15.2 cpp 14.7 cpp Also, the toll fee for July has been adjusted to: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 14.27 cpp 13.77 cpp If you have any questions, please call. Very truly yours, f{-3- ft R. F. Weigle Manager Corporate Accounts RFW: AC BRHK8422603 OXY/HOLMES 000801 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS A Shell Chemical Company A DMtion of Shel ON Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 August 13, 1984 Mr. Craig W. Hull, Jr. Vice President, Commercial Occidental Chemical Company P. 0. Box 4020 Darien, CT 06820 RE. V E D A'JG 1 5 1984 C. W. HULL. JR. Dear Craig: The VCM toll fee for June, 1984 has been adjusted as follows: VOLUME PRICE PER POUND Up to 8MM lbs. Over 8MM lbs. 15.2 cpp 14.7 cpp Also, the toll fee for July has been adjusted to: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 14.27 cpp 13.77 cpp If you have any questions, please call. Very truly yours. f{-3- /o R. F. Weigle Manager Corporate Accounts RFW:AC BRHK8422603 OXY/HOLMES 000802 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS July 12, 1984 Shell Chemical Company A Division of Shell Oil Company One Shed Plaza P.O. Box 2463 Houston, Texas 77001 Mr. Craig W. Hull Vice President, Commercial Occidental Chemical Company P. 0. Box 4020 River Park Darien, CT 06820 Dear Craig: The retroactive toll fee for July, 1984 has been adjusted as follows: VOLUME CPP Up to 15MM pounds Over 15MM pounds 14.86 14.36 We hope this is responsive to your marketing situation. Yours very truly. /R. F. Weigle Manager Corporate Accounts RFW:AC cc: L. A. Wheeler J. B. Flint BRHK8419401 OXY/HOLMES 000803 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Shell Chemical Company A Division of ShoH Oil Company One Shell Plaza P.0. Box 2463 Houston, Texas 77001 June 22, 1984 JUN 2 8 1984 Mr. Craig W. Hull Vice President, Commercial Occidental Chemical Company P. 0. Box 4020 River Park Darien, CT 06820 c- w HULL JR Dear Craig: The retroactive toll fee for June, 1984 has been adjusted as follows: VOLUME CPP Up to 8MM pounds Over 8MM pounds 16.2 15.7 We hope this is responsive to your marketing situation. Yours very truly, R. F. Weigle Manager Corporate Accounts RFW:AC cc: L. A. Wheeler YAF8417406 OXY/HOLMES 000804 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS June 28, 1984 hemical Company R Oil Company One Shell Plaza P.O.Box 2463 Houston, Texas 77001 Ly*) Mr. Craig W. Hull, Jr. Vice President, Commercial Occidental Chemical Company P. 0. Box 4020 Darien, CT 06820 Dear Craig: The VCM toll fee for June, 1984 is as follows: VOLUME PRICE PER POUND Up to 8MM lbs. Over 8MM lbs. 15.7 cpp 15.2 cpp Also, the toll fee for July is as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 15.36 cpp 14.86 cpp If you have any questions, please call. Very truly yours, R. F. Weigle Manager Corporate Accounts RFW:AC YAF8418002 OXY/HOLMES 000805 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS DXY Occidental Chemical Corporation Corporate Oltice To____ From__ Subject Distribution______ Craig W. Hull, Jr. Shell VCM Price - June Date June 21> 198tt Shell has changed their price for June as follows: First 8MM pounds Over 8MM pounds - 16.2C/pound 15.7C/pound This is a reduction and based on chlorine at $150/ton is equal to 21.0C/pound VCM or the same price as Dow. CWH :1kg Distribution R. Hirl R. Rajaji S. Schaefer OXY/HOLMES 000806 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS DXY Occidental Chemical Corporation Corporate Office FILE___MEM0 ______________Steve Schaefer______________ From___________Craig W. Hull. Jr.__________ Subject________VCM Price - Shell Chemical Dgfe ______ May 31, 1984 cc: J. R. Hirl R. Rajaji Shell has revised their VCM price for May to 17.2< and 16.7C. This reflects the reduction from Dow. Also, Shell's price for June will be 17.2C and 16.7C. CWH-.lkg OXY/HOLMES 000807 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS INTER-OFFICE CORRESPONDENCE To. Date MR. D. W. CALHOUN NAME AUGUST 19, 1981 HOUSTON LOCATION From Subject Copy to: J. R. HOPPER NAME SHELL VCM CONTRACT AND BURLINGTON FOR POTTSTOWN LOCATION POTTSTOWN, PERRYVILLE Mr. R. F. Gervais Mr. J. J. McCosJcey Mr. J. L. Russ Mr. J. F. Knight f/C Hooker Chemic, PLAS CEIVED AUG 2 6 1981 DAVID VV. CALHOUN Mr. John Russ, Director of Marketing for the PVC Resins Division, advised today that projected PVC Resin sales for th/4 remainder of this year are going to be lower than originally forecast. As you know, the Shell contract has a penalty if we fail to take the 330 mm lbs. per year minimum quantity. The penalty is defined by a formula which presently equates to $27,500 for each 1 mm lbs. we are short. / Through September Shell will have shipped/- 227 mm lbs. 4th quarter revised requirement / - 91 mm lbs. (Pottstown, Perryville, Burlington) / fTotadI . 318 mm lbs. Assuming 100% of our 4th quarter requirement (91 mm lbs.) to Shell Lwould put us 12 mm lbs. below minimum with $330,000 penalty exposure. We also have a contract with Uniroyal (no penalty clause) and have been performing at approximately 2 mm lbs/ per month. If we maintain Uniroyal at this 2 mm lbs. per month rate/ for the 4th quarter, only 85 mm lbs. would be available for Shell putting us 18 mm lbs. below minimum resulting in a penalty exposure of $495,000. OXY/HOLMES 000808 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS CONTRACT SUMMARY SHEET CODE:__ ; TYPE: COMMODITY: DIVISION/LOCATION CONTRACT BETWEEN: AND. AGREEMENT DATES: _______________________________________________________ _ NOTICE PROVISIONS: _____________________________________________________ AMENDMENTS: REVIEWED BY: DATE COMMENTS: DATE DATE DATE DATE DATE OXY/HOLMES 000809 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS OXY Occidental Chemical Corporation Corporate Office fA '4h MEMO To Frnm Subject C. W. Hull F. H. Romanelli____________________________ Liquidated Damages 1984 Contract VCM Date December 3, 1984 CC: J. R. Hirl M. J. Rudick S. W. Schaefer R. J. Schuh*'' C. S. Shaw Our best estimate of 1984 liquidated damages, assuming a 40MM pound shortfall, is $1.5MM. Pottstown did the analysis based on the Dewitt low number for ethylene. Each lc change in ethylene is equivalent to approximately $200M in an inverse relationship, i.e., the higher the ethylene price, the less are our damages. Since Dewitt's low is probably high relative to market, the damages could be greater than $1.5MM. YAV k i: C L i V E D DEC 31991 R. J ''"HUH OXY/HOLMES 000810 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS December 10, 1984 Shell Chemical Company One Shell Plaza P.O.Box 2463 Houston. Texas 77001 Mr. Ronald Schuh Vice President, Purchasing Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 Dear Ron: The adjusted VCM toll fee for November, 1984 is as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 11.05 10.80 If you have any questions, please call. This is based on a 14.25 cpp monomer price. Very truly yours, BRHK8426501 REG' utr R OXY/HOLMES 000811 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS November 30, 1984 2* Shell Chemical Company A Division of Shaft Oil Company One Shel Plaza P.O.Box 2463 Houston, Texas 77001 Mr. Ronald Schuh Vice President, Purchasing Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 Dear Ron: The nominated VCM toll fee for December, 1984 is as follows: VOLUME PRICE PER POUND Up to 15MM lbs. Over 15MM lbs. 13.30 12.80 f- r If you have any questions, please call. Final toll fee for November is still to be decided. Very truly yours, R. F. Weigre Manager Corporate Accounts BRHK8426501 RllUVED DEC 41991 R j --wijh OXY/HOLMES 000812 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Occidental Chemical Corporation August 10, 1983 C O F ! V F r> All 6 15 1983 Ms. Joan Kalinoski Shell Chemical Company 100 Executive Drive West Orange, NJ 07052 WHC Dear Joan: SUBJECT: VINYL CHLORIDE MONOMER REQUIREMENTS AUGUST, 1983 - REVISION #1 Per confirming phone conversation with Donna Arpaio on August 9, please enter the following order changes: Burlington Plant Please cancel 6 cars (1,080,000 lbs.) from the Burlington August shipping schedule. These cars were originally scheduled to ship on August 10, 10, 11, 11, 11, and 12. This change decreases the Burlington order to 69 cars (12,420,000 lbs.). The new total for both locations is 26,100,000 lbs. Very truly yours. Kerry L. Adams Buyer - Materials Management KLA/seh cc: W. H. Childs - Houston K. H. Garner/J. R. Hilt H. H. Raster T. Nasife - Burlington R. M. O'Donoghue - Niagara Falls V. J. Smith R. F. Weigle - Shell OXY PVC Resins/PVC Fabricated Products Arrnanc Harimer Boulevarc Box 699. Potistcwn Pennsylvania 19464 215 32^-6400 OXY/HOLMES 000813 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Occidental Chemical Corporation July 21, 1983 RECE/yp/^ Ijul 2 51983 Ms. Gail Pyontek Shell Chemical Company 100 Executive Drive West Orange, NJ 07052 ftoHc Dear Gail: SUBJECT: VINYL CHLORIDE MONOMER REQUIREMENTS JULY, 1983 - REVISION #2 Per confirming phone conversation with you on July 21, please enter the following order changes: Burlington Plant Please cancel 10 cars (1,800,000 lbs.) from the Burlington July shipping schedule. These cars were originally scheduled to ship on July 22, 22, 22, 23, 23, 24, 24, 25, 25, and 26. This change decreases the Burlington order to 35 cars (6,300,000 lbs.). The new total for both locations is 14,400,000 lbs. Manager - Raw Material Supply JFK/seh cc: Mr. W. H. Childs - Houston Mr. K. H. Garner/Mr. J. R. Hilt Mr. H. H. Raster Mr. T. Nasife - Burlington Ms. R. M. O'Donoghue - Niagara Ms. V. J. Smith Mr. R. F. Weigle - Shell OXY PVC Resins/PVC Fabricated Products Armsnd Hammer Boulevard. Box 699. Pottstcwn. Pennsylvania 1946- 215'327-6400 OXY/HOLMES 000814 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Occidental Chemical Corporation June 17, 1983 JUN 2 21983 Ms. Gail Pyontek Shell Chemical Company 100 Executive Drive West Orange, NJ 07052 VVHC Dear Gail: SUBJECT: VINYL CHLORIDE MONOMER REQUIREMENTS JULY 1 THROUGH JULY 31, 1983 Per confirming phone conversation with you today, our July VCM shipping schedule will be as follows: Potts town Plant Ship Dates 7/13/83 7/14/83 7/15/83 7/16/83 7/17/83 7/18/83 7/19/83 7/20/83 7/21/83 7/22/83 7/23/83 7/24/83 7/25/83 7/26/83 7/27/83 7/28/83 7/29/83 7/30/83 7/31/83 No. of Cars 1 2 1 1 21 2 1 2 1 2 1 1 2 1 2 1 2 1 1 Estimated Arrival Dates 7/23/83 7/24/83 7/25/83 7/26/83 7/27/83 7/28/83 7/29/83 7/30/83 7/31/83 8/1/83 8/2/83 8/3/83 8/4/83 8/5/83 8/6/83 8/7/83 8/8/83 8/9/83 8/10/83 26 26 cars x 180,000 lbs. = 4,680,000 lbs. XY PVC Resins/PVC Fabricated Products Armand Hammer Boulevard. Box 699. Pottstown. Pennsylvania 19464 215/327-6400 OXY/HOLMES 000815 Occidental Chemical Page 2 Burlington Plant Ship Dates No. of Cars Estimated Arrival Dates 7/10/83 7/11/83 7/12/83 7/14/83 7/15/83 7/16/83 7/17/83 2 2 1 2 2 2 3 7/20/83 7/21/83 7/22/83 7/24/83 7/25/83 7/26/83 7/27/83 7/18/83 7/19/83 7/20/83 7/21/83 7/22/83 7/23/83 7/24/83 2 2 2 2 3 2 2 7/28/83 7/29/83 7/30/83 7/31/83 8/1/83 8/2/83 8/3/83 7/25/83 7/26/83 7/27/83 7/28/83 7/29/83 7/30/83 7/31/83 2 3 2 2 2 ,3 ~2 8/4/83 8/5/83 8/6/83 8/7/83 8/8/83 8/9/83 8/10/83 45 45 cars x 180,000 lbs. = 8,100,000 lbs. Very truly yours. James Ft Knight Manager - Raw Material Supply JFK/seh cc: Mr. Mr. Mr. Mr. Ms. Ms. Mr. W. H. Childs - Houston*"''"*^ K. H. Garner/Mr. J. R. Hilt H. H. Raster T. Nasife - Burlington R. M. O'Donoghue - Niagara Falls V. J. Smith R. F. Weigle -Shell OXY/HOLMES 000816 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Occidental Chemical Corporation May 24, 1983 Ms. Gail Pyontek Shell Chemical Company 100 Executive Drive West Orange, NJ 07052 Dear Gail: SUBJECT: VINYL CHLORIDE MONOMER REQUIREMENTS JUNE, 1983 - REVISION #1 Per confirming phone conversation with you on May 23, please enter the following order changes: Pottstown Plant Please add 12 cars to the Pottstown June shipping schedule to ship 3 each on June 27, 28, 29, and 30. This increases the total Pottstown order to 57 cars (10,260,000 lbs.). Burlington Plant Please add 12 cars to the Burlington June shipping schedule to ship 3 each on June 27, 28, 29, and 30. This increases the total Burlington order to 67 cars (12,060,000 lbs.). The new total for both locations is 22,320,000 lbs. cc: Mr. W. H. Childs - Houston Mr. K. H. Garner/Mr. J. R. Hilt Mr. H. H. Raster Ms. V. J. Marsteller Mr. T. Nasife - Burlington Ms. R. M. O'Donoghue - Niagara Falls Mr. D. Singer - Shell Mr. R. F. Weigle - Shell OXY PVC Resins/PVC Fabricated Products Armand Hammer Boulevard. Box 699 Pottsiown Pennsylvania 19464 215/327-6400 OXY/HOLMES 000817 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS D. W. CALHOUN - HOUSTON Occidental Chemical Corporation u May 18, 1983 Ms. Gail Pyontek Shell Chemical Company 100 Executive Drive West Orange, NJ 07052 Dear Gail: SUBJECT: VINYL CHLORIDE MONOMER REQUIREMENTS JUNE 1 THROUGH JUNE 30, 1983 Per confirming phone conversation with you on May 17, 1983, our June VCM shipping schedule will be as follows: Ship Dates No. of Cars Estimated Arrival Dates 6/1/83 3 6/11/83 6/2/83 2 6/12/83 6/3/83 5 6/13/83 6/4/83 5 6/14/83 6/5/83 5 6/15/83 6/6/83 6/7/83 6/8/83 6/9/83 6/10/83 3 3 3 2 2 6/16/83 6/17/83 6/18/83 6/19/83 6/20/83 6/27/83 6/28/83 6/29/83 6/30/83 3 3 3 _3 7/7/83 7/8/83 7/9/83 7/10/83 45 45 cars x 180,000 lbs. = 8,100,000 lbs. OXY PVC Resins/PVC Fabricated Products Armand Hammer Boulevard, Box 699. Pottstown. Pennsylvania 19464 215/327-6400 OXY/HOLMES 000818 Occidental Chemical tf > - Page 2 Burlington Plant Ship Dates No. of Cars Estimated Arrival Dates 6/1/83 5 6/11/83 6/2/83 5 6/12/83 6/3/83 2 6/13/83 6/4/83 2 6/14/83 6/5/83 3 6/15/83 6/6/83 2 6/16/83 6/7/83 2 6/17/83 6/8/83 2 6/18/83 6/9/83 3 6/19/83 6/14/83 6/15/83 6/16/83 6/17/83 6/18/83 6/19/83 2 2 2 3 2 2 6/24/83 6/25/83 6/26/83 6/27/83 6/28/83 6/29/83 6/20/83 6/21/83 6/22/83 6/23/83 2 3 2 2 6/30/83 7/1/83 7/2/83 7/3/83 6/28/83 6/29/83 6/30/83 2 3 2 7/8/83 7/9/83 7/10/83 55 55 cars x 180,000 lbs. = 9,900,000 lbs. Very truly ypvurs. James F! Knight Manager - Raw Material Supply JFK/seh cc: Mr. D. W. Calhoun - Houston Mr. K. H. Garner/Mr. J. R. Hilt Mr. H. H. Raster Ms. V. J. Marsteller Mr. T. Nasife - Burlington Ms. R. M. O'Donoghue - Niagara Falls Mr. D. Singer - Shell Mr. R. F. Weigle - Shell OXY/HOLMES 000819 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS INTER OFFICE CORRESPONDENCE To: Date: From: Subject: Copies: R. F. Gervais November 16, 1981 D. W. Calhoun Shell Long-Term V R. S. Baker, Jr. J. R. Hopper L. G. King J. F. Riordan W. J. Wetzel Hooker Chemical Company Attached is a copy of the Shell VCM proposal. We have not fully reviewed it and I have no detailed comments at this time. I do know that the items are not "cast in concrete" and I expect every point to be negotiable. My department will be reviewing this proposal and we plan a formal presentation and discussions with all recipients of this memo. DWC:dh 2218b Attachment D. W. Calhoun 141A / OXY/HOLMES 000820 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS November 6, 1981 Shell Chemical Company A Dmmor of Shol Oil Company One She! Plaza P.O.Box 2463 Houston, Texas 77001 RECEIVED Mr. David W. Calhoun Director - Energy and Raw Material Supply Hooker Chemical Company 1980 South Post Oak Road P. 0. Box 4289 Houston, TX 77210 NOV 10 1881 DAVID W. CALHOUN Dear Dave: SUBJECT: LONG-TERM VCM MANUFACTURING PROPOSAL Dave Litton, Larry Wheeler, and I appreciated having the opportunity to meet with you and Jim Hopper on October 8th to continue our long-term VCM contract discussions. At that meeting, we provided you with the outline of a VCM manufacturing proposal which we believe meets the objectives expressed by both Hooker and Shell during our several previous discussions. This applies especially to Hooker's desire for a proposal that eliminates fixed financial commitments, provides an ethylene advan tage, and considers the competing economics of a Niagara VCM project. As agreed, we are transmitting this proposal to you in a more formal way by means of this letter. In addition to the proposal outline, we are including a brief description of the rationale behind some of the key points to assist you in explaining the proposal to others within Hooker. We have also documentated Shell's positions, expressed verbally during our meeting, on a number of other contract issues such as those dealing with quantities, underlifting provisions, and provisions for meeting competition. As you had requested, we have tried to approach the development of this proposal from the standpoint of a "best offer" which would require a minimum of negotiating effort on both sides. Accordingly, we would appreciate the opportunity of presenting the key elements of the proposal to senior Hooker management at an early date so as to obtain the endorse ment of both companies' managements concerning the direction we are heading together. Since we are both engaged in a long range planning exercise for our respective businesses, we both need to confirm that a Hooker-Shell VCM manufacturing agreement of the type proposed is more attractive to Hooker than backward integration into VCM and is economi cally viable to both companies. ^2 OXY/HOLMES 000821 We will proceed to adapt the proposal to a presentation format and look forward to reviewing this with you at your convenience. Sincerely, Corporate Account Manager Attachments LR5-I OXY/HOLMES 000822 Private and Confidential VCM Conversion Fee Proposal for Hooker Term = 7-10 years. Nominated fee, subject to a maximum. Maximum Fee = Ethylene Price x Ethylene Conversion Factor + Variable Conversion Cost + Fixed Cost and Return where: EthvleneJPrice. = Shell's prevailing posted price for ethylene, i'.O.Ji., Norco, Louisiana Ethylene Conversion Factor = For 1982-84 = 0.455 5" % For 1985 and thereafter, Shell may increase up to 0.48 Variable Conversion Cost = 2.64 cpp x Shell's Monthly Average Norco Fuel Cost Shell's 3Q81 Average Norco Fuel Cost Fixed Cost and Return = , ,, Monthly CE Plant Cost Index --1X 3081 CE Plant Cost Index Maximum "Fixed Cost and Return" element of the fee may be exceeded as much as 20 percent for as many pounds of VCM as converted below maximum. Fee may be increased upon 30 days' notice at any time after it has been in effect for ninety days. y OXY/HOLMES 000823 RATIONALE BEHIND KEY ELEMENTS OF VCM CONVERSION PROPOSAL 1. Term, 7-10 years. Length of term is somewhat flexible but should be sufficiently long as to reflect the commitment of a "joint venture," providing both sides with security of supply/offtake for the long-term. 2. Fee. The fee for conversion of Hooker's chlorine into VCM would be nominated, but would be subject to a maximum. The maximum would be set so as to assure Hooker of lower VCM costs at all times than could be obtained through investment in new VCM capacity, wherever located. Below the maximum, Shell and Hooker would follow the present approach to establishing the fee, i.e., negotiated to reflect current market conditions and the need to be responsive to competitive situations. Shell has already demonstrated a willingness to recognize ethylene and chlorine values advantageous to Hooker and accept less than full recovery of VCM conversion costs in order to keep its conversion fee competitive. 3. Fee Components. At the maximum, the fee would be comprised of separately identified ethylene, variable conversion, and fixed cost and return components. The ethylene conversion factor would be set so as to guarantee Hooker an advantageous ethylene position for a minimum of three years. The ethylene component has been structured to be as advantageous to Hooker as a long-term, large-volume, ethylene purchase agreement negotiatied in the same time frame. 4. Variable Conversion Cost. This component is based on 3Q'81 Norco VCM variable conversion costs, escalated with average Norco fuel costs. Conversion costs are largely energy-related: steam for distillation, fuel for cracking furnaces. 5. Fixed Cost and Return. The competitive market will determine what proportion of Shell's VCM fixed cost and return on VCM capital are recoverable at any time. Shell has proposed an escalating ceiling of 6.0 cpp (1981 money) on this element to assure Hooker of con version costs that are less than could otherwise be obtained over the long-term by investment in new VCM capacity at Niagara Falls. The ceiling value was determined as follows: I. Fixed Cost: Unit fixed VCM conversion costs in Shell's plants are in excess of 3 cpp, excluding depreciation. For a new, world scale VCM plant, unit fixed costs could be as low as 2.5 cpp in 1981 money. Assume this latter value as the ceiling on the fixed cost component of the fee. OXY/HOLMES 000824 2 II. Return: a) Under equilibrium VCM market conditions, the return on VCM capital will be set by new VCM plant economics (to justify capacity additions). Most new capacity will be added on the U.S. Gulf Coast. b) A new, world scale, U.S. Gulf Coast VCM plant would have a nameplate capacity of 1,000MM lb/yr; an effective capacity of 900MM lbs/yr; and an installed capital cost of $200-250MM (1981 $). c) An annual capital charge (depreciation plus profit) of 20-25 percent of gross investment, pre-tax, would be required to minimally justify new capital investment. d) 25 percent x $200MM (or 20 percent x $250MM) -r 900MM lbs = 5.5 cpp VCM (1981 money) for return at equilibrium conditions. e) Consider Hooker's Niagara VCM option relative to U.S. Gulf Coast: Although there are many differences between a Niagara investment and a Gulf Coast investment, the major quan tifiable differences are in the areas of construction cost, VCM freight cost, and chlor-alkali power cost. Potential Niagara ethylene costs are not definable by Shell at this time, but it is unlikely that they could be less than U.S. Gulf Coast ethylene costs and could be more. i) Construction Cost A VCM plant built in Niagara Falls will cost approxi mately 10 percent more to construct than a comparable U.S. Gulf Coast plant. 10 percent x 5.5 cpp U.S. Gulf Coast capital charge = 0.55 cpp disadvantage for Niagara (say 0.6 cpp). ii) VCM Freight Cost Norco to Pottstown, Perryville, Burlington equals 2.06 cpp. Niagara to same destinations equals 1.50 cpp (single car), but annual volume rates in 1.0-1.2 cpp range could be negotiated. OXY/HOLMES 000825 3 Differential freight cost, Norco vs. Niagara = 1.0 cpp advantage for Niagara. iii) Power Cost Incremental power cost available to Hooker at Niagara could be as low as 6 mills/KWH vs. 36 mills/KWH at Taft. If the Niagara incremental power cost is sufficiently low, Hooker can justify maximizing chlorine production at Niagara and shipping surplus chlorine to the Gulf. The maximum advantage for VCM production at Niagara vs. VCM production at Norco is then the cost of shipping chlorine from Niagara to the Gulf. Any better Niagara power economics than are needed to justify such chlorine shipment will be realized by Hooker whether VCM is produced at Niagara or not. Chlorine tank car rates, Niagara to the Gulf are $72/T but could be negotiated down to $45-50/T for large volume business. $50/T ,, lbs chlorine _ 1.6 cpp advantage 2000 lb/T X lb VCM " for Niagara iv) Net advantage for Niagara = 1.0 + 1.6 - .6 = 2.0 cpp VCM. f) Deduct Niagara advantage from 5.5 cpp required return for U.S. Gulf Coast VCM: 5.5 - 2.0 = 3.5 cpp = return ceiling to be competi tive with a Niagara VCM option. III. Total fixed cost + return = 2.5 cpp fixed + 3.5 cpp return = 6.0 cpp as a ceiling. Since actual fixed cost + return will most often be below the ceiling (today's Hooker fee equates to 0.45 cpp fixed cost + return), the long-term average fixed cost + return will be considerably below the cost Hooker would incur at all times for these elements if it constructed and operated its own VCM plant at Niagara. 6. Escalation. The ceiling value for fixed cost + return is in 1981 money. This element is largely based on plant construction costs which will escalate with time. The CE Plant Cost Index is widely recognized as the most accurate index of chemical plant construction costs. OXY/HOLMES 000826 4 7. Partial compensation for VCM sold below the ceiling price. There is risk to Shell that over the long-term, because of the ceiling price limitation, the fixed cost + return element will average less than is required to yield Shell recovery of costs and a fair return on its existing VCM assets. Shell proposes that, to the extent market conditions permit, it be allowed to charge up to 120 percent of the fixed cost + return ceiling for as many pounds of VCM as are converted below the maximum. This will only partially compensate Shell since it is likely that the major portion of pounds converted below the maximum will be at fees more than 20 percent below the maximum. 8. Quantity. Although not addressed in the proposal, Shell would favorably consider an increasing year-by-year volume commitment, starting at 380MM lbs in 1982 and growing to 500MM lbs by 1985. Ultimate volumes as high as 750MM lbs could be considered. Obligated deliveries in any year would be up to 105 percent of the commitment and obligated purchases would be a minimum of 95 percent of the commitment. 9. Underliftings. In the event Hooker purchased less than 95 percent of the commitment volume in any year, Hooker would agree to toll a stated percentage of its VCM requirements through Shell. The percentage would increase with increasing underliftings. This provision would be in lieu of liquidated damages. 10. Meet or Release. Shell would be willing to consider an appropriate meet or release provision, similar to that contained in the present contract. OXY/HOLMES 000827 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS OXT Occidental Chemical Corporation Executive Offices MEMO TO: John Huber FROM: Dave Calhoun SUBJECT: DOW VCM/SHELL TOLL FEE cc: L. G . King W. J. Wetzel 3. F. Rlordan R. F. Gervals S. P. Dominick H. H. Kaster P. W. Fiedler DATE: May 10. 1983 DOW: Dow has agreed to roll back their April VCM price to us from 19.S t/lb. to 18.75 t/lb. This reduction Is not a general roll back and this market price remains at 22 z/lb. The price for May Is at this time scheduled to return to 19.5 1/lb. Dow will not extend the 18.75 price for May at this time. I believe however, that Dow will eventually hold the 18.75 for May and June. SHELL: Shell has been holding the line on their toll fee nomination of 16.45 (15.95 vol over 15 mm lbs) which we have rejected as being totally unacceptable. Shell has also refused to recognize the margin problem on the dispersion resin. We have a meeting scheduled with them tomorrow for another attempt at lowering the fee. I believe Shell will lower their fees and also respond on the dispersion resin, however how much and when are the questions. I should have more Information tomorrow. OC-1007.A (ED. 7-82) OXY/HOLMES 000828 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Occidental Chemical Corporation Executive Offices MEMO TO: John Huber FROM: Bill Childs SUBJECT: DOW VCH/SHELL TOLL FEE cc: L. G. King W. J. Wetzel R. F. ServeIs S. P. Dominick H. H. Raster J. F. Rlordan T. A. Sugalskl P. W. Fiedler R. C. Corwin DATE: June 7. 1983 DOW: We have Just been notified by Dow that the VCM price of 18.75</lb will be extended for May and June. SHELL: Shell has Indicated that they will be competitive with Dow for May and June which would change their toll fee nomination of 16.45 (15.95 vol over 15 mm lbs) to 15.71 (15.21 vol over 15 mm lbs). Shell has not confirmed these toll fees at this time but will respond during the week. BvSa. <ZJLSUu> WHC:Js OC-1007.A (EO. 7-82) OXY/HOLMES 000829 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS November 27, 1978 To: From: Wm. E. Sholl JET This appears to be a well thought out contract and is very likely the best deal Ruco could make. As long as Hooker can send Cl? to Shell by pipeline, the transportation economics certainly favor doing so. The only (mild) criticism I have is that I feel Conoco or Goodrich might have been better conversion prospects than Dow, PPG and Diamond who constructed their VCM plants (at least partly) to use up their own chlorine. Carping aside, this appears to be a good arrangement and Bill should be commended on it. Let's ask Lucy to set up a file for these contracts, this to be titled "VCM". JET OXY/HOLMES 000830 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS To. Date. INTER-OFFICE CORRESPONDENCE Distribution MAMS November 16, 1978 VOCATION From W- J- Wetze^ Subject. Proposed VCM Contract Shell Chemical Copy to: B. D. R. A. L. G. J. F. Davis Katherine King Riordan HOOKER CHEMICAL CORPORATION Hooker Chemicals & Plastics Corp. Occidental Chemical Company Oxy Metal Industries Corporation O Interore Ruco O Canadian Oxy ~d) fg Q f? n w fc Uli L & b u b [DJ NOV 2 G iS78 W. E. SHOLL I am attachimg for your review and comment a draft of a letter I intend to send to OoTT-Baeder requesting his approval-of the attached contract with Shell Chemical for the tolling of Hooker. Cl, into VCM. If you are in disagreement with either the letter or have any problems with the provisions of the proposed contract, please advise me as soon as possible since after December 31, 1978 Ruco will be without legal protection of its VCM feedstock supply. WJW:fc Distribution: J. S. Coey K. A. McGaw . W. E. Shol1 ^ J. D. Sipes OXY/HOLMES 000831 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS %r To__ Date P N 4 INTER-OFFICE CORRESPONDENCE D. L. Baeder____________________ MAM| LOCATION November 16, 1978 From W. J. Wetzel MAMS LOCATION VCM Contract - Shell Chemical HOOKER CHEMICAL CORPORATION Hooker Chemicals & Plastics Corp-. Occidental Chemical Company Oxy Metal Industries Corporation Interore Ruco Canadian Oxy Copy to: J. S. Coey J. Cross B. D. Davis R. A. Katherine L. G. King K. A. McGaw J. F. Riordan W. E. Sholl J. D. Sipes DRAFT Attached for your review and approval is a final draft of a proposed contract with Shell Chemical for the tolling of Hooker C12 into vinyl chloride monomer (VCM) feedstock for Ruco's PVC facilities. In order to give you some of the flavor and background of these negotia tions, I have attached a summary (Exhibit I) highlighting the major milestones in our negotiations. I believe that Hooker has explored every reasonable possibility to determine if VCM could be made available to Ruco on a better basis than from Shell and that none is available. Shell, in our opinion, is the only viable "toll" supplier at this time. The main features of the proposed contract are as follows: 1. Shell will toll Hooker C12 into VCM for a period of six (6) years. If Hooker decides to build or acquire VCM manufacturing capability, Hooker may terminate this agreement at the end of three (3) years or at the end of four and one-half (A-l/2) years with eighteen (18) months notice. 2. The conversion fee can be changed each quarter but Shell must meet or release based on competitive actions. I recommend your approval of this contract for the following major reasons: 1. It will provide Ruco with an assured supply of VCM feedstock for six (6) years based on tolling Cl^ via pipe line. In the past this has resulted in very competitive VCM for Ruco. 2. Assures the use of approximately 50,000 tons per year of C12 or 300,000 tons over the life of the contract. Materials Management and Legal assisted us in the negotiation and generally agree with the proposed contract. Finance has reviewed the contract and have no comments. Finally, I have discussed this with the ICG key personnel OXY/HOLMES 000832 * D. L. Baeder October 2k, 1978 2- - VCM Contract - Shell Chemical who want the assurance of moving the Cl^ into VCM. Based on the above, I recommend you approve this proposed contract. WJW:fc /, OXY/HOLMES 000833 k SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS SUMMARY VCM NEGOTIATION HIGHLIGHTS Hooker's first major contract for vinyl chloride monomer (VCM) was with B. F. Goodrich and was a straight purchase of VCM rather than a tolling of HCPC Cl2. The B. F. Goodrich contract expired December 31 , 1973- a) Hooker then negotiated a contract with Shell that provided for a straight purchase of VCM for the first year and a toll conversion of HCPC for the remaining term which ended on December 31, 1977. b) Hooker opted to supply its own tank car fleet for the trans portation of VCM from Shell's Norco, La. plant primarily to Ruco's facility at Burlington. c) The tolling portion of this contract was based on a fixed conversion fee with escalating terms based on a formula factored by crude oil pricing, labor rates, commodity index number and extraordinary costs, such as regulatory compliance. d) By mutual agreement, this contract was allowed to extend itself through December 31, 1978. The major difference in the extended period is that the VCM conversion fee would be based on a market price concept and not tied to escalators. During this extension period (1978) other potential suppliers of VCM were selected and contacted to determine whether outright purchase, or conversion of Hooker chlorine to VCM was feasible. All VCM suppliers were originally considered, but due to known supply limitations at that time, only three (3) major suppliers were contacted formally. ConversatTons were held with marketing management of Dow Chemical, Pittsburgh Plate Glass and Diamond Shamrock with the following observations: a) None of these producers was interested in "converting" Hooker chlorine into VCM. b) From a straight purchase point of view, either availability or future pricing philosophy pre cluded further investigation and discussion with these companies. Having satisfied ourselves that economically there was no advantage to see other sources of supply, we initiated negotiations with Shell for a new supply contract. OXY/HOLMES 000834 Exhibit Page 2 5. The major issue to be resolved in these negotiations revolved around the conversion fee to be charged by Shell. a) Shell made it very clear to us that they were not receiving an adequate return on investment based on our original con version fee with escalator concept, and wished to set future conversion fees on VCM market pricing with the proviso that it was their intent to provide a slight competitive advantage to the tol1 conversion customer. We were further advised that two (2) other major toll conversion customers had already agreed to a market price equivalent. It developed that the conversion fee that Shell projected for 1978 was 11.25c/1b. whereas an extention of the existing contract was approximately 10.25(/lb. b) Ruco was being asked to absorb an initial conversion price increase of 1.0</lb. which based on a projected consumption of 170MM lbs. VCM for 1978 would have resulted in an increased VCM raw material cost to Ruco of $1.7MM. c) Market conditions were such on January 1, 1978 that no change or increase occurred in our conversion fee which has remained at 9.87</lb. F.O.B. Norco, La. The conversion fee went down to 9.27^/lb. on February 1 and will finish the year at 10.75^/1b. Based on the above, it is our belief that Shell is reacting favorably to the market place in line with their advised intent to keep conversion customers in a favorable competitive position. 6. The expected radical increase in our VCM costs and the stiffer penalty clause in the new agreement made us more cautious about our ability to resell VCM or profitably toll PVC, so we negotiated lower minimum and maximum quantities in the proposed contract. Old (MM lbs.) New (MM lbs.) Minimum Maximum Minimum Maximum 177 209 150 180 7. Shell proposed that the new five (5) year contract be effective January 1,1978 and incorporate the new conversion fee concept instead of beginning January 1, 1979. We countered with a six (6) year contract beginning January 1, 1979. We wanted a six (6) year contract to maximize the C12 going into Shell considering they were planning on being in the CI2 business themselves. We did not want to give them an opportunity to cancel our C12 toll arrangement. 8. We were also aware of the new government regulations that made it necessary to modify all tankcars for the transporation of VCM to minimize damage and improve safety by 1982. These modifications included installation of head shields, thermal insulation, and OXY/HOLMES 000835 Exhibit I Page 3 improved coupling arrangements. Estimated cost of these modifications is approximately $10,000/tankcar. Since ninety (90) tankcars are required to service Burlington, N. J. from Norco, La., an outlay of approximately $900,000 would be required to modify these tankcars and our monthly rental costs would go up. 9. As a concession to sign up one (1) year earlier, we presented a proposal to Shell to take over the Ruco tankcar leases that were to expire in 1978, modifications cost, and the management of the necessary tankcars to service Ruco's requirements if we were to give serious consideration to their new contract proposal. After further negotiations, Shell agreed to assume the tankcar fleet which included leases, cost of modifications and management. Since such tankcar leases are of a five (5) year duration, it was further agreed that the new VCM conversion contract would be for a like period. We finally decided that the economics of keeping or giving up our cars was equal and that the flexibility the cars provided for resale and/or tolling out-weighed the public relations advantage of getting rid of the cars and so we elected to keep our cars. 10. We asked for Shell to tighten up the VCM specifications considerably and they agreed to tighten up some areas but could not agree on other areas. We have a letter of understanding outside of the contract to indicate we still want them to work with us to improve the VCM speci fications . OXY/HOLMES 000836 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS 7/24/78 PRIVATE & CONFIDENTIAL CONVERSION AGREEMENT 1 This Agreement is made this day of 1978, by and between SHELL CHEMICAL COMPANY, a division of SHELL OIL COMPANY, a Delaware corporation with offices at One Shell Plaza, Houston, Texas 77002 (hereinafter referred to as "Shell") and HOOKER CHEMICALS & PLASTICS CORP., a subsidiary of Occidental Petroleum Corporation, a California River Road, Burlington, New Jersey 08016 corporation, with offices at 345--Tbird-Sfereet-y-N-iagar-a-Fa-l-l-s-;--New--or-k 14302 (hereinafter referred to as "Hooker"). WHEREAS, Shell and Hooker have entered into previous agreements dated January 24, 1973 and October 24, 1974 for the sale by Shell to Hooker of Vinyl Chloride Monomer (hereinafter referred to as "VCM") during the year 1974 and for the conversion by Shell of Hooker's chlorine to VCM in subsequent years for delivery to Hooker; and WHEREAS, Shell and Hooker desire to maintain a mutually bene ficial long-term agreement for the conversion of Hooker chlorine into VCM by Shell. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereby agree as follows: WITNESSETH 1. TERM. A. This Agreement shall be binding upon the parties upon and after the execution hereof. It shall remain in full force and effect for a Primary Period of six (6) years, beginning on January 1, 1979, and shall continue thereafter unless and until terminated. Either OXY/HOLMES 000837 7/24/76 2 party may terminate as of the last day of the Primary Period or at any time thereafter by giving notice of termination to the other party at least eighteen (18) months in advance; however. Hooker may terminate this agreement earlier under the sole circumstances described in Article l.B. below. B. If Hooker decides to build or acquire VCM manufactur ing capability, Hooker may terminate this agreement at the end of three (3) years or at the end of four and one-half (4-1/2) years providing that Hooker has given Shell written notice eighteen (18) months in advance of the proposed termination date. If Hooker has failed to notify Shell of its intent to terminate this agreement by July 1, 1980, the option to terminate at the end of three (3) years lapses and Hooker may then not terminate this agreement until the end of four and one-half (4-1/2) years. If Hooker subsequently fails to notify Shell of its intent to terminate by January 1, 1982, then the termination provisions and 12 of Article l.A./are the sole conditions of termination. i. QUANTITIES - CONVERSION. During the term of this Agreement, Hooker shall deliver liquid chlorine to Shell by pipeline at Shell's Norco, Louisiana plant, or by mutual consent, by 90 ton tank car to such Shell location(s) as Shell shall designate, pursuant to Article 6 hereof, to be held by Shell in storage for Hooker's account and to be converted subsequently into such amounts of VCM as Hooker shall order, at a conver sion ratio of 0.64 pounds of chlorine to 1.0 pound of VCM. In no event shall Shell be obligated to deliver to Hooker in any calendar month a quantity of VCM exceeding 1/11 of the applicable calendar year maximum quantity shown below or, cumulatively, 1/6 of such calendar year maximum in any two (2) succeeding months. OXY/HOLMES 000838 I/tt/ I o 3 QUANTITIES OF VCM TO BE CONVERTED - MILLION POUNDS YEAR MINIMUM 1979 and each . year thereafter MAXIMUM 180 Hooker shall notify Shell not less than nine (9) months prior 1980 to the start of 4S59 and any future year as to its nomination of the quantities of VCM desired during that calendar year within the range of Hooker's nomination for 1979 is 170,000,000 lbs. the applicable minimum and maximum amounts specified above. / Except as further limited by such applicable calendar year minimum and maximum quantities, Hooker will be required to receive not less than 95% of the nomination for each succeeding calendar year (Hooker's "obligated quantity"), and Shell will be required to deliver up to, but not in excess of (except at its option), 105% of the nomination for such calendar year (Shell's "obligated quantity"). If Shell has additional VCM capacity after allowing for the c* supply of its other current or planned obligations, as determined by Shell, then Shell shall offer Hooker on at least a quarterly basis, such excess quantity. If under these conditions Hooker accepts such offer, or if for any other reason Hooker requests Shell to deliver more VCM in any calendar year than the applicable calendar year Shell obligation (105% of such year's nominated quantity or maximum quantity, whichever is applicable) and Shell so agrees, then the applicable calendar year minimum and maximum and the nominated quantity for such year, will be amended to include the added quantity or quantities. In the event Shell requests Hooker to have less chlorine converted into VCM in any calendar year than the applicable calendar OXY/HOLMES 000839 Y/24/78 4 year minimum, and Hooker so agrees, then the applicable calendar year minimum and maximum shall be of no effect for such year, and that amount requested by Shell and agreed to by Hooker shall be treated as the nomination for such calendar year. 3. PERFORMANCE. If Hooker fails, for reasons other than those provided for in Article 10 hereof, to order and accept its obligated quantity for any calendar year, the provisions outlined in Paragraphs A, C and D shall apply and the amount of the obligated quantity shall reflect any adjustments under Paragraph B. If, however, Hooker gives notice of termination of this agreement at the end of the primary period or anniversary thereof or prior to the end of the primary period as provided for in Article I.B., then option 1 of Paragraph A shall not be available to Hooker in the last year (twelve-month period) of the agreement. A. Subject .to Paragraphs B. and C. of this Article 3; at Hooker's option exercised within 15 days after notice from Shell of any underlift for the prior calendar year, either (1) the minimum and maximum quantities specified in Article 2 for all years of this Agreement subse quent to the year of such underperformance by Hooker shall be reduced by the difference between its obligated quantity for the year of under- performance and the quantity actually ordered and accepted by Hooker during such year or, (2) Hooker shall pay to Shell as liquidated damages for each pound of VCM below such obligated quantity not ordered and accepted during the year an amount to be calculated as follows: OXY/HOLMES 000840 7-24-78 5 Payment = CF - 0.48E - 1.0 cent per pound CF = average conversion fee hereunder expressed in cents per pound for the year in question. E = Shell's valuation of ethylene in VCM expressed in cents per pound as determined by Shell and consistent with the average conversion fee hereunder. If option (2) is applicable, payment shall be made by Hooker within thirty (30) days after the date of Shell's invoice. B. If no later than ninety (90) days prior to January 1 of any calendar year of the Term hereof Hooker requests Shell to attempt to sell elsewhere a specific portion of the obligated quantity of VCM that Hooker is required to order and accept hereunder during that next calendar year, then to the extent that Shell may, after exercising its best efforts, sell such portion thereof at a price considered by Shell, in its sole judgment, to-be satisfactory, Hooker's obligated quantity for that next calendar year in question shall be correspondingly reduced. If Hooker,, at the time of its request for Shell to sell a specific portion of its obligated quantity, requests that such sale be limited to the quantity for that next calendar year, then Shell will not, without prior consultation with Hooker, commit such quantity for future periods if such quantity would reduce Hooker's ability to have said quantity converted by Shell in subsequent years. Hooker may also request that Shell sell elsewhere a portion of the obligated quantity for any calendar year up to ninety (90) days after January 1 of such calendar year of the term hereof but Shell may, at its option, decline to sell such material for any reason, including but not limited to disruption of Shell's sales OXY/HOLMES 000841 7/24/78 6 plan or interference with sales to Shell's other contract customers. The minimums and maximums specified in Article 2 hereof for each calendar year or years shall be correspondingly reduced by any specific portion of Hooker's obligated quantity sold elsewhere by Shell hereunder at Hooker's request. C. If after Hooker requests Shell to sell a specific portion of its obligated quantity in accordance with Paragraph B above, and Hooker fails to order and accept that portion of its obligated quantity not requested of Shell to be sold to third parties during that year, then the provisions of Paragraph A above shall apply with regard to the underlifted quantity (i.e., the difference between the obligated quantity not requested of Shell to be sold to third parties by Shell and the quantity actually ordered and received by Hooker during the year), provided, however, that as to such underlifted quantity the choice of option 1) or option 2) of,Paragraph A shall reside in Shell, not Hooker. D. Notice of any underlifting or option elected by Shell under Paragraph C shall be given by Shell, within fifteen (15) days following the year in which the underperformance by Hooker occurs. 4. CONVERSION FEE. For all VCM converted for and delivered to Hooker hereunder, Hooker shall pay Shell FOB Shell's plant a conversion fee, to be nominated by Shell ninety (90) days in advance of January 1, 1979. As of the date this agreement is signed, such conversion fee is effectively 10.75 cents per pound (11.85 cents per pound conversion fee, less a Temporary Voluntary Allowance of 1.1 cent per pound). This fee may be reasonably increased at any time after it has been in effect ninety (90) days upon thirty (30) days' notice given to Hooker by Shell. OXY/HOLMES 000842 7/2U/78 7 Any conversion fee in effect hereunder may be decreased by Shell at its option at any time and reinstated subsequently by Shell at any time upon notice to Hooker by Shell. For any calendar year, if Hooker provides Shell satisfactory written evidence that a third party is willing to convert Hooker chlorine into at least 75 million pounds of VCM at an overall delivered cost including Hooker chlorine transportation fees which is lower by more than 0.25 cents ($0.0025) per pound for VCM converted hereunder for the same time period, and such competitive offer is made without disclosure by Hooker of the conversion fee hereunder, then unless Shell elects (and so advises Hooker in writing) within thirty (30) days to meet such competitive fee for the quantities so offered, the offered quantities shall be deducted from the obligated quantity of both parties hereunder for such calendar year. In the event Shell elects to meet such a competi tive offer, no later offer of the same competitor or of the same parcel, made within twelve (12) months of the date of Shell's election, shall be considered/to be a competitive offer within the meaning of this Article 4. Further if Hooker provides written evidence satisfactory to Shell that Shell's chlorine conversion fee puts Hooker at a significant competitive disadvantage, i.e., 0.25 cents ($0.0025) per pound, as determined in good faith by Shell to costs for VCM otherwise actually available to Hooker from any of the three largest domestic VCM producers other than Shell, then Shell will either reduce its chlorine conversion fee to be competitive or give Hooker the option to reduce its obligated quantity by an amount equal to Hooker's actual purchases from non-Shell sources for all remaining years of the contract. OXY/HOLMES 000843 !/:*/ jo 8 5. PAYMENT. Payment of the conversion fee for VCM delivered hereunder shall be made to Shell within thirty (30) days after the date of Shell's invoice. 6. DELIVERIES. A. General: Not less than 10 days prior to the beginning of each calendar month Hooker shall, if Shell desires, advise Shell as to the quantity of chlorine it desires to have converted into VCM, at the conversion ratio set out in Article 2 for subsequent delivery to Hooker during the following three (3) months. It is intended that Hooker shall deliver liquid chlorine to Shell's facilities at Norco, Louisiana via pipeline. By mutual consent, liquid chlorine deliveries may be made by 90 ton tank car to such Shell location(s) as Shell shall designate. Hooker will provide and maintain necessary facilities, includ ing a pipeline to Hooker^s Taft, Louisiana property line at Hooker's cost and expense, to deliver such amounts of liquid chlorine as required to produce^the appropriate quantity of VCM as specified hereunder. Shell shall transport such quantities of chlorine from Hooker's property line to Shell's Norco, Louisiana Plant in a pipeline to be maintained at Shell's cost and expense. Hooker shall pay Shell on a monthly basis a reasonable pipeline charge for chlorine transported through Shell's pipeline and used for conversion to Hooker's VCM. Shell's pipeline charge will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing Shell's pipeline and on operating costs both prorated on the basis that Hooker's throughput of chlorine for conversion to Hooker's VCM bears to the total throughput of chlorine OXY/HOLMES 000844 7/24/78 9 through the line provided, however, that such pipeline charge shall not exceed Hooker's equivalent rail cost for movement of chlorine in Hooker's 90 ton rail cars from Hooker's Taft, Louisiana Plant to Shell's Norco, Louisiana Plant. It is intended that Shell shall deliver the VCM converted hereunder in tank cars acceptable to Shell and furnished by Hooker. With prior mutual agreement such deliveries may be supplemented by tank cars furnished by Shell. Deliveries shall be made from Shell's plant at Norco, Louisiana, or from other locations at Shell's option on reasonably advanced notice. If the chlorine necessary for conversion into VCM as set forth above is not in Shell's storage, or readily accessible at the time of conversion, then Shell shall be excused from delivery of the volume of VCM not produced and Hooker's entitlement to VCM for the calendar year then in effect will be correspondingly reduced. Both parties shall make best efforts to maintain the chlorine delivered in balance with VCM shipped. The intent is to maintain balance at all times hut should an imbalance occur it shall be redressed during the following month. Imbalances created by planned shutdowns of the VCM plant for maintenance shall be redressed by means mutually agreed to prior to the shutdown. Hooker shall notify Shell in writing by the 20th of each month of the planned chlorine deliveries for the following three months. These quantities will be modified as required to redress imbalances. B. Liquid Chlorine: Measurements of the quantities of liquid chlorine shipped to Shell hereunder shall be made in accordance with the procedures set forth below: OXY/HOLMES 000845 7/2U/78 10 1. For Shipments by Pipeline. The quantity of liquid chlorine delivered by pipeline will be determined by a turbine meter or mutually acceptable volumetric flow meter. The meter will be checked regularly by a mutually acceptable method and Shell shall have the right to have representatives present during checking and calibration of the meter. Shell shall have the right to approve the piping arrangement through the meter to the pipeline to insure accurate measurement. 2. For Shipment in Tank Cars. Measurement of the net quantity of liquid chlorine shipped to Shell in tank cars shall be made using railroad type weigh scales. The type scales, their calibration and use in weighing shall conform to the requirements set forth by American Association of Railroad (A.A.R.) rule. Cars shall be weighed at rest on stationary scales, the capacity and platform of which will enable each car to be weighed singly. Cars to be weighed shall be uncoupled from any other railroad equipment when placed on the scale for weighing. The weigh scale shall be calibrated every six months in accordance with regulations as set forth by the A.A.R. rule. Shell's designated representative from time to time, upon request to Hooker's designated representative, shall be permitted to witness the weighing of the chlorine cars to be shipped to Shell to verify the accuracy of the weights. The tare or light weight of each car to be loaded is to be measured immediately before loading with liquid chlorine. A weight document for each car shall be furnished to Shell which shall OXY/HOLMES 000846 7/2*1/78 li include the time of day, date, weight, weigher and car number for the tare and gross weight. Car seal numbers shall be recorded. C. VCM by Tank Car. The quantity or weight of VCM delivered into tank cars for Hooker's account shall be determined on the basis of outage tables with appropriate corrections for temperature, or on the basis of certified weights of the common carrier of each loaded tank car utilizing printed tare of such tank cars or some other means which is mutually acceptable. "Heel" allowance shall be computed on the basis of the standard factor at 5 psig of 3 pounds per 100 gallons of car capacity, provided such cars are returned to Shell with a VCM pressure of between 5 and 10 psig prior to loading-and with an oxygen content less than 1,000 ppm. In the event that the oxygen content exceeds 1,000 ppm, no heel allowance will be granted and Hooker shall pay the actual cost (plus plant overhead) of purging the car to make it suitable for loading. 7. GOVERNMENTAL CHARGES. All new taxes and other governmental charges other than those based on income, which are imposed on VCM, or on the raw'materials, process materials or catalysts from which the VCM is produced, or on Shell (including without limitation its VCM manufac turing facility), or required to be paid or collected by Shell by reason of the production, conversion, transportation, or delivery of the VCM hereunder, shall be paid to Shell by Hooker in addition to the con version fee and within thirty (30) days after the date of Shell's state ment. 8. TITLE, COMMINGLING AND RESPONSIBILITY FOR LOSS. Title to all chlorine delivered to Shell and held by Shell for Hooker's account and all VCM converted hereunder shall be and remain in Hooker's account OXY/HOLMES 000847 7/2U/T8 12 but Shell shall have the right to commingle with its own chlorine all chlorine delivered to Shell and held by Shell for Hooker's account hereunder. Shell shall have also the right to commingle with its own VCM or other VCM held for the account of third parties, all VCM converted for Hooker's account hereunder. To the extent caused by Shell's negligence, Shell shall be responsible for all loss or damage 1) to chlorine delivered to Shell and held by Shell for Hooker's account hereunder, 2) to all VCM converted from such chlorine while on Shell's property and 3) to all Hooker tank cars, full or empty, while on Shell's property. Any chlorine required for conversion in excess of the con version ratio shall be supplied by Shell at no cost to Hooker. Any chlorine remaining in Shell's storage because of conversion efficiency shall become the property of Shell. 9. LIABILITIES- - CLAIM. Hooker warrants that the chlorine delivered hereunder will meet the specifications set forth in Exhibit "A" and Shell warrants that the VCM converted from such chlorine will meet the specifications set forth in Exhibit "B" or subsequently modified by mutual written agreement, but Shell and Hooker make NO OTHER WARRANTIES hereunder, WHETHER OF MERCHANTABILITY, FITNESS OR OTHERWISE, AND NONE SHALL BE IMPLIED. Hooker shall accept Shell's analysis of VCM converted hereunder as determined on the contents of Shell's storage spheres prior to delivery to Hooker and Hooker shall accept Shell's Certificate of Analysis therefore as representative of the quality of the VCM delivered hereunder with respect to meeting the specifications warranted unless proven to be in error. Hooker shall have the right on reasonable advance OXY/HOLMES 000848 |/CH/ |J 13 notice to obtain from Shell, from time to time, a sample of the VCM delivered hereunder in a sample container provided by Shell and purchased from Shell by Hooker. Shell shall have no liability for, and Hooker shall indemnify Shell against all claims, loss, liability and expense on account of any injury or death of persons (including Hooker's employees) or damage to property (including Hooker's) to the extent caused by Hooker's negligence in unloading, storage, handling or use of the VCM delivered hereunder after the VCM is safely loaded into suitable tank cars and on execution by appropriate railroad representative of a nonnegotiable bill of lading. Hooker shall have no. liability for, and Shell shall indemnify Hooker against all claims, loss, liability and expense on account of any injury or death of persons (including Shell's employees) or damage to property (including Shell's) to the extent caused by Shell's negligence in unloading, storage, handling or use of the chlorine delivered here under after arrival of the chlorine upon Shell's premises. Neither Shell nor Hooker shall have any liability to the other for any claims arising directly or indirectly out of or in connection with this Agreement, unless the claimant gives the other party notice of the claim setting forth fully the facts on which it is based within ninety (90) days after the date of delivery or other transaction or occurrence giving rise to the claim. 10. EXCUSES FOR NONPERFORMANCE. Neither Shell nor Hooker shall be liable for failure or delay in the performance of this Agree ment, to the extent that, in Shell's case, its ability to produce or deliver the VCM converted hereunder, or in Hooker's case, its ability to OXY/HOLMES 000849 (/<**/ | O 14 produce or deliver the chlorine converted hereunder or to consume the VCM which Shell converts hereunder, is delayed, impaired, or prevented, by any circumstances (except financial) reasonably beyond its control, or by fire, explosion, breakdown in machinery or equipment, failure of catalyst, or riots, strikes, labor disputes, condemnation or conveyance under threat of condemnation, voluntary or involuntary compliance with any law, order, regulation, recommendation, or request of any govern mental authority (including, without limitation, those relating to price controls and product allocation), or total or partial failure of the usual means of transportation of chlorine, ethylene, Dichloroethane, VCM or PVC or inability or delay in obtaining all or any part of the feed stocks, process materials or catalysts used in the manufacture of chlorine, Dichloroethane, VCM or PVC, from earlier established internal or third party sources of supply. As used herein, "labor dispute" shall mean any controversy to which either Shell or Shell's source for feedstocks, process materials or catalysts or Hooker or Hooker's source of feedstocks, process materials or catalysts has an interest involving wages, hours or working conditions, and includes any strike, picketing, lockout, suspension of construction or any other action taken in connection with or because of the labor dispute. Neither Shell nor Hooker shall have any obligation to participate in any settlement of a labor dispute, or to request its agents or contractors or raw material suppliers to do so. The quantities of VCM consequently undelivered as a result of causes so excused hereunder shall not be required to be made up by Shell upon resumption of full deliveries of VCM hereunder and such excused quantities shall be deducted from the applicable remaining obligated quantities of Shell and Hooker OXY/HOLMES 000850 7/24/78 15 under this Agreement. In the event that Shell is excused from delivering any quantity of VCM due to any of the causes specified above. Shell shall allocate a pro rata share of its remaining supply of VCM to Hooker, such share to be equal to the percentage which Hooker's nominated quantity for the year in question bears to the total of VCM commitments to all customers and Shell's internal requirements as determined by Shell for such year at Shell's Norco, Louisiana plant, times the volume available for shipment. Neither Hooker nor Shell shall have any obligation in the event of any excused causes specified above to purchase ethylene, chlorine, Dichloroethane or VCM to perform hereunder, nor to be required to supply ethylene, chlorine, Dichloroethane or VCM produced in any of its plants other than those normally used for performance hereunder, provided that available supplies of such products from sources previously used during the applicable calendar year to supply the same hereunder are apportioned equitably among customers- and internal uses in such manner as Hooker and Shell, in their sole judgment, find appropriate. If Shell's performance is excused, hereunder due to inability to obtain feedstocks, process materials or catalysts used in the manufacture of VCM from Shell's earlier planned or established sources, Shell shall use diligent efforts to obtain such materials from other than earlier planned or established sources but fees hereunder shall be adjusted to reflect any increase in cost to Shell. If Shell is unable to obtain such feedstocks. Hooker, at its option, on reasonable notice may provide such feedstocks as are acceptable to Shell by mutually agreeable delivery methods and at Hooker's cost, and Shell shall convert VCM from such feedstocks provided by Hooker for delivery to Hooker for so long as Shell's excused performance OXY/HOLMES 000851 7/24/78 16 continues hereunder but fees shall be adjusted to reflect any corresponding increase or decrease in cost of feedstocks to Shell. 11. ASSIGNABILITY. Neither this Agreement nor any claim against Hooker or Shell arising directly or indirectly out of or in connection with this Agreement shall be assignable by either party or by operation of law, without the prior written consent of the other party. 12. REMEDIES. In the event of any breach by either party of any of the provisions of this Agreement which continues for thirty (30) days after notice thereof is given by the other, such other party shall have the right, in addition to any other rights or remedies it may have, to suspend or refuse deliveries hereunder and/or to terminate this Agreement by notice to the defaulting party, effective thirty (30) days following the date of such notice. Either party's right to require strict performance of the obligations of the other shall not be affected in any way by any previous waiver, forebearance or course of dealing. 13. NOTICES. All notices or demands under this Agreement whether^required by the terms hereof or otherwise shall be in writing and shall be delivered or mailed by certified or registered mail, return receipt requested, to the following addresses of the parties or to such other addresses as may be hereafter designated in writing by the respec tive parties: ff-fco-Heoker-t--Hooke r- C-beEH.-ea-l- -P-L&frtri-oe--Corp^ ) 345-Tfei-r-d--Bt-reet ) ) DELETED At-t-enti-mr:--Manager-,--Fur-ehaoee ) Raw-Ma-fceri-el-e--&--Containers ) OXY/HOLMES 000852 7/24/78 17 If to Hooker: Copy to: If to Shell: Hooker Chemical & Plastics Corp. Ruco Division River Road Burlington, New Jersey 08016 Attention: Division Material Manager Shell Chemical Company A Division of Shell Oil Company P. 0. Box 2463, One Shell Plaza Houston, Texas 77001 ' Attention: General Manager, Chemical Sales All purchase orders or purchase acknowledgements which may be used to order or acknowledge orders for delivery of VCM hereunder shall be deemed to be intended for convenience and the provisions contained therein shall not serve to add to or otherwise vary the provisions of this Agreement. . when i,: becomes effective January 1, 1979, shall 14. ENTIRETY-RELEASE. This Agreement/ comprise the entire .shall Agreement and/merges--an-d supersede all prior understandings and repre sentations (oral or written) between Shell and Hooker concerning the conversion of chlorine into VCM for Hooker, specifically including an agreement dated October 24, 1974 as amended. Neither this Agreement nor any subsequent Agreement amending or supplementing this Agreement shall be binding on Shell or Hooker unless and until it has been signed by the party claimed to be bound thereby, and commencement of performance hereunder or under any such subsequent Agreement shall not constitute a waiver of this requirement. 15. FAVORED NATIONS. If at any time Shell converts chlorine to VCM for a third party of substantially equal or better quality and quantity at a chlorine conversion fee or upon terms more favorable to the customer than in effect hereunder. Shell shall immediately give OXY/HOLMES 000853 18 Hooker the benefit of such lower chlorine conversion fee or more favor able terms for all deliveries of VCM made thereafter for so long as such lower price or more favorable terms remain in effect for a third party. It is understood that this paragraph does not apply to (a) chlorine con versions or deliveries by Shell to the government of the United States of America, (b) chlorine conversions or deliveries by Shell to any company which receives a functional discount for resale on that quantity which is resold, (c) chlorine conversions by Shell to customers for uses in manufacture of products not competitive with products manufactured by Hooker, (d) chlorine conversions for domestic third parties where Shell is meeting bona fide competitive situations, or (e) chlorine conversions for third parties for export outside the United States. IN WITNESS WHEREOF, the parties hereto have signed this Agree ment in duplicate as of the day and date first written above. SHELL CHEMICAL COMPANY A Division of Shell Oil Company HOOKER CHEMICAL & PLASTICS CORP. By. M. K. Seggerman General Manager Chemical Sales By OXY/HOLMES 000854 7724/(0 19 EXHIBIT A CHLORINE SPECIFICATIONS Chlorine Chlorinated Compounds Nonvolatile Matter Water Bromine 99.5% vol. min. 1000 ppra max. 100 ppm max. 30 ppm max. 100 ppm max. OXY/HOLMES 000855 7/2U/78 20 EXHIBIT B SPECIFICATIONS FOR VINYL CHLORIDE HOOKER CHEMICAL & PLASTICS CORP. Vinyl Chloride Acetaldehyde Acetylene Acidity, as HC1 Butadiene Heavy Ends* Iron Methyl Chloride Vinyl Acetylene Nonvolatiles Peroxide, as H^O^ Sulfur Water, Appearance Color Stabilizer 99.9% minimum by weight 1 ppm maximum by weight 0.4 ppm maximum by weight 1 ppm maximum by weight 8 ppm maximum by weight 50 ppm maximum by weight 0.5 ppm maximum by weight 70 ppm maximum by weight 20 ppm maximum by weight 50 ppm maximum by weight 0.06 ppm maximum by weight 1 ppm maximum by weight 100 ppm maximum by weight Clear and free of suspended matter Colorless None added *Heavy ends include the following: Ethyl Chloride, 1,1-Dichloroethylene, 1,2-Dichloroethylene, Beta-Chloropropene, Dichloroacetylene, Chloroprene, Vinylidene Chloride, CIS Dichloroethane, TRANS Dichloroethane, 1,1-Dichloroethane, 1,2-Dichloroethane, Trichloroethylene, Perchloroethylene, Monochloropropane, Dichloropropane, Vinyl Bromide OXY/HOLMES 000856 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS hooker RUCO omun TO: Copies to: H. Raster P. L. Friedman R. A. Katherine A. Kowalewski Subject: VCM REQUIREMENTS - 1980 INTER-OFFICE MEMORANDUM File Ref.: DAG-155-abc Date: From: 4/24/79 D. A. Guarino Div./Dep*t: RUCO/POLYMERS Location: Burlington To confirm, please make arrangements for providing the Polymers Business Group with sufficient VCM to produce 155MM pounds of homopolymer at Burlington during 1980. This will require 158,875MM pounds of VCM during 1980. I APR 2 5 1979 HOOKER CHEMICALS CORP. PURCHASING DEPT. FORM NO* 98*094 OXY/HOLMES 000857 hoaher RUCO nvsw To: Copies to: H.H. Kaster R.A. Katherine Subject: VCM NOMINATION - 1980 INTER-OFFICE MEMORANDUM File Ref.: PLF-2-ZC Date: April 30, 1979 From: Phillip L. Friedman Div./Dept: RUCO/New Ventures Location: Burlington This will confirm New Ventures' portion of the 1980 nomination for Shell VCM. Please allow 12.0 MM pounds of VCM for re-sale and PVC tolling. The total nomination including Burlington should therefore be 171 MM pounds, allowing approximately 180 MM pounds maximum under our contract. PLF/zc OXY/HOLMES 000858 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS INTER-OFFICE CORRESPONDENCE To_ Date L. G. King, Sr. VP/Operations NAME July 10, 1979 LOCATION From Joe E. Thornberg NAME Subject Shell - Hooker Relations LOCATION Hooker Chemical Company Copy to: Wm. E. Sholl and D. W. Calhoun This is to provide background for the July 12th meeting with Shell per your request to Wm. E. Sholl. Our largest purchases (est.'79) are the following: Material Volume Dollars Using Group VCM Toluene Sulfur Allyl Chloride Spray Oil A1 cohols Epichiorhydrin 170,000,000# 24,701,000 750.000 gal. 712,500 14,000 tons 392,000 750,000# 270,000 300.000 gal. 222,000 750,000# 172,500 80,000# 41,600 Ruco Spec. Chem. AGP-West Spec. Chem. AGP-West Ruco Spec. Chem. Total $26,511,600 The VCM Contract Salient features are: 1. Term: Jan. 1, 1979, for a six-year Primary Period, and continuing thereafter until either party gives 18 months' notice of termination. 2. Special Termination: If Hooker decides to build or acquire VCM manufacturing capability, Hooker may terminate this agreement at the end of three years, or four and a half years, with 18 months' notice. 3. Minimum-Maximum Volume: The contract provides for Hooker to take between 150 and 180 mill ion-pounds of VCM per year. Each year Hooker must nominate, nine months in advance, the amount wanted. Then, at least 95% of nominated amount must be taken for that year and every succeeding year. 4. Favored Nations: Provides for extending lower prices to Hooker, with extenuating provisions, chief of which is that Shell does not have to give equal treatment if a lower priced customer makes pro ducts not competitive with Hooker. 5. Meet or Release: If Hooker can get a competitive price 0.25<t pound lower than the Shell conversion price, Shell must meet or release. OXY/HOLMES 000859 L. 6. King from Joe E. Thornberg Page 2 - July 10, 1979 6. The Economics for Hooker. (Note: Considered very confidential.) The present conversion fee is 13.60tf/pound. of VCM. The price for chlorine is $77/ton, plus $2/ton for pipeline service, or $79 per ton. This amounts to another 2.53/pound of VCM for a total of 16.13^/pound of VCM. The current posted price for VCM is 17.2tf/pound. This one cent differential is worth $1.7 million per year. 7. The Chlorine Input: At 170 million pounds of VCM, over 54,000 tons of chlorine are moved per year and about 59,000 tons of added caustic soda are available due to the conversion contract. Incrementally, the profit on the chlorine is about $54/ton, or $2.9 million, and the incremental profit on the caustic soda is about $23/ton, or about $1.4 million per year. Attached also is an article which appeared recently in the C&EN magazine on Jack St. Clair of Sh JET/1e attach. OXY/HOLMES 000860 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS IXV Occidental Chemical Corporation Executive Offices TO: John Huber FROM: Dave Calhoun SUBJECT: FUTURE VCM TOLLING L. G. King W. J. Wetzel J. F. Rlordan R. F. Gervals T. A. Sugalskl P. W. Fiedler R. S. Barron S. P. Dominick T. S. Farmer R. C. Corwin DATE: June 1, 1983 MEMO The Shell VCM toll contract will be ending Its primary term at end 1984. The contract Is evergreen and requires 18 months notice of cancellation In order to prevent the contract from continuing. I strongly suggest that the contract not continue beyond 1984 In Its present form. I have discussed the aspect of cancellation with Shell and they have recommended we reduce the cancellation notice from 18 months to 14 months. Shell feels this will give both parties 4 months with which to develop a new contract. I recommend we accept Shell's offer of 14 month cancellation notice and Indicate such by signing their attached contract amendment. If you should decide to cancel the contract entirely outright. I have attached a draft cancellation letter prepared by our legal department. The VCM business Is undergoing a very trying period at this time. They are restrained on their VCM prices due to PVC pricing problems while being pressured by chlorine and ethylene price Increases. Plant capacities have been shutdown and the supply of VCM could become tight as early as 1985. If the market tightens and OCC has not established Itself with favorable toll contracts, the opportunity to use HI & SC chlorine In our VCM may no longer be possible. The time Is now to establish a VCM toll program and I feel the use of Cities Service ethane Is a possible key. Attached Is an "Ethylene Production Economics" study which shows Ethane's relative value among the various ethylene fuels. Also attached Is a price history of NGL's as well as a Cities Service forecast for 1983. If ethane were tolled to ethylene and then the ethylene Is tolled with OCC chlorine Into VCM, the following cases are possible. 1. Shell _________________________ Texas Ethane -------- ^ Ethylene ^ VCM (Deer Park) - Shell Is a net buyer of Ethane OC-1007.A (ED. 7-62) OXY/HOLMES 000861 2. Conoco Lake Charles. LA Ethane ______ 3y Ethylene ^ VCM - Conoco Is currently buying ethane from Cities - Can use Niagara chlorene at Baltimore - PVC conflict 3. 6eoro1a Pacific Lake Charles Union Texas Petroleum at Lake Charles______ Plaouamlne. LA Ethane Ethylene Exxon Pipeline 6P-VCM Exxon Systems ethylene - can use Niagara chlorine - chlorine & PVC conflict 4. Ethyl (150 mm lbs max) Lake Charles______________ _________Baton Rouge Ethane ____ ^ Union Texas ---------- } Ethyl/VCM Ethylene - Buys chlorine & Ethylene 5. Dow Texas or Louisiana _______ Louisiana Ethane Ethylene _____________________^ VCM - not buyer of ethane from Cities - chlorine conflict Attached Is a Cities Service Ethane supply/demand summary. Listed are their contracts and their expiration dates. The final result Is that Cities can easily Supplyour feedstock volume needs along with a usable pipeline system. The problem of course Isto qetacceptable conversion economics from the ethylene and VCM producers. The time Is still good to be developing our options. I feel several sources of supply Is the route for the Pottstown and Burlington demand of 300/340nmlbs. I have not Included PPG, Formosa or Goodrich as viable options for they have expressed no Interest In working with us. PPG however could change their mind but I do not consider It likely. OXY/HOLMES 000862 I have reviewed all the work done in VCM with Roger Corwin and Bill Childs. Theyhave all the contacts and phone numbers and will be able to pick up where I have left off. I again stress the importance of positioning OCC strategically with toll contracts and the critical nature of the timing in doing so. OXY/HOLMES 000863 ETHANE SU PPLY/D EM AN c_ <o OXY/HOLMES 000864 May 13, 1983 Shell Chemical Company A Dwvion of She* Oil Company One Shal Plaza P.O.Box 2463 Houston, Taxaa 77001 Mr. David Calhoun Occidental Chemical Corporation P. 0. Box 4289 Houston, TX 77210 Dear Dave: This letter refers to the CONVERSION AGREEMENT dated JULY 24, 1978 between HOOKER CHEMICALS AND PLASTICS CORP. (subsidiary of OCCIDENTAL PETROLEUM COMPANY) and SHELL CHEMICAL COMPANY, as amended by letter dated December 18, 1980. Article 1, TERM, states in part, either party may terminate as of the last day of the primary period or at any time thereafter by giving notice of termination to the other party at least eighteen (18) months in advance. Whereas the primary period of the AGREEMENT ends on December 31, 1984, effective notice of termination by either party must be given no later than June 30, 1983. It is hereby mutually agreed that Article 1, TERM, shall be amended to read, "either party may terminate as of the last day of the primary period or at any time thereafter by giving notice of termination to the other party at least fourteen (14) months in advance." Very truly yours, ?/ . / L>' R. F. Weigle Corporate Account Manager ACCEPTED AND AGREED TO this day of, 1983. OCCIDENTAL CHEMICAL CORPORATION By. Title RFW1:66 OXY/HOLMES 000865 May 13, 1983 Shell Chemical Company A DBrinon of Sh*l 0> Company On* Stel Plaza P.O. Box 2463 Houaton, Taxaa 77001 Mr. David Calhoun Occidental Chemical Corporation P. 0. Box 4289 Houston, TX 77210 Dear Dave: This letter refers to the CONVERSION AGREEMENT dated JULY 24, 1978 between HOOKER CHEMICALS AND PLASTICS CORP. (subsidiary of OCCIDENTAL PETROLEUM COMPANY) and SHELL CHEMICAL COMPANY, as amended by letter dated December 18, 1980. Article 1, TERM, states in part, either party may terminate as of the last day of the primary period or at any time thereafter by giving notice of termination to the other party at least eighteen (18) months in advance. Whereas the primary period of the AGREEMENT ends on December 31, 1984, effective notice of termination by either party must be given no later than June 30, 1983. It is hereby mutually agreed that Article 1, TERM, shall be amended to read, "either party may terminate as of the last day of the primary period or at any time thereafter by giving notice of termination to the other party at least fourteen (14) months in advance." Very truly yours, ' R. F. Weigle Corporate Account Manager ACCEPTED AND AGREED TO this day of, 1983. OCCIDENTAL CHEMICAL CORPORATION By. Title RFW1:66 OXY/HOLMES 000866 May 13, 1983 Shell Chemical Company A Divaian of Sh*a OH Company OnaShcl Plaza P.0. Box 2463 Houston, Taxaa 77001 Mr. Dave Calhoun Occidental Chemical Corporation P. 0. Box 4289 Houston, TX 77210 Dear Dave: Attached hereto is a copy of our proposed letter agreement extending the contract termination notice date from June 30, 1983 to October 31, 1983. We agree this is in our mutual interest. Please have the agreement signed promptly and return to me. Your cooperation is deeply appreciated. Sincerely, 4 V ' -. '' Cs R. F. Weigte Corporate Account Manager RFW:ac cc: L. A. Wheeler R. G. Yapp, Jr. RFW1:66 OXY/HOLMES 000867 ATIACHMEOT V STRUCTURE OF VCN INDUSTRY 1982* CHLORINE DRIVEN PPG GEORGIA-PACIFIC ETHYLENE DRIVEN CONOCO .QVf r'l .T. *DCW PVC DRIVEN FORMOSA BORDEN GOODRICH TOTAL CAPACITY (!W IS) 900 1000 1900 700 1540 2200 4440 830 600 2000 3430 9770 * Could equally well be under Chlorine-Driven PERCENT OF TOTAL VCM CAPACITY 19% 45% 35% 100% OXY/HOLMES 000868 CITIES SERVICE INTEROFFICE LETTER December 1, 1982 TO: J. E. Beavers J. M. Berchey D. E. Farrell B. L. Galloway W. A. Haliburton, Jr. D. F. Hogsett E. J. Lancaster J. B. Turner, Jr. M. A. Warner Economics Ethylene production economics for the major feedstocks of gas oil, full range naphtha, natural gasoline, normal butane, propane and ethane were updated to include recent prices and costs. Two cases were prepared for 60 and 90 percent capacity utilization rates. Ethylene cash costs (excludes depreciation) varies from 14.74/lb for ethane to 22.74/lb for normal butane in the 90'per*cent capacity case. At 60 percent capacity, these costs rise to 16.7<t/lb and 25.34/lb respectively, because the same fixed costs are spread over lower production. The attached table compares the ethylene production costs by feedstocks for the two cases. The table also compares the breakeven values for all the feedstocks with a gas oil price of 864/gallon. Ethane and propane breakeven prices are below current spot values. Normal butane is the most over valued feed stock followed by natural gasoline. /ja attachments cc: J. A. Rodkey 63*1 30 11 1 -79> SAFETY IS................CITIES SERVICE PEOPLE OXY/HOLMES 000869 ETHYLENE PRODUCTION ECONOMICS December 1982 ene lo s t b 12/1/82 a> o o *r- 4^ S- t- <o a. o a: </) C <0 ao > >5 a> -c ^Pr- T" 10 f- <0 o OJ JC3 to C v a. CQ -fc* to o o vo <U LU * o in vo CO m CO o a% CO vo VO CO CO CO CO r^. vo in m CO CM CO vo r*^ rH CSJ CO in vo cm CM CM CM fH a) o U if- i-- -4J C- t- to a. o a: (O c <o 0) CD > >5 a>-c +> -- r-- <o *- to o a 2(s to S- \ a. CQ *t* to o O o <3* in CM rH o o\ CO r-* vo in in VO CO CM CM CO 00 p^. VO in co CO CM CM r^. co or o CM in *3* CM CM *H 00to VO co rH OY 03 CO r^. D" CM to sz 4-> <u XI c a. ou zto o ac; +-> (/) (D 0(/> ) 03 4-> o>"O CD 3 0a> c CQ a; o ) oLu a: IO c (U i. IO IO c oto r-- 3 4-> (0 o3 IO zCD Ll. Z a a. to c. -C c. -M Q. LU OXY/HOLMES 000870 ETHYLENE PRODUCTION ECONOMICS ETHANE FEEDSTOCK Basis: U.S. Gulf Coast - December 1982 Prices Capacity: 1.0 Billion Pounds Per Year Investment: $370 MM Fixed Capital 37 MM Working Capital $407 MM Total Yield MANUFACTURING COSTS Raw Materials Ethane Coproduct Credits Fuel Gas Propylene Butadiene Butane/Butylene Gasoline Fuel Oil 0.4095 0.008 0.024 0.017 0.002 0.002 0.000 Subtotal Variable Costs Fuel Electricity Makeup Water Catalyst/Chemlcals Subtotal 0.010 0.0044 1.0 Fixed Costs Wages Salaries Maintenance Direct Overhead General Plant Overhead Taxes & Insurance Working Capital Charges Marketing & Admin. Subtotal 35 4 2.5 50 65 1.5 i 1.0 Total Fixed & Variable Total Cash Costs Units Price Units Cost at 60% Rate (C/Lb) Cost at 100% Rate (C/Lb) Gal 29 C/Gal 11.88 MMBTU Lb Lb Gal Gal Gal 400 18.5 31 71 87 65 C/MMBTU C/Lb C/Lb C/Gal c/Gal C/Gal 3.20 .44 .53 .14 .17 .03 4.51 MMBTU KWH Gal 400 3.4 0.035 0.5 C/MMBTU C/KWH C/Gal MM$/Year 4.00 0.01 0.04 0.05 4.10 Men 14.50 $/Hour 0.16 Men 36 M$/Yr/Man 0.02 % Fixed Capital 1.51 % Salaries + Wages 0.10 % Sal. + Wages + Maint. 1.10 % Fixed Capital 0.92 % Prime Rate x Work. Cap. 1.03 % Ethylene Price 0.43 5.27 9.37 16.74 0.10 0.01 0.92 0.06 0.67 0.56 0.63 0.26 3.21 7.31 14.68 K-6MS/D21/D1 12/1/82 OXY/HOLMES 000871 ETHYLENE PRODUCTION ECONOMICS PROPANE FEEDSTOCK Basis: U.S. Gulf Coast - December 1982 Prices Capacity: 1.0 Billion Pounds Per Year Investment: $410 MM Fixed Capital 41 MM Working Capital $451 MM Total Yield MANUFACTURING COSTS Raw Materials Propane Coproduct Credits Fuel Gas Propylene Butadiene Butane/Butylene Gasoline Fuel Oil 0.5386 0.017 0.375 0.068 0.007 0.023 0.003 Subtotal Variable Costs Fuel Electricity Makeup Water Catalyst/Chemicals 0.0114 0.0055 1.0 Subtotal Fixed Costs Wages Salaries Maintenance Direct Overhead General Plant Overhead Taxes & Insurance Working Capital Charges Marketing & Admin. Subtotal 35 4 2.5 50 65 1.5 i 2.0 Total Fixed & Variable Total Cash Costs Units Price Units Cost at 60% Rate (C/Lb; Cost at 100% Rate (C/Lb; Gal 47.0 C/Gal 25.31 MMBTU Lb Lb Gal Gal Gal 400 18.5 31 71 87 65 C/MMBTU C/Lb C/Lb C/Gal C/Gal C/Gal 6.80 6.94 2.11 .50 2.00 .20 18.55 MMBTU KWH Ga 1 400 3.4 0.035 0.6 C/MMBTU C/KWH C/Gal MM$/Year 4.56 0.02 0.04 0.06 4.68 Men 14.50 $/Hour Men 36 M$/Yr/Man % Fixed Capital % Salaries + Wages % Sal. + Wages + Maint. % Fixed Capital % Prime Rate x Work. Cap. % Ethylene Price 0.16 0.02 1.67 0.10 1.20 1.00 1.15 0.84 6.14 10.82 17.58 0.10 0.01 1.02 0.06 0.73 0.61 0.70 0.51 3.74 8.42 15.18 K-6MS/D21/D2 12/1/82 OXY/HOLMES 000872 ETHYLENE PRODUCTION ECONOMICS BUTANE FEEDSTOCK Basis: U.S. Gulf Coast - December 1982 Prices Capacity: 1.0 Billion Pounds Per Year Investment: $435 MM Fixed Capital 44 MM Working Capital $479 MM Total Yield MANUFACTURING COSTS Raw Materials Butane 0.5019 Coproduct Credits Fuel Gas Propylene Butadiene Butane/Butylene Gasoline Fuel Oil 0.014 0.439 0.085 0.032 0.029 0.007 Subtotal Variable Costs Fuel Electricity Makeup Water Catalyst/Chemicals 0.0116 0.0065 1.1 Subtotal Fixed Costs Wages Salaries Maintenance Direct Overhead General Plant Overhead Taxes & Insurance Working Capital Charges Marketing & Admin. 35 4 2.5 50 50 1.5 i 2.0 Subtotal Total Fixed & Variable Total Cash Costs Units Price Units Cost at 60Z Rate (c/Lb) Cost at 100Z Rate (C/Lb) Gal 71 C/Gai 35.63 MMBTU Lb Lb Gal Gal Gal 400 18.5 31 71 87 65 C/MMBTU C/Lb C/Lb C/Gal C/Gal C/Gai 5.60 8.12 2.64 2.27 2.52 .46 21.61 MMBTU KWH Gal 400 3.4 0.035 0.7 C/MMBTU C/KWH c/Gal MM$/Year 4.64 0.02 0.04 0.07 4.77 Men Men % % Z % z z 14.50 $/Hour 36 M$/Yr/Man Fixed Capital Salaries + Wages Sal. + Wages + Maint. Fixed Capital Prime Rate x Work. Cap. Ethylene Price 0.16 0.02 1.79 0.10 1.28 1.07 1.23 0.84 6.49 11.26 25.28 0.10 0.01 1.09 0.06 0.78 0.65 0.75 0.51 3.95 8.72 22.74 K-6MS/D21/D3 12/1/82 OXY/HOLMES 000873 ETHYLENE PRODUCTION ECONOMICS NATURAL GASOLINE FEEDSTOCK Basis: U.S. Gulf Coast - December 1982 Prices Capacity: 1.3 Billion Pounds Per Year Investment: $700 MM Fixed Capital 70 MM Working Capital $770 MM Total Yield Units Price Units Cost at 602 Rate (C/Lb; Cost at 100% Rate (c/Lb; MANUFACTURING COSTS Raw Materials Natural Gasoline 0.5321 Gal 77 C/Gal 40.97 Coproduct Credits Fuel Gas Propylene Butadiene Butylene Butane Benzene Toluene Xylene C_+ Aromatics C^+ Raffinate Fuel Oil Subtotal 0.016 0.439 0.120 0.023 0.002 0.036 0.012 0.002 0.004 0.031 0.013 MMBTU Lb Lb Gai Gal Gal Gal Gal Gal Gal Gal 400 18.5 31 71 71 155 125 150 120 90 65 C/MMBTU C/Lb C/Lb C/Gal C/Gai C/Gal C/Gal C/Gal C/Gal C/Gal C/Gal 6.40 8.12 3.72 1.63 .14 5.57 1.50 0.30 0.51 2.76 .85 31.50 Variable Costs Fuel Electricity Makeup Water Catalyst/Chemicals 0.0148 0.0070 1.5 MMBTU KWH Gal 400 3.4 0.035 0.8 C/MMBTU C/KWH C/Gal MM$/Year 5.92 0.02 0.05 0.06 Subtotal 6.05 Fixed Costs Wages Salaries 44 Men 5 Men 14.50 36 $/Hour M$/Yr/Man 0.16 0.02 Maintenance Direct Overhead General Plant Overhead 2.5 % 50 % 65 % Fixed Capital Salaries + Wages Sal. + Wages + Maint. 2.21 0.10 1.56 Taxes & Insurance 1.5 % Working Capital Charges L % Marketing 6 Admin. 2.5 % Fixed Capital Prime Rate x Work. Cap. Ethylene Price 1.33 1.49 0.80 0.10 0.01 1.35 0.06 0.95 0.81 0.91 0.49 Subtotal 7.67 4.68 Total Fixed & Variable 13.72 10.73 Total Cash Costs 23.19 20.20 K-6MS/D21/D4 12/1/82 OXY/HOLMES 000874 ETHYLENE PRODUCTION ECONOMICS FULL RANGE NAPHTHA FEEDSTOCK MANUFACTURING COSTS Basis: U.S. Gulf Coast - December 1982 Prices Capacity: 1.3 Biliion Pounds Per Year Investment: $700 MM Fixed Capital 70 MM Working Capital $770 MM Total Yield Units Price Units Cost at 60% Rate (C/Lb; Cost at 100% Rate (C/Lb; Raw Materials Naphtha Coproduct Credits Fuel Gas Propylene Butadiene Butylene Butane Benzene Toluene Xylene Cq+ Aromatics C-+ Raffinate Fuel Oil 0.5566 Gal 0.016 0.466 0.129 0.017 0.002 0.038 0.021 0.012 0.009 0.043 0.035 MMBTU Lb Lb Gal Gal G3l Gal Gal Gal Gal Gal 83 400 18.5 31 71 71 155 125 150 120 90 65 C/Gal C/MMBTU C/Lb C/Lb C/Gal C/Gai C/Gal C/Gal C/Gal C/Gal C/Gal C/Gal 46.20 6.40 8.62 4.00 1.21 .14 5.94 2.66 1.87 1.08 3.85 2.28 Subtotal 38.05 Variable Costs Fuel Electricity Makeup Water Catalyst/Chemicals 0.0159 0.0075 1.5 MMBTU KWH 03 1 400 3.4 0.035 0.8 C/MMBTU C/KWH C/Gal MM$/Year 6.36 0.03 0.05 0.06 Subtotal 6.50 Fixed Costs Wages Salaries Maintenance Direct Overhead General Plant Overhead Taxes & Insurance Working Capital Charges Marketing & Admin. 44 Men 5 Men 14.50 36 $/Hour M$/Yr/Man 0.16 0.02 2.5 % Fixed Capital 2.21 50 % Salaries + Wages 0.10 65 % Sal. + Wages + Maint. 1.56 1.5 % i% Fixed Capital Prime Rate x Work. Cap. 1.33 1.49 2.5 % Ethylene Price 0.80 0.10 0.01 1.35 0.06 0.95 0.81 0.91 0.49 Subtotal 7.67 4.68 Total Fixed 6 Variable 14.17 11.18 Total Cash Costs 22.32 19.33 K-6MS/D21/D5 12/1/82 OXY/HOLMES 000875 ETHYLENE PRODUCTION ECONOMICS GAS OIL FEEDSTOCK Basis: U.S. Gulf Coast - December 1982 Prices Capacity: 1.3 Billion Pounds Per Year Investment: $785 MM Fixed Capital 80 MM Working Capital $865 MM Total Yield Units Price Units Cost at 60% Rate (c/Lb; Cost at 100% Rate (c/Lb; MANUFACTURING COSTS Raw Materials Gas Oil 0.5221 Gal 86 C/Gal 44.90 Coproduct Credits Fuel Gas Propylene Butadiene Butylene Butane Benzene Toluene Xylene Cg+ Aromatics C,+ Raffinate Fuel Oil 0.012 0.523 0.172 0.020 0.001 0.031 0.017 0.006 0.007 0.041 0.091 MMBTU Lb Lb Gal Gal Gal Gal Gal Gal Gal Gal 400 18.5 31 71 71 155 125 150 120 90 65 C/MMBTU C/Lb C/Lb C/Gal C/Gal C/Gai C/Gal C/Gal C/Gai C/Gal C/Gal 4.80 9.68 5.33 1.42 .07 4.73 2.09 0.96 0.86 3.71 5.92 Subtotal 39.57 Variable Costs Fuel Electricity Makeup Water Catalyst/Chemicals 0.0184 0.010 1.7 MMBTU KWH Gal 400 3.4 0.035 1.4 C/tlMBTU C/KWH C/Gal MM$/Year 7.36 0.03 0.06 0.11 Subtotal 7.56 Fixed Costs Wages 44 Men 14.50 $/Hour 0.16 Salaries 5 Men 36 M$/Yr/Man 0.02 Maintenance 2.5 % Fixed Capital 2.48 Direct Overhead 50 % Salaries + Wages 0.10 General Plant Overhead 65 % Sal. + Wages + Maint. 1.72 Taxes & Insurance 1.5 % Fixed Capital 1.48 Working Capital Charges i % Prime Rate x Work. Cap. 1.72 Marketing & Admin. 3% Ethylene Pr ice 0.95 Subtotal 8.63 0.10 0.01 1.51 0.06 1.05 0.90 1.05 0.58 5.26 Total Fixed & Variable 16.19 12.82 Total Cash Costs 21.52 18.15 K-6MS/D21/D6 12/1/82 OXY/HOLMES 000876 OXY/HOLMES 000877 IGULF COAST ETHANE P R IC E VS PROPANE SPOT PRICE bASfeb oN' HEATING v a L u m m btu I 3| g 8 s 8 8 5 8 ee PROPANE SPOT PRICES UPPER AND LOUER LIMITS I > i gS ? c 0~ *> oc OXY/HOLMES 000879 PROPANE SPOT V 8 . POSTED PRICE (G u lf C oast) I SOBUTANE GULF COAST SPOT PRICES UPPER AND LOWER LIMITS OXY/HOLMES 000881 OXY/HOLMES 000882 NATURAL GASOLINE GULF COAST SPOT PRICES OXY/HOLMES 000884 w fit D O OXY/HOLMES 000885 OXY/HOLMES 000886 OXY/HOLMES 000887 OXY/HOLMES 000888 4. OXY/HOLMES 000889 May 13, 1983 Shell Chemical Company A Ommo of Stel OH Company One Shan Plaza P.O.Box 2463 Houston, Texas 77001 Mr. David Calhoun Occidental Chemical Corporation P. 0. Box 4289 Houston, TX 77210 Dear Dave: This letter refers to the CONVERSION AGREEMENT dated JULY 24, 1978 between HOOKER CHEMICALS AND PLASTICS CORP. (subsidiary of OCCIDENTAL PETROLEUM COMPANY) and SHELL CHEMICAL COMPANY, as amended by letter dated December 18, 1980. Article 1, TERM, states in part, either party may terminate as of the last day of the primary period or at any time thereafter by giving notice of termination to the other party at least eighteen (18) months in advance. Whereas the primary period of the AGREEMENT ends on December 31, 1984, effective notice of termination by either party must be given no later than June 30, 1983. It is hereby mutually agreed that Article 1, TERM, shall be amended to read, "either party may terminate as of the last day of the primary period or at any time thereafter by giving notice of termination to the other party at least fourteen (14) months in advance." Very truly yours, }/ '> y C/ R. F. Weigle Corporate Account Manager ACCEPTED AND AGREED TO this day of, 1983. OCCIDENTAL CHEMICAL CORPORATION By. Title RFW1-.66 OXY/HOLMES 000890 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS V/ V MAR 01976 CHEMICAL SALES SHELL CHEMICAL COMPANY A DIVISION OF SHELL OIL COMPANY 600 SUMMER STREET STAMFORD. CONNECTICUT 06904 March 16, 1976 TELEPHONE AREA CODE 703 337-1600 RECEIVED MAR 10 |97@ Hooker Chemical Corporation 342 Third Street P.0. Box 728 Niagara Falls, N.Y. 14302 Wm. E. Sholl *' Attention: Mr. W. E. Sholl, Vice President Purchasing Gentlemen: Vinyl Chloride Monomer (VCM) Please refer to our contract dated October 24, 1974, covering conversion of Chlorine supplied by Hooker into VCM at Shell's Norco facility. According to our contract, the 1976 fee Shell will charge Hooker for use of the Shell Chlorine pipeline between Taft, Louisiana and Norco, Louisiana, as provided in Paragraph 5.2 will be based on toll Chlorine deliveries of 57,920 tons (115,840 M pounds) by Hooker. This quantity relates to Shell's maximum obligation to supply Hooker with 181 million pounds of VCM and Shell's obligated purchase requirement to Chlorine from Hooker of 100,000 tons (200,000 M pounds). Hooker's payment obligation pertains only to the toll Chlorine shipments. On this basis. Shell proposes to bill Hooker $8,925 per month ($107,100 annually) during 1976 based on target volumes. However, this charge will be adjusted at year end based on the actual movement of all Chlorine through the pipeline and the percentage of the total Chlorine received through the pipeline which Hooker toll Chlorine represents. It will be adjusted, therefore, for Chlorine shipments by third parties who transport their Chlorine through the same pipeline. The charge is based on spent capital, plus operating charges which will be incurred by Shell regardless of volume shipped. (cont'd. page 2) OXY/HOLMES 000891 Hooker Chemical & Plastics Corp. -2- March 16, 1976 Should you have any questions on this matter, please do not hesitate to contact us. If you agree with the foregoing fee charge, please signify your agreement by signing and returning the enclosed copy of this letter. Sincerely yours, DPJ:udes enc. /w.Z /iWu* D. P. Jones, Account Manager Chemical Sales AGREED THIS 29 day of Marchs 1976 Hooker Chemical & Plastics Corp. BY: __ TITLE: ______________ Manager of Procurement Kaw Materials & containers--------- 3/34/76 OXY/HOLMES 000892 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS uv u w/' v CHEMICAL SALES I SHELL CHEMICAL COMPANY A DIVISION OF SHELL OIL COMPANY 600 SUMMER STREET STAMFORD, CONNECTICUT 06904 November 21, 1974 mtPHONf AHA COO( 203 3 2 7-2600 Mr. Neil M. Barber Mgr. of Purchases Hooker Chemicals & Plastics Corp. P.0. Box 728 Niagara Falls, N.Y. 14302 HO v ^ 1974 a, '* H, Dear Neil: The date of 10/24/72 on the executed copies of the VCM contract apparently is a date that we started originally on re-negotiations. Boy.1, how time flies. I am sure everything will be in order if you will change the date on this contract to 10/24/74 and we will do the same with our copies. All other terms and conditions will remain the same. Thank you for calling this to our attention - we appreciate your cooperation and patience in these tedious negotiations. Sincerely yours, DPJ:udes D. P. Jones, Account Manager Chemical Sales cc: Mr. William Sholl Hooker Chemical & Plastics Corp. P.0. Box 728 Niagara Falls, N.Y. 14302 OXY/HOLMES 000895 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS SHELL CHEMICAL COMPANY A DIVISION OF SHELL OIL COMPANY ONE SHELL PLAZA P.O. BOX 2463 HOUSTON, TEXAS 77001 April 10, 1975 Subject: Vinyl Chloride Monomer (VCM) Hooker Chemical Corporation 345 Third Street Niagara Falls, New York 14302 Attention Mr. W. E. Sholl, Vice President Purchasing Gentlemen: Pursuant to the contract dated October 24, 1974, covering conver sion of chlorine supplied by Hooker into VCM at Shell's Norco facility, now in effect, this is to advise of the fee Shell will charge Hooker for use of the Shell chlorine pipeline now in place between Taft, Louisiana, and Norco, Louisiana, as provided in Paragraph 5.2. The fee is based on a reasonable capital charge calculated to cover the cost of installing, maintaining and operating Shell's pipeline. The fee in 1975 is based on chlorine deliveries required for VCM toll conversion equivalent to the contractual entitlement, 62,700 tons, and Shell's obligated purchase requirement, 90,000 tons. Hooker's payment obligation pertains only to the toll chlorine shipments. On this basis, the fee will amount to approximately $2.00/ton of toll chlorine received from Hooker for Hooker's account. Shell proposes to bill Hooker $10,200 per month during 1975 based on target volumes. However, this charge will be adjusted at year end based on the actual movement of chlorine through the pipeline and the percentage of the total chlorine received which Hooker toll chlorine represents. It will also be adjusted for chlorine shipments by third parties who transport their chlorine through the same pipeline. The charge is based on spent capital plus operating charges which will be incurred by Shell regardless of volume shipped. Should you have any questions on this matter, please do not hesitate to contact us. If you agree with the foregoing fee charge, please signify OXY/HOLMES 000893 Hooker Chemical Corporation 2. your agreement by signing and returning the enclosed copy of this letter. Very truly yours. Enclosure W. S. Bazard, Jr. v Account Manager Corporate Accounts Aoreed this day of -A. ^ HUOKEK"'CHEMICAL CORPORATION By:___ Title: /3v.A, Manager of Procurement Raw Materials & Containers 197 ? cc - Mr. D. A. Bloomfield Vice President & General Manager Hooker Ruco Division River Road Burlington, Mew Jersey 08016 Mr. D. P. Jones Shell Chemical Company 600 Summer Street Stamford, Connecticut 06904 OXY/HOLMES 000894 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS CONFIDENTIAL S'. AGREEMENT THIS IS AN AGREEMENT, dated and effective October 24, 1972'--' by and between SHELL CHEMICAL COMPANY, a division of SHELL OIL COMPANY, a Delaware Corporation, having an office at One Shell Plaza, P. 0. Box 2463 Houston, Texas 77001 (hereinafter referred to as "Shell"), and HOOKER CHEMICALS & PLASTICS CORP., a subsidiary of Occidental Petroleum Corporation, a California Corporation, having an office at 345 Third Street, Niagara Falls, New York 14302 (hereinafter referred to as "Hooker"). WHEREAS, Shell and Hooker have entered into a previous Agreement dated January 24, 1973 for the sale by Shell to Hooker of Vinyl Chloride Monomer (hereinafter referred to as "VCM") during the year 1974 and for the conversion by Shell of Hooker's chlorine to VCM subsequently for delivery to Hooker; and WHEREAS, Shell and Hooker each recognize that the costs of VCM manufacture are increased substantially from those contemplated when entering into said previous Agreement and that future costs for such manufacture are increasingly uncertain owing to the uncertain costs of hydrocarbon supplies for feedstocks and power the escalation in costs for other raw materials, catalyst, utilities, power and labor, and the increased capital and oper ating costs required to meet Federal, State and Local Government environmental standards and operating requirements; and WHEREAS, Shell and Hooker each desire to provide for such price and fee changes as are realistic and necessary from time to time for Shell OXY/HOLMES 000896 2 to maintain its VCM operations at a level of economic viability sufficient to enable Shell to provide for necessary raw materials and other resources so as to sustain the long-term continuity tof VCM supply by Shell to Hooker; and WHEREAS, Shell and Hooker desire to maintain a mutually beneficial long-term Agreement for the conversion of Hooker chlorine into VCM by Shell and for which Hooker is prepared to expand its chlorine manufacturing capacity and for which Shell is prepared to provide VCM conversion capacity on a long-term basis from its VCM plant at Norco, Louisiana; NOW, THEREFORE; in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto, effective as of January 1, 1974, hereby agree as follows: WITNESSETH: 1. Term This Agreement shall be in effect for a primary period of four (4) calendar years beginning January 1, 1974 and ending on December 31, 1977, and from calendar year to calendar year thereafter, either party being able to terminate this Agreement effective at the end of the primary period or at any time thereafter, by giving the other party at least eighteen (18) months prior written notice. In the event either party exercises the right to terminate this Agreement on eighteen (18) months prior written notice effec tive at any time subsequent to the expiration date of'the primary period but i not at the end of a calendar year, the rights and duties of the parties with respect to the year of termination shall be prorated in the proportion that OXY/HOLMES 000897 3 the number of days in the calendar year prior to the effective date of termination bear to the number of days in the calendar year. 2. 1974 Purchase 2.1 During the calendar year 1974 Shell shall sell and deliver and Hooker shall purchase and receive a minimum of 159,000,000 pounds and a maximum of 193,000,000 pounds of VCM FOB Shell's Plant. Hooker and Shell shall have the delegations and rights with regard to these quantities as set out in Paragraphs 3.2 and 3.3 hereof. The "Base Price" hereunder for the calendar year 1974 shall be 6.75 cents ($0.0675) per pound of VCM, FOB Shell's plant, for all Quantities actually shipped. Notwithstanding the foregoing. Hooker shall pay Shell a pi ICC KJI C ^ A~J ,-.0-- ~ centi fWfrU0> .unuc6o**t~/t y\-u---c---i-------p---u---U_ D.rO1/pUiii VU.'I,_I__O___f_b_U____1lO- _HQ______a__b___uU_lG CLUMUIlUC _ Stabilization Act and Regulations issued thereunder prohibit Shell from increasing same. 2.2 The "Base Price" set forth in Paragraph 2.1 above shall be subject to increase or decrease effective as of July 1, 1974 and as of October 1, 1974 by Shell giving Hooker at least thirty (30) days prior written notice. 3. Quantity - Conversion 3.1 During the term of this Agreement after the calendar year 1974 Hooker shall deliver liquid chlorine to Shell, to be held by Shell for Hooker's account and to be converted thereafter into such amounts of VCM as Hooker shall order at a conversion ratio of 0.64 pounds of chlorine to 1.0 pounds of VCM. OXY/HOLMES 000898 4 3-2 During calendar years 1975, 1976 and 1977, Shell shall convert and deliver to Hooker and Hooker shall accept from Shell VCM in an amount not less than nor more (except with Shell's p^ior written approval) than the respective minimums and maximums set forth below, but not exceeding, except with Shell's prior written approval, one-tenth (1/10) of the applicable maxi mum calendar year quantity during any calendar month, or cumulatively one- sixth (1/6) of the applicable calendar year maximum in two (2) succeeding months. MAXIMUM - MINIMUM QUANTITIES OF VCM`CONVERTED (LBS) PER CALENDAR YEAR Year Minimum Quantity Maximum Quantity 1975 160,000,000 196,000,000 1976 167,000,000 '203,000,000 1977 177,000,000 209,000,000 3.3 Hooker shall give written notice to Shell not less than six (6) months prior to each calendar year hereof as to the quantity of VCM it estimates it will require to be converted and/or delivered by Shell during that calendar year within the range of the calendar year minimum and maximum amounts as specified in this Agreement. Subject to the minimum and maximum quantities stated in Paragraphs 2 and 3.2 Hooker shall be required to receive not less than ninety-five (95) percent of the estimated calendar year quantity and Shell shall be required to deliver not more than one hundred five (105) percent of the estimated calendar year quantity in each calendar year covered by this Agreement, unless Shell shall agree in writing to deliver a greater or lesser quantity ordered by Hooker. If in.any year Hooker requires and Shell agrees to sell VCM or to convert hereunder amounts of liquid chlorine OXY/HOLMES 000899 5 into VCM in excess of the calendar year maximum stated in Paragraph 2 or 3.2, then said calendar year maximum and minimum shall be of no further effect for such year and that amount requested by Hooker and agreed to by Shell shall be considered a commitment for such calendar year, and during that year Hooker shall be required to receive not less than 95% and Shell shall be required to deliver not more than 105% of such commitment. 3.4 Shell hereby extends to Hooker a right of first refusal to increase both the 1976 and 1977 auantities of VCM listed in Paragraph 3.2 to 210,000,000 pounds minimum and 260,000,000 pounds maximum per year. To exercise this right of first refusal. Hooker must give Shell written notice prior to July 1, 1975. If at any time prior to the exercise of this right by Hooker, Shell has an opportunity to utilize the conversion capacity represented by the quantities ' subject to this right of first refusal for sales to or for conversions for third parties. Shell shall notify Hooker to this effect in writing setting out the quantity involved and Hooker shall have three (3) months thereafter to exercise its right of first refusal to accept such quantities of VCM according to the terms hereof with delivery beginning 7 months following the date of Shell's notice. In the event Hooker elects not to accept such quantities of VCM, then Shell shall be relieved from any further obligation under this subsection. All of the foregoing relative to said right of first refusal shall be applicable only if, at the time Hooker gives written notice of its desire to exercise such right, Shell's projections indicate that it will have available to it at its Norco, Louisiana Plant, the raw materials needed to manufacture the increased quantities of VCM at costs no greater than for raw materials used to manufacture VCM not subject to this right OXY/HOLMES 000900 6 for the same calendar years (1976 and 1977). If such costs of raw materials as may be available to Shell as are needed to manufacture the increased quantities of VCM exceed costs for raw materials not subject to this right. Hooker shall have the option to pay such increased costs and exercise said right of first refusal. Shell will promptly notify Hooker of any contrary indication upon receipt of Hooker's said notice, in which event such right of first refusal shall be inoperative and of no force or effect. Conversion fees for any optional amounts of VCM above the applicable maximum quantity in Paragraph 3.2 shall be determined in the following way: 3.4.1 Shell will specify a conversion fee for the 1976 optional quantity before November 30, 1975. If the "Specified Fee" is not accepted by Hooker before December 15, 1975, then the Hooker right of first refusal on these optional quantities for 1976 and 1977 shall be of no further force or effect and the applicable quantities of VCM shall revert to those designated in Paragraph 3.2. The "Specified Fee" or any other fee for the 1976 and 1977 optional quantity subsequently in effect hereunder shall be subject to increase or decrease any time after it has been in effect for ninety (90) days by Shell giving Hooker at least thirty (30) days prior written notice. Shell warrants that until January 1, 1978 any such increase or decrease in the "Specified Fee" for the optional quantities of VCM provided hereunder will be determined according to the following formula: Optional Quantity Fee = SF+0.0061(A-A2)+0.0014(B-B2)+0.0032(C-C2)+D where the terms used in the formula have the following definitions: SF = Specified Fee as set forth in Paragraph 3.4.1 A = Crude Oil Price in Cents per Barrel B = Average Labor Rate in Cents per Hour OXY/HOLMES 000901 7 C = Commodity Index Number D = Extraordinary Costs in Cents per Found of VCM These terms are defined more specifically in Appendix I attached hereto and made a part hereof. A^ and C^ are the base numbers as more specifically defined in Appendix from which the Optional Quantity Fee shall be computed. 3.5 If this agreement shall continue subsequent to the calendar year 1977 in effect the-optional quantities of VCM shall be the same as those applicable to the calendar year 1977. 4. Conversion Fees - Terms of Payment 4.1 The "Base Conversion Fee" hereunder shall be 5.25 cents ($0.0525) per pound, FOB Shell's plant, for all quantities of VCM as specified in Paragraph 3.2 hereunder which are actually shipped during the term hereof beginning with the calendar year 1975. The Base Conversion Fee shall be subject to increase or decrease January 1, 1975 and as of the first day of each succeeding calendar quarter in accordance with the premises hereof by Shell giving Hooker at least thirty (30) days prior written notice. Shell warrants that until January 1, 1978 any such increase or decrease in the Base Conversion Fee applicable to the conversion of chlorine supplied by Hooker into VCM as provided hereunder in quantities as determined pursuant to Paragraph 3.2 above will be determined according to the following formula: OXY/HOLMES 000902 8 Escalated Conversion Fee = BCF+0.006T(A-A^)+0.0014(B-B^)+0.0032(C-C^)+D where the terms used in the formula have the following definitions: BCF = Base Conversion Fee as set forth above A = Crude Oil Price in Cents per Barrel B = Average Labor Rate in Cents per Hour C = Corrcnodity Index Number D = Extraordinary Costs in Cents per Pound of VCM These terms are defined more specifically in Appendix I attached hereto and made a part hereof. A-j, and C^ are the base numbers as more specifically defined in Appendix I from which the Escalated Conversion Fee shall be computed. 4.2 In the event Shell elects to continue the manufacture and marketing of commercial- quantities of YCH subsequent to the calendar year 1077, the primary period shall extend to December 31, 1979 or for so long until December 31, 1979 as Shell may so elect and in such event Shell will, before December 31, 1975 or as soon thereafter as it may so reasonably determine, so notify Hooker and the parties hereto will begin negotiations in good faith and endeavor to reach agreement before July 1, 1976 on the basis for establishing conversion fees applicable to the calendar year 1978 and there after. In the event the parties do not reach agreement on the basis for establishing conversion fees for the calendar year 1978 and subsequently, this Agreement shall terminate December 31, 1977. 4.3 For any calendar year after 1974, if Hooker provides Shell satis factory written evidence of any offer from a domestic third party, made without OXY/HOLMES 000903 9 disclosure by Hooker of Shell's applicable conversion fee, of a conversion fee applicable to the receipt by Hooker of at least 75 million pounds of VCM for such calendar year and said offered conversion fee is lower by more than 0.1 cents ($0,001) per pound of VCM in the basis of delivered cost FOB Hooker's plant than Shell's applicable conversion fee plus Hooker's delivery costs in effect for the same time period, then unless Shell elects within thirty (30) days and so advises Hooker in writing to meet such third party conversion fee offer for the quantities so offered, such quantities shall be deducted from the base quantities deliverable to Hooker by Shell hereunder for such calendar year. In the event Shell elects to meet such a competitive offer, it is agreed that no later offer of the same competitor or of the same parcel, made within twelve (12) months of the date of Shell's election, shall be considered to be a competitive offer. 4.4 Payment for VCM shall be made to Shell within thirty (30) days from the date of Shell's invoice for VCM delivered to Hooker or to Hooker's order. In the event that in any calendar year Hooker fails to accept the required minimum quantity of VCM as specified in Paragraphs 2 and 3.2 (as the same may be reduced under Paragraph 9), or as may be modified by Paragraphs 3.3, 3.4 or 3.5 Hooker shall pay Shell within 30 days after the beginning of the next calendar year the sum 0.75 multiplied by a figure equal to the differ ence between the number of pounds actually accepted by Hooker during such calendar year and the required minimum quantity, subject to the following conditions. After it has sold all of the VCM production capacity of its OXY/HOLMES 000904 10 Norco, Louisiana and Houston, Texas Plants for such year, exclusive of Hooker's minimum quantity hereunder for that year, Shell shall use diligent efforts to sell that portion of such minimum quantity not accepted by Hooker; and Hooker will be allowed a credit against the amount due to Shell here under for such unaccepted quantity equal to the amount received by Shell from the sale of such quantity, or any part thereof, to the extent only, however, that the amount so received by Shell from any such sale exceeds Shell's actual cost of chlorine for production of the said quantity of VCM plus an amount determined by subtracting 0.75< per pound from the amount Hooker would have paid Shell for such quantity of VCM had it accepted the same hereunder. Shell shall not be obligated, however, to sell VCM specified in the foregoing sentence at a price which, in Shell's sole judg ment, would be lower than fair market value and in no event shall Hooker be allowed a credit exceeding 0.75 per pound for sale by Shell of VCM not accepted by Hooker. It is expressly understood, however,` that if during the term of this Agreement Shell supplies VCM produced at its Norco, Louisiana and Houston, Texas Plants to parties other than Hooker under contract requir ing such parties to take minimum annual quantities of VCM so produced, any sales by Shell of minimum quantities not accepted by Hooker and such other parties shall be attributed to such parties ratably for purpose of computing the above credit to Hooker. If for any reason other than provided for in Paragraph 9, Shell fails to deliver VCM up to the required maximum quantity as may be ordered by Hooker in accordance with provisions of this Agreement, Shell shall pay Hooker 0.75 per pound for such undelivered VCM so ordered by Hooker. OXY/HOLMES 000905 11 5. Orders - Deliveries 5.1 Not less than ten (10) days prior to the beginning of each month hereof Hooker shall submit to Shell a notice setting out the quantity of VCM ordered for such month. 5.2 Shell has provided written notice indicating the availability of a connecting chlorine pipeline proposed by Shell hereunder. Therefore, Hooker will provide and maintain necessary facilities, including a pipeline to Hooker's Taft, Louisiana property line at Hooker's cost and expense to deliver such amounts of liquid chlorine as required to produce the appropriate quantity of VCM as specified hereunder. Shell proposes to transport such quantities of chlorine from Hooker's property line to Shell's Norco, Louisiana Plant in a proposed pipeline to be built and maintained at Shell's cost and expense. Hooker shall pay Shell on a monthly basis a reasonable pipeline charge for chlorine transported through Shell's pipeline and used for conversion to Hooker's VCM. Shell's pipeline charge will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing Shell's pipeline and on operating costs both prorated on the basis that Hooker's throughput of chlorine for conversion to Hooker's VCM bears to the total throughput of chlorine through the line provided, however, that such pipeline charge shall not exceed Hooker's equivalent rail cost for movement of chlorine in Hooker's 90 ton rail cars from Hooker's Taft, Louisiana Plant to Shell's Norco, Louisiana Plant. The weight of chlorine delivered by pipeline for conversion to VCM hereunder shall be determined by Hooker's weigh tanks or by other means as may be mutually acceptable. Should Governmental restrictions prevent installation or usage of such pipeline for chlorine transportation, then Hooker shall deliver, at Hooker's expense, the aforementioned chlorine to Shell's OXY/HOLMES 000906 12 Norco, Louisiana Plant by 90 ton rail cars or other means agreeable to both parties. In the event Shell does not have the pipeline available for delivery of chlorine by January 1, 1975 Hooker shall use its best efforts to commence deliveries by 55 and/or 90 ton tank cars at Hooker's expense for so long as said pipeline is not available. Shell shall provide suitable facilities for receipt of such chlorine at the locations described herein. The weight of chlorine, delivered into Shell's facilities by tank car suffi cient to satisfy the conversion ratio stated hereunder, shall be determined as specified in Exhibit C. 5.3 Shell shall deliver all VCM converted (or sold) hereunder FOB Shell's Norco, Louisiana Plant into Hooker's tank cars, of a capacity to be mutually agreed upon. The quantity or weight of VCM delivered into Hooker's tank-cars shall be determined by railroad weight scales and certi fied weigh tickets shall be supplied for verification. In the event Hooker elects to verify Shell's measurements of the quantity of VCM delivered here under and differences in excess of 1% are uncovered in any car, such excess overages or shortages, if substantiated, shall be subject to billing adjust ments. Tank Car "heel" allowance for VCM shall be computed on the basis of the standard factor at 5 psig of three (3) pounds per 100 gallons of car capacity provided such tank cars are made available to Shell with a VCM pressure of between five (5) and ten (10) psig prior to loading. OXY/HOLMES 000907 13 6. GOVERNMENTAL CHARGES All new and increased domestic or foreign taxes and other govern mental charges other than those based on income, which are imposed after December 31, 1973 on VCM, or on the feedstocks or process materials used to produce the VCM, or on Shell (including without limitation its VCM manufacturing facilities), or required to be paid or collected by Shell by reason of the sale, production, conversion, transportation, or delivery of the VCM hereunder, shall be paid to Shell by Hooker in addition to the prices and conversion fees herein specified and within fifteen (15) days after receipt of Shell's statement. 7. Title Title to all chlorine delivered to Shell and held by Shell for Hooker's account and all VCM converted hereunder shall be and remain in Hooker, but Shell shall have the right to commingle the same with its own chlorine and VCM or with that held by Shell for a third party. Responsibility for all losses or damage of the chlorine delivered hereunder shall be in Shell after receipt of the same by it in Shell's facilities as stated herein, except where the same arises out of the negligence of Hooker. Responsibility for all losses or damage of the VCM converted (or sold) hereunder shall be in Shell until the same is delivered to Hooker into tank cars as provided for hereunder except where the same arises out i of the negligence of Hooker. OXY/HOLMES 000908 14 Any chlorine required for conversion in excess of the conversion ratio shall be supplied by Shell at no cost to Hooker. Title to any chlorine remaining in storage at the end of any calendar year because of conversion efficiencies shall transfer to Shell. 8. Liabilities - Claim Hooker warrants that the chlorine delivered hereunder and Shell warrants the VCM converted (or sold) hereunder will meet the specifications set forth respectively in Exhibit A and Exhibit B, but Shell and Hooker make NO OTHER WARRANTIES hereunder, WHETHER ON MERCHANTABILITY, FITNESS OR OTHER WISE AND NONE SHALL BE IMPLIED. Hooker shall accept Shell's analysis of VCM converted or sold hereunder as determined on the contents of Shell's storage spheres prior to delivery to Hooker and Hooker shall accept Shell's Certifi cate of Analysis therefor as representative of the quality of the VCM delivered hereunder with respect to meeting the specifications warranted. Responsibility for all claims arising directly or indirectly out of the chlorine delivered hereunder shall be in Shell during unloading and discharge and after receipt of the same by Shell in its facilities as stated herein, except where the same arises out of the negligence of Hooker. Responsibility for all claims arising directly or indirectly out of the VCM converted (or sold) hereunder shall be in Shell until the same is delivered to Hooker into tank cars as provided for hereunder, except where the same arises out of the negligence of Hooker. OXY/HOLMES 000909 15 Shell shall have no liability for, and Hooker shall indemnify Shell against all claims, loss liability and expense on account of, any injury or death of persons (including Hooker's employees) or damage to property (including Hooker's) caused by or happening in connection with Hooker's unloading, storage, handling or use of the VCM delivered hereunder, unless due to negligence of Shell, its agents or employees in the manufacture or loading of the product, or defects in the tank cars furnished for trans portation of the product. Hooker shall have no liability for, and Shell shall indemnify Hooker against all claims, loss liability and expense on account of, any injury or death of persons (including Snell's employees) or damage to prop erty (including Shell's) caused by or happening in connection with Shell's receiving, unloading, transporting, storage, handling, or use of chlorine delivered hereunder, unless due to negligence of Hooker, its agents or employees, in the manufacture or handling of the product or facilities for transportation of the product. Neither Shell nor Hooker shall have any liability to the other ior any claims arising directly or indirectly out of or in connection with this Agreement, unless the claimant gives the other party notice of the claim (setting forth fully the facts on which it is based) within sixty (60) days after the date of discovery, or other transaction or occurrence giving rise to the claim. Claims shall in any case belimited to the value of VCM or chlorine as appropriate where for such purpose the value of VCM shall be assumed as if comprised of the conversion fee applicable plus 0.64 multiplied by the value of chlorine and the value of chlorine shall be taken OXY/HOLMES 000910 16 as Hooker's average selling price for bulk chlorine sold under long-term contract for delivery from Hooker's Taft, Louisiana chemical plant; and neither party shall ever be liable for any indirect, special or consequential damages. 9. Excuses for Non-Performance Either Shell or Hooker shall be excused from its obligations here under when and to the extent that performance is delayed, impaired, or prevented (a) by any circumstances (except financial) reasonably beyond its control, or (b) by fire, explosion, breakdown in machinery or equipment, plant shutdown, or failure of catalyst, or riots, strikes, labor disputes, voluntary or involuntary compliance with any law, order, regulation, recommen dation, or request of any governmental authority, (including, v.'ithout limita tion, those relating to economic stabilization or product allocation), or total or partial failure of the usual means of transportation of chlorine, ethylene, dichloroethane or VCM, or inability or delay in obtaining all or any part of the feedstocks or process materials used in the manufacture of VCM from Shell's earlier planned or established internal or third party sources of supply. As used herein, "labor dispute" means any controversy to which either Shell or Hooker has an interest, involving wages, hours or work ing conditions and includes any strike, picketing, lockout, suspension of construction or any other action taken in connection with or because of the labor dispute. Neither Shell nor Hooker shall have any obligation to partic ipate in any settlement of a labor dispute, or to request its agents or con tractors to do so except where the same is acceptable to such party in its OXY/HOLMES 000911 sole judgment. The quantities of VCM consequently undelivered as a result of causes excused hereunder shall not be required to be made up by Shell or Hooker upon resumption of full deliveries of VCM hereunder and such VCM quantities shall be deducted from the obligated quantities applicable to the then calendar year. In the event that Shell is excused from delivering any quantity of VCM due to any of the causes specified above, Shell shall have the right to apportion, solely according to Shell's judgment, the productive capacity being utilized to include Hooker, and Shell shall have no obliga tion in the event of any excused causes specified above to purchase VCM to perform hereunder or to purchase feedstocks or process materials from sources not previously established or to utilize any internal sources of supply of the same to perform hereunder. If Shell's performance is excused hereunder due to inability to obtain feedstocks or process materials used in the manufacture of VCM from Shell's earlier planned or established sources. Shell shall use diligent efforts to obtain such feedstocks or process materials from other than earlier planned or established sources but fees hereunder shall be adjusted to reflect any increase in cost to Shell. If Shell is unable to obtain such feedstocks. Hooker, at its option, on reasonable notice and at Hooker's cost may provide such feedstocks to Shell by mutually agreeable delivery methods and Shell shall convert VCM from such feedstocks provided by Hooker for delivery to Hooker for so long as Shell's excused performance continues hereunder but fees shall be adjusted to reflect the corresponding decrease in cost of feedstocks to Shell. OXYflttOLMES 000912 18 Should excused deliveries of VCM or chlorine hereunder continue for a period in excess of one hundred twenty (120) days, the party whose performance is not excused during this period may cancel this Agreement effective sixty (60) days after written notice given following expiration of the aforesaid one hundred twenty (120) day period, provided that deliv eries have not resumed at a rate corresponding to the minimum required by this Agreement before expiration of such sixty (60) days. 10. Assignability Neither this Agreement nor any claim arising directly or indirectly out of or in connection therewith shall be assignable by either party or by operation of law without the written consent of the other party, which consent shall not be unreasonably withheld, except that either party may assign its rights hereunder, subject to the obligation thereof, to any successor of substantially all of its business assets pertaining to VCI;i or chlorine pro duction or the use thereof as a raw material, as applicable. 11. Remedies In the event of any breach by either party of any of the provisions of this Agreement, the other party shall have the right in addition to any other rights or remedies it may have to suspend or refuse deliveries here under and/or to terminate this Agreement by notice to the defaulting party effective as of the date of such notice. Either party's right to require strict performance of the obligation of the other shall not be affected in any way by any previous waiver, forebearance or course of dealing. OXY/HOLMES 000913 19 12. Notices All notices or demands under this Agreement, whether required by the terms hereof or otherwise, shall be irv writing and shall be delivered or mailed by certified or registered mail, return receipt requested, to the following addresses of the parties or to such other addresses as may be hereafter designated in writing by the respective parties: If to Hooker: Hooker Chemical Corporation 345 Third Street Niagara Falls, New York 14302 If to Shell: Shell Chemical Company A Division of Shell Oil Company P. 0. Box 2463 One Shell Plaza Houston, Texas 77001 Attention Manager Chemical Intermediates 13. Laws Governing Contract This Agreement shall be governed under the laws of the State of New York. 14. Entirety - Execution This Agreement comprises the entire Agreement and merges and super sedes all prior agreements, understandings and representations (oral or written) between Shell and Hooker concerning the subject matter hereof, including specifically said previous Agreement of January 24, 1973. Neither this Agreement nor any subsequent Agreement amending or supplementing this Agreement shall be binding on Shell or Hooker unless and until it has been OXY/HOLMES 000914 20 signed on Shell's or Hooker's behalf by a duly authorized representative, and commencement of performance hereunder or under any such subsequent Agreement shall not constitute a waiver of, this requirement. IN WITNESS WHEREOF, the parties hereto have signed this Agreement in duplicate as of the day and date first written above. SHELL CHEMICAL COMPANY. A Division of Shell Oil Company HOOKER CHEMICALS & PLASTICS CORP. OXY/HOLMES 000915 EXHIBIT A CHLORINE SPECIFICATIONS Chlorine Chlorinated Compounds Non-Volatile Matter Water Bromine 99.5% Volume 1,000 ppm max 100 ppm max. 30 ppm max. 100 ppm max. OXY/HOLMES 000916 EXHIBIT B SPECIFICATIONS FOR VINYL CHIORIDF SPECIFICATIONS Acetylene, mol ppm Acetaldehyde, mol ppm Butadiene, mol ppm Water, weight ppm Acidity (as HC1), weight ppm Non-Volatiles, weight ppm Iron, weight ppm Color Appearance Stabilizer MAXIMUM 3.0 5.0 10.0 100.0 2.0 200.0 0.5 Colorless Clear and free from suspended matter None added OXY/HOLMES 000917 EXHIBIT C Measurements of the net quantity of chlorine shipped to Shell in tank cars shall be made using railroad type weigh scales. The type of scales and their calibration and use in weighing shall conform to require ments as set forth in the National Bureau of Standards in N.B.S. Handbook 44, the latest edition, or a maintenance measuring tolerance of +0.2% of true weight. The weigh scale used shall be the stationary weighing type for weighing cars at rest. The weigh scale weight capacity and weighing plat form length shall enable weighing cars in a single weighing or draft. Cars to be weighed shall be uncoupled from any other railroad equipment when placed on the scale for weighing. The weigh scale shall be calibrated monthly. Shell representatives shall have the privilege of witnessing each weigh scale calibration in addition to the routine weighing of cars. The supplier shall furnish copies of documents that will establish that calibration test weight cars are certi fied by N.B.S. weigh scales. Documents shall also be furnished for evidence and the integrity of all calibration and maintenance work. Copies of N.B.S. certificates shall be furnished by the supplier to Shell for all test weight cars used for weigh scale calibration. Weigh scale calibration shall include using N.B.S. certified weights for 100% of maximum gross weight of cars loaded with chlorine. Weigh scale repeatability shall be determined from three successive weight measurements of a test weight for 100% of the range of measurement. The weighing procedure used, including test weight car placement, re-zeroing OXY/HOLMES 000918 of scales, etc., shall be based upon N.B.S. Handbook 44 and should be included in written procedures to be furnished by the supplier for the mutual use of the supplier and Shell in all calibration and routine weighing. The weigh scale repeatability shall not exceed the minimum weigh scale indicated weight graduation. Shell shall have the privilege of witnessing or requesting that routine spot checks be made by the supplier of the weigh scale performance by determining the v/eigh scale repeatability by successively weighing a selected car loaded with chlorine three separate times. Security measures shall include the use of serially numbered security seals. Seals shall be provided to assure that the integrity of measurement is assured by prevention of unauthorized tampering or adjustment of any v/eigh scale mechanism following its calibration. Sealing devices shall be installed after each weigh scale calibration and this action witnessed by a Shell representative. The supplier shall record all seal serial numbers and Shell shall be contacted and advised whenever removal of a seal is necessary. Verification of seal serial numbers shall be done and witnessed by Shell prior to that removal for weigh scale maintenance and calibration. The number and location of all seals shall be mutually agreed upon by the supplier and Shell to assure realizing adequate security. The tare or light weight of each car to be loaded is to be measured immediately before loading with chlorine. A weigh document for each loaded car shall be furnished to Shell which shall include the time of day, date, weight, weigher and car number for the tare and gross weight. Car seal numbers shall be recorded for the gross weight. In each weighing, the weigh scales shall be re-zeroed before the car to be weighed is placed on the scales. OXY/HOLMES 000919 APPENDIX I PAGE 1 A, A1 AND A2 CRUDE OIL PRICE "A" shall equal the volumetric average delivered cost of the crude oils, condensates, natural gas liquids, and natural gas used as a raw material and processing and blend stocks which are recorded as intakes to Shell's refineries expressed in cents per barrel where the "current period" shall be the preceding months of September and October for the calendar quarter commencing January 1st, December-January for the calendar quarter commencing April 1st, March-April for the calendar quarter commencing July 1st and Oune-Juiy for the calendar quarter commencing October 1st. "A-j" is the volumetric average delivered cost for the fourth calendar quarter of 1973 and is 563 cents per barrel, is the volumetric average delivered value determined and entered as "A" during the months September- October 1975 for the determination of the escalated conversion fee to be effective January 1, 1976. These values, in addition to those determined pursuant to "D" as hereinafter described, are considered to be proprietary to Shell and, therefore, the values are not to be revealed to others by Hooker. OXY/HOLMES 000920 APPENDIX I PAGE 2 B, B, AND B,, I il LABOR RATES B shall equal the arithmetical average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, reported for the "current period" (as identified below) by the United States Bureau of Labor Statistics in Table C-2 in the publication, "Employment and Earnings". B( shall be the arithmetical average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, reported for the period October, November, December, 1973 and is 511 cents per hour. The "current period" shall be the preceding months of DecemberFebruary (inclusive) for the calendar quarter commencing July 1st, March-Hay (inclusive) for the calendar quarter commencing October 1st, June-August (inclusive) for the calendar quarter commencing January 1st and SeptemberNovember (inclusive) for the calendar quarter commencing April 1st. B^ shall be the arithmetic average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, entered as B above during the fourth quarter 1975 for the determination of the Escalated Conversion Fee to be effective January 1, 1976. Should the method of computing the hourly earnings referred to herein be changed, or should publication of same be discontinued or substan tially delayed, the parties hereto shall agree upon the use of another similar labor rate compilation and shall adjust the Labor Rate Base to conform to the calculation method of the new compilation. OXY/HOLMES 000921 APPENDIX I PAGE 3 C,--C,i A--N--D---C- r,, COMMODITY INDICES C shall equal the arithmetical averages of the latest final Wholesale Commodity Price Indices for Industrial Commodities reported for the "current period" (as identified below) by the United States Bureau of Labor Statistics in the publication "Wholesale Prices and Price Indices". C-j shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Commodities reported for the "base period" (as identified below) in the above-mentioned publication and table. The "current period" and the "base period" shall include the iden tical months specified under "Labor Rates" for calculation of B and above. The base period index (C^) is 133.4. C^ shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Commodities entered as C above during the fourth quarter 1975 for the determination of the Escalated Conversion Fee to be effective January 1, 1976. Should the method of computing the Wholesale Commodity Price Index referred to herein be changed, or should publication of same be discontinued or substantially delayed, the parties hereto shall agree upon the use of another similar index and shall adjust the Wholesale Commodity Price Index Base to conform to the calculation method of the new index selected. If a new reference base is established, the Wholesale Commodity Price Index Base shall be converted to the new base by factors published by the Bureau of Labor Statistics. If the weighting structure is revised, the unofficial index will be used until the official index is released. OXY/HOLMES 000922 APPENDIX I PAGE 4 D --- EXTRAORDINARY COSTS Shell and Hooker each recognize that, owing to the uncertanties in, but not limited to, future Federal, State and Local operation require ments and environmental standards, in new requirements to protect safety and health of employees and the public, and in figure equipment performance from corrosion and maintenance standpoints, it is impractical as of the date of this Agreement to establish a fixed formula for escalation of the Base Conversion Fee to cover these costs on an equitable basis for as many years into the future as the intended duration of this Agreement. Each party agrees, however, that it is their intent such extraordinary costs incurred by Shell after May 1, 1974 shall be added to the Base Conversion Fee or applicable conversion fee described in Paragraph 4.1 based upon Shell's actual cost experience for the "current period" as specified under "Labor Rates" for calculation of B, and B^ above. Shell's extraordinary cost fee will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing new equipment, if any, and on new opera ting costs, if any, both prorated on the basis that Hooker's VCM conversion quantities during the period for which Shell's extraordinary costs are being computed for purposes of fee adjustment bear to a total VCM production for the period involved at the facility from which Hooker is receiving OXY/HOLMES 000923 deliveries of VCM as provided hereunder. Costs will not be considered extraordinary unless they exceed $350,000 for the productive capacity being utilized to include Hooker. Shell will give Hooker such advance notice of its non-binding best estimate of such extraordinary costs as soon as reasonably possible, but increases attributed to actual extraordinary costs as computed above will not be effective until notice of such increase is given pursuant to Paragraphs 3.4.1 and 4.1 hereunder. Decisions as to the necessity and type of such extraordinary costs shall reside solely with Shell. OXY/HOLMES 000924 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS CONFIDENTIAL AGREEMENT THIS IS AN AGREEMENT, dated and effective by and between SHELL CHEMICAL COMPANY, a division of SHELL OIL COMPANY, a Delaware Corporation, having an office at One Shell Plaza, P. 0. Box 2463 Houston, Texas 77001 (hereinafter referred to as "Shell"), and HOOKER CHEMICAL CORPORATION, a subsidiary of Occidental Petroleum Corporation, a California Corporation, having an office at 345 Third Street, Niagara Falls, New York 14302 (hereinafter referred to as "Hooker"). WHEREAS, Shell and Hooker have entered into a previous Agreement dated January 24, 1973 for the sale by Shell to Hooker of Vinyl Chloride Monomer (hereinafter referred to as "VCM") during the year 1974 and for the conversion by Shell of Hooker's chlorine to VCM subsequently for delivery to Hooker; and WHEREAS, Shell and Hooker each recognize that the costs of VCM manufacture are increased substantially from those contemplated when entering into said previous Agreement and that future costs for such manufacture are increasingly uncertain owing to the uncertain costs of hydrocarbon supplies for feedstocks and power the escalation in costs for other raw materials, catalyst, utilities, power and labor, and the increased capital and oper ating costs required to meet Federal, State and Local Government environmental standards and operating requirements; and WHEREAS, Shell and Hooker each desire to provide for such price and fee changes as are realistic and necessary from time to time for Shell OXY/HOLMES 000925 2 to maintain its VCM operations at a level of economic viability sufficient to enable Shell to provide for necessary raw materials and other resources so as to sustain the long-term continuity of VCM supply by Shell to Hooker; and WHEREAS, Shell and Hooker desire to maintain a mutually beneficial long-term Agreement for the conversion of Hooker chlorine into VCM by Shell and for which Hooker is prepared to expand its chlorine manufacturing capacity and for which Shell is prepared to provide VCM conversion capacity on a long-term basis from its VCM plant at Norco, Louisiana; NOW, THEREFORE; in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto, effective as of January 1, 1974, hereby agree as follows: WITNESSETH: 1. Term This Agreement shall be in effect for a primary period of four (4) calendar years beginning January 1, 1974 and ending on December 31, 1977, and from calendar year to calendar year thereafter, either party being able to terminate this Agreement effective at the end of the primary period or at any time thereafter, by giving the other party at least eighteen (18) months prior written notice. In the event either party exercises the right to terminate this Agreement on eighteen (18) months prior written notice effec tive at any time subsequent to the expiration date of the primary period but not at the end of a calendar year, the rights and duties of the parties with respect to the year of termination shall be prorated in the proportion that OXY/HOLMES 000926 the number of days in the calendar year prior to the effective date of termination bear to the number of days in the calendar year. 2. 1974 Purchase 2.1 During the calendar year 1974 Shell shall sell and deliver and Hooker shall purchase and receive a minimum of 159,000,000 pounds and a maximum of 193,000,000 pounds of VCM FOB Shell's Plant. Hooker and Shell shall have the delegations and rights with regard to these quantities as set out in Paragraphs 3.2 and 3.3 hereof. The "Base Price" hereunder for the calendar year 1974 shall be 6.75 cents ($0.0675) per pound of VCM, FOB Shell's plant, for all Quantities actually shipped. Notwithstanding the foregoing. Hooker shall pay Shell a price of 5.247 cents ($0.05247) per pound of VCM for so long as the Economic Stabilization Act and Regulations issued thereunder prohibit Shell from increasing same. 2.2 The "Base Price" set forth in Paragraph 2.1 above shall be subject to increase or decrease effective as of duly 1, 1974 and as of October 1, 1974 by Shell giving Hooker at least thirty (30) days prior written notice. 3. Quantity - Conversion 3.1 During the term of this Agreement after the calendar year 1974 Hooker shall deliver liquid chlorine to Shell, to be held by Shell for Hooker's account and to be converted thereafter into such amounts of VCM as Hooker shall order at a conversion ratio of 0.64 pounds of chlorine to 1.0 pounds of VCM. OXY/HOLMES 000927 4 3.2 During calendar years 1975, 1976 and 1977, Shell shall convert and deliver to Hooker and Hooker shall accept from Shell VCM in an amount not less than nor more (except with Shell's prior written approval) than the respective minimums and maximums set forth below, but not exceeding, except with Shell's prior written approval, one-tenth (1/10) of the applicable maxi mum calendar year quantity during any calendar month, or cumulatively one- sixth (1/6) of the applicable calendar year maximum in two (2) succeeding months. MAXIMUM - MINIMUM QUANTITIES OF VCM CONVERTED (LBS) PER CALENDAR YEAR Year 1975 1976 1977 Minimum Quantity 160,000,000 167,000,000 177,000,000 Maximum Quantity 196,000,000 203,000,000 209,000,000 3.3 Hooker shall give written notice to Shell not less than six (6) months prior to each calendar year hereof as to the quantity of VCM it estimates it will require to be converted and/or delivered by Shell during that calendar year within the range of the calendar year minimum and maximum amounts as specified in this Agreement. Subject to the minimum and maximum quantities stated in Paragraphs 2 and 3.2 Hooker shall be required to receive not less than ninety-five (95) percent of the estimated calendar year quantity and Shell shall be required to deliver net more than one hundred five (105) percent of the estimated calendar year quantity in each calendar year covered by this Agreement, unless Shell shall agree in writing to deliver a greater or lesser quantity ordered by Hooker. If in any year Hooker requires and Shell agrees to sell VCM or to convert hereunder amounts of liquid chlorine OXY/HOLMES 000928 5 into VCM in excess of the calendar year maximum stated in Paragraph 2 or 3.2, then said calendar year maximum and minimum shall be of no further effect for such year and that amount requested by Hooker and agreed to by Shell shall be considered a commitment for such calendar year, and during that year Hooker shall be required to receive not less than 95% and Shell shall be required to deliver not more than 105% of such commitment. 3.4 Shell hereby extends to Hooker a right of first refusal to increase both the 1976 and 1977 quantities of VCM listed in Paragraph 3.2 to 210,000,000 pounds minimum and 260,000,000 pounds maximum per year. To exercise this right of first refusal. Hooker must give Shell written notice prior to July 1, 1975. If at any time prior to the exercise of this right by Hooker, Shell has an opportunity to utilize the conversion capacity represented by the quantities subject to this right of first refusal for sales to or for conversions for third parties. Shell shall notify Hooker to this effect in writing setting out the quantity involved and Hooker shall have three (3) months thereafter to exercise its right of first refusal to accept such Quantities of VCM according to the terms hereof with delivery beginning 7 months following the date of Shell's notice. In the event Hooker elects not to accept such quantities of VCM, then Shell shall be relieved from any further obligation under this subsection. All of the foregoing relative to said right of first refusal shall be applicable only if, at the time Hooker gives written notice of its desire to exercise such right. Shell's projections indicate that it will have available to it at its Norco, Louisiana Plant, the raw materials needed to manufacture the increased quantities of VCM at costs no greater than for raw materials usee to manufacture VCM not subject to this right OXY/HOLMES 000929 6 for the same calendar years (1976 and 1977). If such costs of raw materials as may be available to Shell as are needed to manufacture the increased quantities of VCM exceed costs for raw materials not subject to this right. Hooker shall have the option to pay such increased costs and exercise said right of first refusal. Shell will promptly notify Hooker of any contrary indication upon receipt of Hooker's said notice, in which event such right of first refusal shall be inoperative and of no force or effect. Conversion fees for any optional amounts of VCM above the applicable maximum quantity in Paragraph 3.2 shall be determined in the following way: 3.4.1 Shell will specify a conversion fee for the 1976 optional quantity before November 30, 1975. If the "Specified Fee" is not accepted by Hooker before December 15, 1975, then the Hooker right of first refusal on these optional quantities for 1976 and 1977 shall be of no further force or effect and the applicable quantities of VCM shall revert to those designated in Paragraph 3.2. The "Specified Fee" or any other fee for the 1976 and 1977 optional quantity subsequently in effect hereunder shall be subject to increase or decrease any time after it has been in effect for ninety (90) days by Shell giving Hooker at least thirty (30) days prior written notice. Shell warrants that until January 1, 1978 any such increase or decrease in the "Specified Fee" for the optional quantities of VCM provided hereunder will be determined according to the following formula: Optional Quantity Fee = SF+0.0061(A-A2)+0.0014(B-B2)+0.0032(C-C2)+D where the terms used in the formula have the following definitions: SF = Specified Fee as set forth in Paragraph 3.4.1 A = Crude Oil Price in Cents oer Barrel B = Average Labor Rate in Cents per Hour OXY/HOLMES 000930 C = Commodity Index Number D = Extraordinary Costs in Cents per Pound of VCM These terms are defined more specifically in Appendix I attached hereto and made a part hereof, and are the base numbers as more specifically defined in Appendix from which the Optional Quantity Fee shall be computed. 3.5 If this agreement shall continue subsequent to the calendar year 1977 in effect the optional quantities of VCM shall be the same as those applicable to the calendar year 1977. 4. Conversion Fees - Terms of Payment 4.1 The "Base Conversion Fee" hereunder shall be 5.25 cents ($0.0525) per pound, FOB Shell's plant, for all quantities of VCM as specified in Paragraph 3.2 hereunder which are actually shipped during the term hereof beginning with the calendar year 1975. The Base Conversion Fee shall be subject to increase or decrease January 1, 1975 and as of the first day of each succeeding calendar quarter in accordance with the premises hereof by Shell giving Hooker at least thirty (30) days prior written notice. Shell warrants that until January 1, 1978 any such increase or decrease in the Base Conversion Fee applicable to the conversion of chlorine supplied by Hooker into VCM as provided hereunder in quantities as determined pursuant to Paragraph 3.2 above will be determined according to the following formula: OXY/HOLMES 000931 8 Escalated Conversion Fee = BCF+0.0061 (A-A^J+0.0014(B-B1 )-K3.0032(C-C.j)+D where the terms used in the formula have the following definitions: BCF = Base Conversion Fee as set forth above A = Crude Oil Price in Cents per Barrel B = Average Labor Rate in Cents per Hour C = Commodity Index Number D = Extraordinary Costs in Cents per Pound of VCM These terms are defined more specifically in Appendix I attached hereto and made a part hereof. A.j, B^ and C^ are the base numbers as more specifically defined in Appendix I from which the Escalated Conversion Fee shall be computed. 4.2 In the event Shell elects to continue the manufacture and marketing of commercial quantities of VCM subsequent to the calendar year 1977, the primary period shall extend to December 31, 1979 or for so long until December 31, 1979 as Shell may so elect and in such event Shell will, before December 31, 1975 or as soon thereafter as it may so reasonably determine, so notify Hooker and the parties hereto will begin negotiations in good faith and endeavor to reach agreement before July 1, 1976 on the basis for establishing conversion fees applicable to the calendar year 1978 and there after. In the event the parties do not reach agreement on the basis for establishing conversion fees for the calendar year 1978 and subsequently, this Agreement shall terminate December 31, 1977. 4.3 For any calendar year after 1974, if Hooker provides Shell satis factory written evidence of any offer from a domestic third party, made without OXY/HOLMES 000932 9 disclosure by Hooker of Shell's applicable conversion fee, of a conversion fee applicable to the receipt by Hooker of at least 75 million pounds of VCM for such calendar year and said offered conversion fee is lower by more than 0.1 cents ($0,001) per pound of VCM in the basis of delivered cost FOB Hooker's plant than Shell's applicable conversion fee plus Hooker's delivery costs in effect for the same time period, then unless Shell elects within thirty (30) days and so advises Hooker in writing to meet such third party conversion fee offer for the quantities so offered, such quantities shall be deducted from the base quantities deliverable to Hooker by Shell hereunder for such calendar year. In the event Shell elects to meet such a competitive offer, it is agreed that no later offer of the same competitor or of the same parcel, made within twelve (12) months of the date of Shell's election, shall be considered to be a competitive offer. 4.4 Payment for VCM shall be made to Shell within thirty (30) days from the date of Shell's invoice for VCM delivered to Hooker or to Hooker's order. In the event that in any calendar year Hooker fails to accept the required minimum quantity of VCM as specified in Paragraphs 2 and 3.2 (as the same may be reduced under Paragraph 9), or as may be modified by Paragraphs 3.3, 3.4 or 3.5 Hooker shall pay Shell within 30 days after the beginning of the next calendar year the sum 0.75c multiplied by a figure equal to the differ ence between the number of pounds actually accepted by Hooker during such calendar year and the required minimum quantity, subject to the following conditions. After it lias solo all of the VCM production capacity of its OXY/HOLMES 000933 10 Norco, Louisiana and Houston, Texas Plants for such year, exclusive of Hooker's minimum quantity hereunder for that year. Shell shall use diligent efforts to sell that portion of such minimum quantity not accepted by Hooker; and Hooker will be allowed a credit against the amount due to Shell here under for such unaccepted quantity equal to the amount received by Shell from the sale of such quantity, or any part thereof, to the extent only, however, that the amount so received by Shell from any such sale exceeds Shell's actual cost of chlorine for production of the said quantity of VCM plus an amount determined by subtracting 0.75$ per pound from the amount Hooker would have paid Shell for such quantity of VCM had it accepted the same hereunder. Shell shall not be obligated, however, to sell VCM specified in the foregoing sentence at a price which, in Shell's sole judg ment, would be lower than fair market value and in no event shall Hooker be allowed a credit exceeding 0.75$ per pound for sale by Shell of VCM not accepted by Hooker. It is expressly understood, however, that if during the term of this Agreement Shell supplies VCM produced at its Norco, Louisiana and Houston, Texas Plants to parties other than Hooker under contract requir ing such parties to take minimum annual quantities of VCM so produced, any sales by Shell of minimum quantities not accepted by Hooker and such other parties shall be attributed to such parties ratably for purpose of computing the above credit to Hooker. If for any reason other than provided for in Paragraph 9, Shell fails to deliver VCM up to the required maximum quantity as may be ordered by Hooker in accordance with provisions of this Agreement, Shell shall pay Hooker 0.75c per pound for such undelivered VCM so ordered by Hooker. OXY/HOLMES 000934 5. Orders - Deliveries 5.1 Not less than ten (10) days prior to the beginning of each month hereof Hooker shall submit to Shell a notice setting out the quantity of VCM ordered for such month. 5.2 Shell has provided written notice indicating the availability of a connecting chlorine pipeline proposed by Shell hereunder. Therefore, Hooker will provide and maintain necessary facilities, including a pipeline to Hooker's Taft, Louisiana property line at Hooker's cost and expense to deliver such amounts of liquid chlorine as required to produce the appropriate quantity of VCM as specified hereunder. Shell proposes to transport such quantities of chlorine from Hooker's property line to Shell's Norco, Louisiana Plant in a proposed pipeline to be built and maintained at Shell's cost and expense. Hooker shall pay Shell on a monthly basis a reasonable pipeline charge for chlorine transported through Shell's pipeline and used for conversion to Hooker's VCM. Shell's pipeline charge will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing Shell's pipeline and on operating costs both prorated on the basis that Hooker's throughput of chlorine for conversion to Hooker's VCM bears to the total throughput of chlorine through the line provided, however, that such pipeline charge shall not exceed Hooker's equivalent rail cost for movement of chlorine in Hooker's 90 ton rail cars from Hooker's Taft, Louisiana Plant to Shell's Norco, Louisiana Plant. The weight of chlorine delivered by pipeline for conversion to VCM hereunder shall be determined by Hooker's weigh tanks or by other means as may be mutually acceptable. Should Governmental restrictions prevent installation or usage of such pipeline for chlorine transportation, then Hooker shall deliver, at Hooker's expense, the aforementioned chlorine to Shell's OXY/HOLMES 000935 12 Norco, Louisiana Plant by 90 ton rail cars or other means, agreeable to both parties. In the event Shell does not have the pipeline available for delivery of chlorine by January 1, 1975 Hooker shall use its best efforts to commence deliveries by 55 and/or 90 ton tank cars at Hooker's expense for so long as said pipeline is not available. Shell shall provide suitable facilities for receipt of such chlorine at the locations described herein. The weight of chlorine, delivered into Shell's facilities by tank car suffi cient to satisfy the conversion ratio stated hereunder, shall be determined as specified in Exhibit C. 5.3 Shell shall deliver all VCM converted (or sold) hereunder FOB Shell's Norco, Louisiana Plant into Hooker's tank cars, of a capacity to be mutually agreed upon. The quantity or weight of VCM delivered into Hooker's tank cars shall be determined by railroad weight scales and certi fied weigh tickets shall be supplied for verification. In the event Hooker elects to verify Shell's measurements of the quantity of VCM delivered here under and differences in excess of 1% are uncovered in any car, such excess overages or shortages, if substantiated, shall be subject to billing adjust ments. Tank Car "heel'1 allowance for VCM shall be computed on the basis of the standard factor at 5 psig of three (3) pounds per 100 gallons of car capacity provided such tank cars are made available to Shell with a VCM pressure of between five (5) and ten (10) psig prior to loading. OXY/HOLMES 000936 13 6. GOVERNMENTAL CHARGES All new and increased domestic or foreign taxes and other govern mental charges other than those based on income, which are imposed after December 31, 1973 on VCM, or on the feedstocks or process materials used to produce the VCM, or on Shell (including without limitation its VCM manufacturing facilities), or required to be paid or collected by Shell by reason of the sale, production, conversion, transportation, or delivery of the VCM hereunder, shall be paid to Shell by Hooker in addition to the prices and conversion fees herein specified and within fifteen (15) days after receipt of Shell's statement. 7. Title Title to all chlorine delivered to Shell and held by Shell for Hooker's account and all VCM converted hereunder shall be and remain in Hooker, but Shell shall have the right to commingle the same with its own chlorine and VCM or with that held by Shell for a third party. Responsibility for all losses or damage of the chlorine delivered hereunder shall be in Shell after receipt of the same by it in Shell's facilities as stated herein, except where the same arises out of the negligence of Hooker. Responsibility for all losses or damage of the VCM converted (or sold) hereunder shall be in Shell until the same is delivered to Hooker into tank cars as provided for hereunder except where the same arises out of the negligence of Hooker. OXY/HOLMES 000937 14 Any chlorine required for conversion in excess of the conversion ratio shall be supplied by Shell at no cost to Hooker. Title to any chlorine remaining in storage at the end of any calendar year because of conversion efficiencies shall transfer to Shell. 8. Liabilities - Claim Hooker warrants that the chlorine delivered hereunder and Shell warrants the VCM converted (or sold) hereunder will meet the specifications set forth respectively in Exhibit A and Exhibit B, but Shell and Hooker make NO OTHER WARRANTIES hereunder, WHETHER ON MERCHANTABILITY, FITNESS OR OTHER WISE AND NONE SHALL BE IMPLIED. Hooker shall accept Shell's analysis of VCM converted or sold hereunder as determined on the contents of Shell's storage spheres prior to delivery to Hooker and Hooker shall accept Shell's Certifi cate of Analysis therefor as representative of the quality of the VCM delivered hereunder with respect to meeting the specifications warranted. Responsibility for all claims arising directly or indirectly out of the chlorine delivered hereunder shall be in Shell during unloading and discharge and after receipt of the same by Shell in its facilities as stated herein, except where the same arises out of the negligence of Hooker. Responsibility for all claims arising directly or indirectly out of the VCM converted (or sold) hereunder shall oe in Shell until the same is delivered to Hooker into tank cars as proviaed for hereunder, except where the same arises out of the negligence of Hooker. OXY/HOLMES 000938 15 Shell shall have no liability for, and Hooker shall indemnify Shell against all claims, loss liability and expense on account of, any injury or death of persons (including Hooker's employees) or damage to property (including Hooker's) caused by or happening in connection with Hooker's unloading, storage, handling or use of the VCM delivered hereunder, unless due to negligence of Shell, its agents or employees in the manufacture or loading of the product, or defects in the tank cars furnished for trans portation of the product. Hooker shall have no liability for, and Shell shall indemnify Hooker against all claims, loss liability and expense on account of, any injury or death-of persons (including Shell's employees) or damage to prop erty (including Shell's) caused by or happening in connection with Shell's receiving, unloading, transporting, storage, handling, or use of chlorine delivered hereunder, unless due to negligence of Hooker, its agents or employees, in the manufacture or handling of the product or facilities for transportation of the product. Neither Shell nor Hooker shall have any liability to the other for any claims arising directly or indirectly out of or in connection with this Agreement, unless the claimant gives the other party notice of the claim (setting forth fully the facts on which it is based) within sixty (60) days after the date of discovery, or other transaction or occurrence giving rise to the claim. Claims shall in any case be limited to the value of VCM or chlorine as appropriate where for such purpose the value of VCM shall be assumed as if comprised of the conversion fee applicable plus 0.64 multiplied by the value of chlorine ano the value of chlorine shall be taken OXY/HOLMES 000939 16 as Hooker's average selling price for bulk chlorine sold under long-term contract for delivery from Hooker's Taft, Louisiana chemical plant; and neither party shall ever be liable for any indirect, special or consequential damages. 9. Excuses for Non-Performance Either Shell or Hooker shall be excused from its obligations here under when and to the extent that performance is delayed, impaired, or prevented (a) by any circumstances (except financial) reasonably beyond its control, or (b) by fire, explosion, breakdown in machinery or equipment, plant shutdown, or failure of catalyst, or riots, strikes, labor disputes, voluntary or involuntary compliance with any law, order, regulation, recommen dation, or request of any governmental authority, (including, without limita tion, those relating to economic stabilization or product allocation), or total or partial failure of the usual means of transportation of chlorine, ethylene, dichloroethane or VCM, or inability or delay in obtaining all or any part of the feedstocks or process materials used in the manufacture of VCM from Shell's earlier planned or established internal or third party sources of supply. As used herein, "labor dispute" means any controversy to which either Shell or hooker has an interest, involving wages, hours or work ing conditions and includes any strike, picketing, lockout, suspension of construction or any other action taken in connection with or because of the labor dispute. Neither Shell nor Hooker shall have any obligation to partic ipate in any settlement of a labor dispute, or to request its agents or con tractors to do so except where the same is acceptable to such party in its OXY/HOLMES 000940 17 sole judgment. The quantities of VCM consequently undelivered as a result of.causes excused hereunder shall not be required to be made up by Shell or Hooker upon resumption of full deliveries of VCM hereunder and such VCM quantities shall be deducted from the obligated quantities applicable to the then calendar year. In the event that Shell is excused from delivering any quantity of VCM due to any of the causes specified above. Shell shall have the right to apportion, solely according to Shell's judgment, the productive capacity being utilized to include Hooker, and Shell shall have no obliga tion in the event of any excused causes specified above to purchase VCM to perform hereunder or to purchase feedstocks or process materials from sources not previously established or to utilize any internal sources of supply of the same to perform hereunder. If Shell's performance is excused hereunder due to inability to obtain feedstocks or process materials used in the manufacture of VCM from Shell's earlier planned or established sources. Shell shall use diligent efforts to obtain such feedstocks or process materials from other than earlier planned or established sources but fees hereunder shall be adjusted to reflect any increase in cost to Shell. If Shell is unable to obtain such feedstocks, Hooker, at its option, on reasonable notice and at Hooker's cost may provide such feedstocks to Shell by mutually agreeable delivery methods and Shell shall convert VCM from such feedstocks provided by Hooker for delivery to Hooker for so lone as Shell's excused performance continues hereunder but fees shall be adjusted to reflect the corresponding decrease in cost of feedstocks to Shell. OXY/HOLMES 000941 18 Should excused deliveries of VCM or chlorine hereunder continue for a period in excess of one hundred twenty (120) days, the party whose performance is not excused during this period may cancel this Agreement effective sixty (60) days after written notice given following expiration of the aforesaid one hundred twenty (120) day period, provided that deliv eries have not resumed at a rate corresponding to the minimum required by this Agreement before expiration of such sixty (60) days. 10. Assignability Neither this Agreement nor any claim arising directly or indirectly out of or in connection therewith shall be assignable by either party or by operation of law without the written consent of the other party, which consent shall not be unreasonably withheld, except that either party may assign its rights hereunder, subject to the obligation thereof, to any successor of substantially all of its business assets pertaining to VCM or chlorine pro duction or the use thereof as a raw material, as applicable. 11. Remedies In the event of any breach by either party of any of the provisions of this Agreement, the other party shall have the right in addition to any other rights or remedies it may have to suspend or refuse deliveries here under and/or to terminate this Agreement by notice to the defaulting party effective as of the date of such notice. Either party's right to require strict performance of the obligation of the other shall not be affected in any way by any previous waiver, forebearance or course of dealing. OXY/HOLMES 000942 19 12. Notices All notices or demands under this Agreement, whether required by the terms hereof or otherwise, shall be in writing and shall be delivered or mailed by certified or registered mail, return receipt requested, to the following addresses of the parties or to such other addresses as may be hereafter designated in writing by the respective parties: If to Hooker: Hooker Chemical Corporation 345 Third Street Niagara Falls, New York 14302 If to Shell: Shell Chemical Company A Division of Shell Oil Company P. 0. Box 2463 One Shell Plaza Houston, Texas 77001 Attention Manager Chemical Intermediates 13. Laws Governing Contract This Agreement shall be governed under the laws of the State of New York. 14. Entirety - Execution This Agreement comprises the entire Agreement and merges and super sedes all prior agreements, understandings and representations (oral or written) between Shell and Hooker concerning the subject matter hereof, including specifically said previous Agreement of January 24, 1973. Neither this Agreement nor any subsequent Agreement amending or supplementing this Agreement shall be binding on Shell or Hooker unless and until it has been OXY/HOLMES 000943 signed on Shell's or Hooker's behalf by a duly authorized representative, and conmencement of performance hereunder or under any such subsequent Agreement shall not constitute a waiver of this requirement. IN WITNESS WHEREOF, the parties hereto have signed this Agreement in duplicate as of the day and date first written above. SHELL CHEMICAL COMPANY A Division of Shell Oil Company HOOKER CHEMICAL CORPORATION By: ________________________________ By: OXY/HOLMES 000944 EXHIBIT A CHLORINE SPECIFICATIONS Chlorine Chlorinated Compounds Non-Volatile Matter Water Bromine 99.5% Volume 1,000 ppm max. 100 ppm max. 30 ppm max. 100 ppm max. OXY/HOLMES 000945 EXHIBIT B SPECIFICATIONS FOR VINYL CHLORIDE SPECIFICATIONS Acetylene, raol ppm Acetaldehyde, mol ppm Butadiene, mol ppm Water, weight ppm Acidity (as HC1), weight ppm Non-Volatiles, weight ppm Iron, weight ppm Color Appearance Stabi1izer MAXIMUM 3.0 5.0 10.0 100.0 2.0 200.0 0.5 Colorless Clear and free from suspended matter None added OXY/HOLMES 000946 EXHIBIT C Measurements of the net quantity of chlorine shipped to Shell in tank cars shall be made using railroad type weigh scales. The type of scales and their calibration and use in weighing shall conform to require ments as set forth in the National Bureau of Standards in N.B.S. Handbook 44, the latest edition, or a maintenance measuring tolerance of +0.2% of true weight. The weigh scale used shall be the stationary weighing type for weighing cars at rest. The weigh scale weight capacity and weighing plat form length shall enable weighing cars in a single weighing or draft. Cars to be weighed shall be uncoupled from any other railroad equipment when placed on the scale for weighing. The weigh scale shall be calibrated monthly. Shell representatives shall have the privilege of witnessing each weigh scale calibration in addition to the routine weighing of cars. The supplier shall furnish copies of documents that will establish that calibration test weight cars are certi fied by N.B.S. weigh scales. Documents shall also be furnished for evidence and the integrity of all calibration and maintenance work. Copies of N.B.S. certificates shall be furnished by the supplier to Shell for all test weight cars used for weigh scale calibration. Weigh scale calibration shall include using N.B.S. certified weights for 100% of maximum gross weight of cars loaded with chlorine. Weigh scale repeatability shall be determined from three successive weight measurements of a test weight for 100% of the range of measurement. The weighing procedure used, including test weight car placement, re-zeroing OXY/HOLMES 000947 of scales, etc., shall be based upon N.B.S. Handbook 44 and should be included in written procedures to be furnished by the supplier for the mutual use of the supplier and Shell in all calibration and routine weighing. The weigh scale repeatability shall not exceed the minimum weigh scale indicated weight graduation. Shell shall have the privilege of witnessing or requesting that routine spot checks be made by the supplier of the weigh scale performance by determining the weigh scale repeatability by successively weighing a selected car loaded with chlorine three separate times. Security measures shall include the use of serially numbered security seals. Seals shall be provided to assure that the integrity of measurement is assured by prevention of unauthorized tampering or adjustment of any weigh scale mechanism following its calibration. Sealing devices shall be installed after each weigh scale calibration and this action witnessed by a Shell representative. The supplier shall record all seal serial numbers and Shell shall be contacted and advised whenever removal of a seal is necessary. Verification of seal serial numbers shall be done and witnessed by Shell prior to that removal for weigh scale maintenance and calibration. The number and location of all seals shall be mutually agreed upon by the supplier and Shell to assure realizing adequate security. The tare or light weight of each car to be loaded is to be measured immediately before loading with chlorine. A weigh document for each loaded car shall be furnished to Shell which shall include the time of day, date, weight, weigher and car number for the tare and gross weight. Car seal numbers shall be recorded for the gross weight. In each weighing, the weigh scales shall be re-zeroed before the car tc be weighed is placed on the scales. OXY/HOLMES 000948 APPENDIX I PAGE 1 A, A1 AND A2 CRUDE OIL PRICE "A" shall equal the volumetric average delivered cost of the crude oils, condensates, natural gas liquids, and natural gas used as a raw material and processing and blend stocks which are recorded as intakes to Shell's refineries expressed in cents per barrel where the "current period" shall be the preceding months of September and October for the calendar quarter commencing January 1st, December-January for the calendar quarter commencing April 1st, March-April for the calendar quarter commencing July 1st and June-July for the calendar quarter commencing October 1st. "A-j" is the volumetric average delivered cost for the fourth calendar quarter of 1973 and is 563 cents per barrel. "A^" is the volumetric average delivered value determined and entered as "A" during the months SeptemberOctober 1975 for the determination of the escalated conversion fee to be effective January 1, 1976. These values, in addition to those determined pursuant to "D" as hereinafter described, are considered to be proprietary to Shell and, therefore, the values are not to be revealed to others by Hooker. OXY/HOLMES 000949 APPENDIX I PAGE 2 B, Bj AND Bc LABOR RATES B shall equal the arithmetical average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, reported for the "current period" (as identified below) by the United States Bureau of Labor Statistics in Table C-2 in the publication, "Employment and Earnings". B( shall be the arithmetical average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, reported for the period October, November, December, 1973 and is 511 cents per hour. The "current period" shall be the preceding months of DecemberFebruary (inclusive) for the calendar quarter commencing July 1st, March-May (inclusive) for the calendar quarter commencing October 1st, June-August (inclusive) for the calendar quarter commencing January 1st and SeptemberNovember (inclusive) for the calendar quarter commencing April 1st. B^ shall be the arithmetic average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, entered as B above during the fourth quarter 1975 for the determination of the Escalated Conversion Fee to be effective January 1, 1976. Should the method of computing the hourly earnings referred tc herein be changed, or should publication of same be discontinued or substan tially delayed, the parties hereto shall agree upon the use of another similar labor rate compilation and shall adjust the Labor Rate Base to conform to the calculation method of the new compilation. OXY/HOLMES 000950 APPENDIX I PAGE 3 C. C, AND C,, --I------------ 1 COMMODITY INDICES C shall equal the arithmetical averages of the latest final Wholesale Commodity Price Indices for Industrial Commodities reported for the "current period" (as identified below) by the United States Bureau of Labor Statistics in the publication "Wholesale Prices and Price Indices". C-| shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Commodities reported for the "base period" (as identified below) in the above-mentioned publication and table. The "current period11 and the "base period" shall include the iden tical months specified under "Labor Rates" for calculation of B and above. The base period index (C^) is 133.4. C^ shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Commodities entered as C above during the fourth quarter 1975 for the determination of the Escalated Conversion Fee to be effective January 1, 1976. Should the method of computing the Wholesale Commodity Price Index referred to herein be changed, or should publication of same be discontinued or substantially delayed, the parties hereto shall agree upon the use of another similar index and shall adjust the Wholesale Commodity Price Index Base to conform to the calculation method of the new index selected. If a new reference base is established, the Wholesale Commodity Price Index Base shall be converted to the new base by factors published by the Bureau of Labor Statistics. If the weighting structure is revised, the unofficial index will be used until tne official index is released. OXY/HOLMES 000951 APPENDIX I PAGE 4 D EXTRAORDINARY COSTS Shell and Hooker each recognize that, owing to the uncertanties in, but not limited to, future Federal, State and Local operation require ments and environmental standards, in new requirements to protect safety and health of employees and the public, and in figure equipment performance from corrosion and maintenance standpoints, it is impractical as of the date of this Agreement to establish a fixed formula for escalation of the Base Conversion Fee to cover these costs on an equitable basis for as many years into the future as the intended duration of this Agreement. Each party agrees, however, that it is their intent such extraordinary costs incurred by Shell after May 1, 1974 shall be added to the Base Conversion Fee or applicable conversion fee described in Paragraph 4.1 based upon Shell's actual cost experience for the "current period" as specified under "Labor Rates" for calculation of B, B-j and above. Shell's extraordinary cost fee will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing new equipment, if any, and on new opera ting costs, if any, both prorated on the basis that Hooker's VCM conversion quantities during the period for which Shell's extraordinary costs are being computed for purposes of fee adjustment bear to a total VCM production for the period involved at the facility from which Hooker is receiving OXY/HOLMES 000952 deliveries of VCM as provided hereunder. Costs will not be considered extraordinary unless they exceed $350,000 for the productive capacity being utilized to include Hooker. Shell will give Hooker such advance notice of its non-binding best estimate of such extraordinary costs as soon as reasonably possible, but increases attributed to actual extraordinary costs as computed above will not be effective until notice of such increase is given pursuant to Paragraphs 3.4.1 and 4.1 hereunder. Decisions as to the necessity and type of such extraordinary costs shall reside solely with Shell. OXY/HOLMES 000953 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS orafoer 345 THIRD STREET, BOX 728, NIAGARA FALLS, NEW YORK 14302, PHONE (716) 278-7000 June 14, 1974 Mr. D. P. Jones Manager, Olefins & Aromatics Shell Chemical Company 600 Summer 'Street Stamford, Connecticut Dear Dud: Many conversations have been held between Shell and Hooker people on various points of the Shell Vinyl Chloride Monomer contract and although some better understanding exists, there are many points which need further discussion and clarification. We are suggesting a meeting here at Niagara in Bill Sholl's office on Monday, June 24th and hope that you, Dick and Ted can make it up here on that day. For your guidance, the areas which need further discussion, clarification, definition and possible revision are as follows. Page 2, Section 1 - Term We- would like Shell to consider a "running" three-year conversion contract, so that on any given day after conversion is initiated we have three years to live together under the agreement. This would express in a formal way the desire of Shell and Hooker to have a continuing business relationship on Vinyl Chloride Monomer. Page 3, Sections 2 and 2.1 - Purchase & Base Price We would like to walk through the make-up of the 6.75 base price (and also escalation which I will touch on later). Page 3, Section 3.1 - Conversion We definitely feel the conversion rate should be restored to the original 0.64 pounds of chlorine per pound of VCM for the proposed 0.65. Page 5, Section 3.4 - Optional Quantities in 1976 & 1977 This whole matter must be firmed up as these quantities of VCM are vital to our Ruco Division. Hooker is willing to discuss underwriting purchased quantities of ethylene in 1976 until such time as Shell's ethylene plant is on stream. Page 7. Section 3.5 - Optional Quantities Beyond 1977 As proposed this could result in Hooker's suffering a drop from 260MM pounds per year back to 210MM pounds per year should optional quantities provided by Shell not be available. This does not truly provide for growth. Hooker believes that the new base for years beyond 1977 should be the 260MM. 11 O C * E H C " I C t L S 4 Pl^mCS OO?.-. OXY/HOLMES 000954 hooker Mr. D. P. Jones 2- - June 14, 1974 Page 7. Section 4 - Conversion Fees & Terms of Payment We would like to walk through this area and suggest that Shell prepare a projection of Hooker's price for VCM through 1977. We need a detailed discussion on escalation and extraordinary costs. All references to payment within the contract should be thirty (30) days. Page 8. Section 4.2 - Conversion Fee for 1978 and Thereafter This needs discussion. As proposed, this will be based solely on Shell's judgment with no obligation to account to Hooker as to the worth of the conversion. Pape 8. Section 4.3 - Meet Competition Clause This needs clarification to assure that a competitive situation is on a delivered basis to Hooker from both Shell and a potential competitor. Page 15, Section - Liabilities-Claim The notification period has been changed from 90 to 30 days. This should be discussed. These are the main points we wish to cover. Dud, and I think most are capable of easy solution. We do need within Hooker a better understanding of Shell's costing and pricing logic as it applies to this contract and look forward to our discussion with you on this matter. Looking forward to seeing you and I sincerely hope we can wrap this up on the 24th. Best regards, HOOKER CHEMICALS & PLASTICS CORP. NMB/fl N. M. Barber Manager of Purchases Raw Materials & Containers cc: W. E. Sholl W. J. Wetzel - Ruco Division R. A. Willis - Ruco Division Shell: K; L. Spalding R. J. Reynolds OXY/HOLMES 000955 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS December 18, 1980 Shell Chemical Company A CWon of Srwl CM Company One Shell Plaza P.O. Box 2463 Houston, Texas 77001 PRIVATE AND CONFIDENTIAL Hooker Chemicals and Plastics Corporation ATTN Mr. D. W. Calhoun Director Energy and Raw Material Supply 1980 South Post Oak Road Houston, Texas 77056 RECEIVED JAN i 919&1 HQPPER Gentlemen: In accordance with our discussions following your recent purchase of the former Firestone PVC facilities, this letter when executed by you in the manner indicated below, will constitute an amendment to the confidential VCM Conversion Agreement between Shell Chemical Company and Hooker Chemicals and Plastics Corporation dated July 24, 1978 as follows: A. Article 2. The table entitled "Quantity Of VCM To Be Converted Million Pounds" is deleted in its entirety and replaced with the following: " Quantities To Be Converted - Million Pounds YEAR MINIMUM MAXIMl 1979 1980 1981 1982 1983 1984 and Annually Thereafter 150 150 330 330 330 330 180 180 380 380 380 380 B. All other Terms and Conditions of Contract remain in full force and effect. This amendment incorporates the quantities of VCM formerly committed by Shell to Firestone but does not include additional other volumes presently under discussion but not yet finally agreed to. Effective on the date you execute this amendment, the VCM Contract between Firestone and Shell dated July 10, 1978, will be considered terminated by mutual consent. andxwexwil^xQbfc&iRxfchexWKifcteBxceflCUEEeRGe ofxFxrestanexx OXY/HOLMES 000956 Hooker Chemicals and Plastics Corporation 2 We sincerely appreciate the excellent business relationship between our two companies and look forward to serving your VCM requirements for many years to come. Very truly yours, G. W. Ash Corporate Account Manager ACCEPTED AND AGREED TO THIS 2^2 DAY OF /"), 19 HOOKER CHEMICALS AND PLASTICS CORPORATION OXY/HOLMES 000957 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS I hooker ruco DIVISION P. O. BOX 456, RIVER ROAD, BURLINGTON, NEW JERSEY 08016, PHONE (609) 499-2300 March 12, 1979 Shell Chemical Company 600 Summer Street Stamford, Conn. 06901 Attn: Mr. D.P. Jones Gentlemen: Please find enclosed two (2) signed copies of our VCM Conversion Agreements dated 7-24-78 and amended per your letter of 9-27-78.When they are countersigned please return one (1) copy for our files. I have also included our P/O #98-56116 for our 1979 requirements. Please thank the members of your organization for your patience and understanding in completing these negotiations. Very truly yours, HHK/djt Herbert H.Kaster Division Materials Manager OXY/HOLMES 000958 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS The Vinyl Institute NEWS Wayne Interchange Plaza II. 155 Route 46 West, Wayne, New Jersey 07470 Contact: Nora Jacobs Edward Howard & Co, (216)781-2400 For Immediate Release OCCXIXMEAL AGAIN RECOGNIZED FOR ENVIRONMENTAL PERFORMANCE WAXNE, New Jersey, June 3, 1988 -- For the second year in a row. Occidental Chenical Corporation's plants in Burlington, New Jersey have been cited for superior performance in the area of environmental health by the Vinyl Institute, a national trade association representing the leading manufacturers of IVC (polyvinyl chloride, or vinyl), VCM (vinyl chloride monomer) and PVC modifiers and additives. Occidental received the Institute's annual environmental achievenent award, designed to measure a plant's ability to control and minimize VCM emissions. The award is modeled on the O.S. Environmental Protection Agency's National Emission Standard for Hazardous Air Pollutants. The best score possible is 100. Occidental received a score of 100 for its Burlington operations, where IVC is produced. Another Occidental Chemical IVC plant, located in Addis, Louisiana, also received an award fran the Vinyl Institute for its envirormental performance, as did a plant in Deer Park, Texas, which manufactures VCM and EDC (ethylene dichloride), feedstocks used in the IVC production process. (more) The Vinyl Institute, A Division of The Society ol the Plastics Industry OXY/HOLMES 000959 -2Occidental representatives received the awards at the Vinyl Institute's annual meeting on May 12. The company was one of seven recognized by the association for environmental achievement in 1987. IVC, or vinyl, is the world's second largest selling plastic material. It is used in numerous industrial and consumer products including pipe, wire and cable jacketing and insulation, house siding, window frames, wall and floor coverings, medical devices and various types of rigid and flexible packaging. ### OXY/HOLMES 000960 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS 480.34 corporation^ Polyvinyl Chloride (PVC) 1986- OXY/HOLMES 000961 hooker June 15, 1976 H. Raster Mgr. - Materials Mgmt Ruco Division Burlington VCM - SHELL CHEMICAL As per our conversations, attached is an executed copy of the Shell contract with a package dated 12/8/75 with updated revisions. Shell confirms their shutdown as of 6/21/76 and also their hopes to limit outage period to 10 days. Ruco's requirements have been plugged in as 15MM lbs. in June and 12MM lbs. in July and Shell anticipates no difficulty in satisfying them. May even ship from Houston if necessary although they are not bound by contract to do so. Insofar as optional quantities for 1977 Ruco must notify Shell prior to July 1. The contract provides you with a Min.-Max. range of 177-209 MM lbs. and with the +5% provision you could nominate 209MM lbs. for your 1977 requirement and Shell could be called upon to supply 219MM lbs. Your probably take at Burlington would not exceed 180MM so this would give you nearly 40MM for conversions. Bear in mind that under the current arrangement one half of shortfall incurred in 1977 could be deducted from 1978 Min.-Max. ranges. In regard to 1978 VCM supply I strongly recommend that we let July 1, 1976 pass with no formal notification to Shell of termination which automatically extends the contract through 1978. Shell has no intention to terminate at end of 1977. This will still give us an opportunity to pursue alternatives such as a Conoco, Diamond Shamrock, Dow etc. and I believe would actually tie in better with these companies expansion plans. N. M. Barber Mgr. - Raw Materials /jci cc: W. J. Wetzel OXY/HOLMES 000962 SHELL CHEMICAL COMPANY A DIVISION OF SHELL OIL COMPANY ONE SHELL PLAZA P.O. BOX 2463 HOUSTON. TEXAS 77001 July 9, 1975 KtCtiVfcU x REGISTERED MAIL RETURN RECEIPT REQUESTED Hooker Chemical Corporation 345 Third Street Niagara Falls, NY 14302 Attention: Mr. W. E. Sholl, Vice President, Purchasing Vinyl Chloride Monomer Gentlemen: Confirming discussions between our companies, we attach to this letter proposed changes to our Agreement dated October 24, 1974. We believe you will find these changes acceptable and consistent with the intent reviewed during previous discussions. If you are in agreement with the enclosed changes, please so indicate your acceptance by signing and returning to us an enclosed copy of this letter and the attachment for our files. Very truly yours Enclosure Agreed and Accepted Date: ____________ By: _______ - Hooker Chemical Corp. Title: General Manage Chemical Sales OXY/HOLMES 000963 Hooker Chemical Corporation cc: Mr. David A. Blumfield Vice President General Manager Hooker Chemicals & Plastics Corp. Ruco Division P. 0. Box 456 Burlington, New Jersey 08016 Mr. D. P. Jones Shell Chemical Co. 600 Summer St. Stamford, Connecticut 06902 2 OXY/HOLMES 000964 */ j hooker December 8, 1975 W E Sholl C D Carley SUBJECT: Vinyl Chloride Monomer Shell Contract Revisions Attached are Shell's proposed revisions in the Vinyl Chloride Monomer contract. The important change is the removal of the 0.75/pound penalty for undertake and its replacement with a new Paragraph 4.4 which in effect provides that the base quantity for 1977 will be reduced by 50% of any shortfall from the 1976 Nominated Quantity (172MM pounds less 5% or 163.4MM pounds). Ruco strongly favors this approach and our International Division will not need coverage for VCM under the Ruco contract as Mayurnik now sees the situation. A brief review of each proposed change follows. 1. Paragraph 3.3: Changes notification of quantity required from 6 months to 9 months. 2. Add 3.3.1: States formula for revising base quantity as 50% of short fall in a given year. 3. Paragraph 3.4: Reflects floating adjusted base. Still gives Hooker first option on additional 60MM pounds in 1978. 4. Paragraph 3.4.1: Optional quantities for 1976 and 1977 have been removed. Realistically our first need for optional quantities will occur, if at all, in 1978. OK with Ruco. 5. Paragraph 3.5: Delete; optional quantities out for 1977. 6. Paragraph 4.4: Removes 0.75</pound penalty for shortfall. 7. 8 & 9: Appendix 1, Pages 1, 2, & 3: Defines more clearly the escalations that shall apply to optional quantity fee for 1978. All other Shell customers have gone along with the new approach of no penalty and the adjustment by 50% of any shortfall on the succeeding years range. These quantities of VCM are placed in a pool by Shell and offered to existing contract customers prior to any offers to new customers. In view of Ruco's approval and International's analysis of their situations, I recommend we sign the amendment. The penalty under the old contract would have worked out to $260,000 for 1975 if invoked (0.75< x 37MM pounds). N M Barber Manager of Procurement Raw Materials & Containers fl attachment OXY/HOLMES 000965 Changes to Agreement dated October 24, 1974 by and between Shell Chemical Company and Hooker Chemicals & Plastics Corp. 1. Paragraph 33 Delete and replace with the following: Hooker shall give written notice to Shell not less than nine (9) months prior to each calendar year hereof as to the quantity of VCM it estimates it will require to be converted by Shell during that calendar year within the range of the calendar year minimum and maximum amounts as specified in this Agreement. Subject to the minimum and maximum quantities stated in Paragraph 3.2 Hooker shall be required to receive not less than ninety-five (95) percent of the estimated calendar year quantity and Shell shall be required to deliver not more than one hundred five (105) percent of the estimated calendar year quantity in each calendar year covered by this Agreement, unless Shell shall agree in writing to deliver a greater or lesser quantity ordered by Hooker. If in any year Hooker requires and Shell agrees to convert hereunder amounts of liquid chlorine into VCM in excess of the calendar year maximum stated in Paragraph 3.2, then said calendar year maximum and minimum shall be of no further effect for such year and that amount requested by Hooker and agreed to by Shell shall be considered a commitment for such calendar year, and during that year Hooker shall be required to receive not less than 95% and Shell shall be required to deliver hot more than 105% of such commitment. 2. Add Paragraph 3-3.1 In the event that in any calendar year Hooker fails to accept the required minimum quantity of VCM as specified in Paragraph 3.2 (as the same may be reduced under the provisions of Paragraph 9 or modified in accordance with the provisions of Paragraphs 3.3 or 3.4), the minimum and maximum quantities deliverable to Hooker by Shell hereunder shall be reduced by a quantity equal to one half of the difference between the number of pounds actually accepted by Hooker during such calendar year and the required minimum quantity, for all subsequent years of this agreement. As a basis for determining the quantity received by Hooker in 1975, Shell will use the number of pounds actually shipped during such calendar year including 7,000,000 pounds of VCM paid for in 1974 and shipped in 1975- 3- Paragraph 34 Delete and replace v:ith the following: If this agreement continues subsequent to the calendar year 1977, Shell hereby extends to Hooker a right of first refusal to increase the minimum and maximum quantities of VCM then in effect by 60,000,000 lbs. for each calendar year the same continues in effect subject to Paragraphs 3-2, 3-3, 3-3.1 and 9- OXY/HOLMES 000966 2 To exercise this right of first refusal. Hooker must give Shell written notice prior to January 1, 1977 or the same shall automatically expire for all subsequent years of this Agreement. Paragraph 3.^.1 Delete and replace with the following: Shell will specify a conversion fee for the 1978 optional quantity before November 30, 1977. If the "Specified Fee" is not accepted by Hooker before December 15 1977 then the Hooker right of first refusal on the 60,000,000 lbs. optional quantity for 1978 and all subsequent years of this agreement shall be of no further force or effect and the applicable quantities of VCM shall revert to those designated in Paragraph 3-2. The "Specified Fee" or any other fee for the 1978 optional quantity subsequently in effect hereunder shall be subject to increase or decrease any time after it has been in effect for ninety (90) days by Shell giving Hooker at least thirty (30) days prior written notice. Shell warrants that until January 1, 1979 any such increase or decrease in the "Specified Fee" for the optional quantities of VCM provided hereunder will be determined according to the following formula: Optional Quantity Fee = SF+0.0061(A-A2)+0.001U(B-B2)+0.0032(C-C2)+D where the terms used in the formula have the following definitions: SF = Specified Fee as set forth in Paragraph 3-^.1 A = Crude Oil Price in Cents per Barrel B = Average Labor Rate in Cents per hour C = Commodity Index Number D = Extraordinary Costs in Cents per Pounds of VCM These terms are defined more specifically in Appendix I attached hereto and made a part hereof, B2 and C2 are the base numbers as more specifically defined in Appendix from which the Optional Quantity Fee shall be computed. 5. Paragraph 3.5 Delete. 6. Paragraph U.4 Delete and replace with the following: Payment for VCM shall be made to Shell within thirty (30) days from the date of Shell's invoice for VCM delivered to Hooker or to Hooker's order. OXY/HOLMES 000967 3 7- Appendix I, Page 1 Delete and replace with the following: "A" shall equal the volumetric average delivered cost of the crude oils, condensates, natural gas liquids, and natural gas used as a raw material and processing and blend stocks which are recorded as intakes to Shell's refineries expressed in cents per barrel where the "current period" shall be the preceding months of September and October for the calendar quarter commencing January 1st, December-January for the calendar quarter commencing April 1st, March-April for the calendar quarter commencing July 1st and June-July for the calendar quarter commencing October 1st. "A.^" is the volumetric average delivered cost for the fourth calendar quarter of 1973 and is 563 cents per barrel. "A^" is the volumetric average delivered value determined and entered as "A" during the months September-October 1977 for the determination of the Optional Quantity Fee to be effective January 1, 1978. These values, in addition to those determined pursuant to "D" as hereinafter described, are considered to be proprietary to Shell and, therefore, the values are not to be revealed to others by Hooker. 8. Appendix I, Page 2 Delete and replace with the following: B shall equal the arithmetical average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, reported for the "current period" (as identified below) by the United States Bureau of Labor Statistics in Table C-2 in the publication, "Employment and Earnings". B^ shall be the arithmetical average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, reported for the period October, November, December, 1973 and is 50.1 cents per hour. The "current period" shall be the preceeding months of DecemberFebruary (inclusive) for the calendar quarter commencing July 1st, March-May (inclusive) for the calendar quarter commencing October 1st, June-August (inclusive) for the calendar quarter commencing January 1st and SeptemberNovember (inclusive) for the calendar quarter commencing April 1st. B2 shall be the arithmetic average, expressed in cents per hour, of the "average hourly earnings", Industrial Chemicals, entered as B above for the "current period" for the determination of the Optional Quantity Fee to be effective January 1, 1978. OXY/HOLMES 000968 k Should the method of computing the hourly earnings referred to herein be changed, or should publication of same be discontinued or substan tially delayed, the parties hereto shall agree upon the use of another similar labor rate compilation and shall adjust the Labor Rate Base to conform to the calculation method of the new compilation. 9- Appendix I, Page 3 Delete and replace with the following. C shall equal the arithmetical averages of the latest final Whole sale Commodity Price Indices for Industrial Commodities reported for the "current period" (as identified below) by the United States Bureau of Labor Statistics in the publication "Wholesale Prices and Price Indices". C^ shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Commodities reported for the "base period" (as identified below) in the above-mentioned publication and table. The "current period" and the "base period" shall include the iden tical months specified under "Labor Rates" for calculation of B and above. The base period index (D^) is 133.1*. shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Commodities entered as C for the "current period" for the determination of the Optional Quantity Fee to be effective January 1, 1978. Should the method of computing the Wholesale Commodity Price Index referred to herein be changed, or should publication of same be discontinued or substantially delayed, the parties hereto shall agree upon the use of another similar index and shall adjust the Wholesale Commodity Price Index Base to conform to the calculation method of the new index selected. If a new reference base is established, the Wholesale Commodity Price Index Base should be converted to the new base by factors published by the Bureau of Labor Statistics. If the weighting structure is revised, the unofficial index will be used until the official index is released. AGREED AND ACCEPTED DATE BY: __________ _________ Hooker Chemical Corporation TITLE: OXY/HOLMES 000969 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS CONFIDENTIAL fJr - '-/o f AGREEMENT THIS IS AN AGREEMENT, dated and effective //*>jr/7</T piS October 24, 1974 by and between SHELL CHEMICAL COMPANY, a division of SHELL OIL COMPANY, a Delaware Corporation, having an office at One Shell Plaza, P. 0. Box 2463 Houston, Texas 77001 (hereinafter referred to as "Shell"), and HOOKER CHEMICALS & PLASTICS CORP., a subsidiary of Occidental Petroleum Corporation, a California Corporation, having an office at 345 Third Street, Niagara Falls, New York 14302 (hereinafter referred to as "Hooker"). WHEREAS, Shell and Hooker have entered into a previous Agreement dated January 24, 1973 for the sale by Shell to Hooker of Vinyl Chloride Monomer (hereinafter referred to as "VCM") during the year 1974 and for the conversion by Shell of Hooker's chlorine to VCM subsequently for delivery to Hooker; and WHEREAS, Shell and Hooker each recognize that the costs of VCM manufacture are increased substantially from those contemplated when entering into said previous Agreement and that future costs for such manufacture are increasingly uncertain owing.to the uncertain costs of hydrocarbon supplies for feedstocks and power the escalation in costs for other raw materials, catalyst, utilities, power and labor, and the increased capital and oper ating costs required to meet Federal, State and Local Government environmental standards and operating requirements; and WHEREAS, Shell and Hooker each desire to provide for such price and fee changes as are realistic and necessary from time to time for Shell OXY/HOLMES 000970 (( 2 to maintain its VCM operations at a level of economic viability sufficient to enable Shell to provide for necessary raw materials and other resources so as to sustain the long-term continuity of VCM supply by Shell to Hooker; and WHEREAS, Shell and Hooker desire to maintain a mutually beneficial long-term Agreement for the conversion of Hooker chlorine into VCM by Shell and for which Hooker is prepared to expand its chlorine manufacturing capacity and for which Shell is prepared to provide VCM conversion capacity on a long-term basis from its VCM plant at Norco, Louisiana; NOW, THEREFORE; in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto, effective as of January 1, 1974, hereby agree as follows: WITNESSETH: 1. Term This Agreement shall be in effect for a primary period of four (4) calendar years beginning January 1, 1974 and ending on December 31, 1977, and from calendar year to calendar year thereafter, either party being able to terminate this Agreement effective at the end of the primary period or at any time thereafter, by giving the other party at least eighteen (18) months prior written notice. In the event either party exercises the right to terminate this Agreement on eighteen (18) months prior v/ritten notice effec tive at any time subsequent to the expiration date of-the primary period but not at the end of a calendar year, the rights and duties of the parties with respect to the year of termination shall be prorated in the proportion that OXY/HOLMES 000971 the number of days in the calendar year prior to the effective date of termination bear to the number of days in the calendar year. 2. 1974 Purchase 2.1 During the calendar year 1974 Shell shall sell and deliver and Hooker shall purchase and receive a minimum of 159,000,000 pounds and a maximum of 193,000,000 pounds of VCM FOB Shell's Plant. Hooker and Shell shall have the delegations and rights with regard to these quantities as set out in Paragraphs 3.2 and 3.3 hereof. The "Base Price" hereunder for the calendar year 1974 shall be 6.75 cents ($0.0675) per pound of VCM, FOB Shell's plant, for all auantities actually shipped. Notwithstanding the foregoing. Hooker shall pay Shell a price of 5.247 cents ($0.05247) per pound of VCM for so long as the Economic Stabilization Act and Regulations issued thereunder prohibit Shell from increasing same. 2.2 The "Base Price" set forth in Paragraph 2.1 above shall be subject to increase or decrease effective as of July 1, 1974 and as of October 1, 1974 by Shell giving Hooker at least thirty (30) days prior written notice. 3. Quantity - Conversion 3.1 During the term of this Agreement after the calendar year 1974 Hooker shall deliver liquid chlorine to Shell, to be held by Shell for Hooker's account and to be converted thereafter into such amounts of VCM as Hooker shall order at a conversion ratio of 0.64 pounds of chlorine to 1.0 pounds of VCM. OXY/HOLMES 000972 ( 4 3.2 During calendar years 1975, 1976 and 1977, Shell shall convert and deliver to Hooker and Hooker shall accept from Shell VCM in an amount not less than nor more (except with Shell's prior written approval) than the respective minimums and maximums set forth below, but not exceeding, except with Shell's prior written approval, one-tenth (1/10) of the applicable maxi mum calendar year quantity during any calendar month, or cumulatively one- sixth (1/6) of the applicable calendar year maximum in two (2) succeeding months. MAXIMUM - MINIMUM QUANTITIES OF VCM CONVERTED (LBS) PER CALENDAR YEAR Year Minimum Quantity Maximum Quantity 1975 160,000,000 196.000.000 1976 167,000,000 203.000.000 1977 177,000,000 209.000.000 3.3 Hooker shall give written notice to Shell not less than six (6) months prior to each calendar year hereof as to the quantity of VCM it estimates it will require to be converted and/or delivered by Shell during that calendar year within the range of the calendar year minimum and maximum amounts as specified in this Agreement. Subject to the minimum and maximum quantities stated in Paragraphs 2 and 3.2 Hooker shall be required to receive not less than ninety-five (95) percent of the estimated calendar year quantity and Shell shall be required to deliver not more than one hundred five (105) percent of the estimated calendar year quantity in each calendar year covered by this Agreement, unless Shell shall agree in writing to deliver a greater or lesser quantity ordered by Hooker. If in any year Hooker requires and Shell agrees to sell VCM or to convert hereunder amounts of liouid chlorine OXY/HOLMES 000973 (( 5 into VCM in excess of the calendar year maximum stated in Paragraph 2 or 3.2, then said calendar year maximum and minimum shall be of no further effect for such year and that amount requested by Hooker and agreed to by Shell shall be considered a commitment for such calendar year, and during that year Hooker shall be required to receive not less than 95% and Shell shall be required to deliver not more than 105% of such commitment. 3.4 Shell hereby extends to Hooker a right of first refusal to increase both the 1976 and 1977 quantities of VCM listed in Paragraph 3.2 to 210,000,000 pounds minimum and 260,000,000 pounds maximum per year. To exercise this right of first refusal. Hooker must give Shell written notice prior to July 1, 1975. If at any time prior to the exercise of this right by Hooker, Shell has an opportunity to utilize the conversion capacity represented by the quantities subject to this right of first refusal for sales to or for conversions for third parties, Shell shall notify Hooker to this effect in writing setting out the quantity involved and Hooker shall have three (3) months thereafter to exercise its right of first refusal to accept such quantities of VCM according to the terms hereof with delivery beginning 7 months following the date of Shell's notice. In the event Hooker elects not to accept such quantities of VCM, then Shell shall be relieved from any further obligation under this subsection. All of the foregoing relative to said right of first refusal shall be applicable only if, at the time Hooker gives written notice of its desire to exercise such right. Shell's projections indicate that it will have available to it at its Norco, Louisiana Plant, the raw materials needed to manufacture the increased quantities of VCM at costs no greater than for raw materials used to manufacture VCM not subject to this right OXY/HOLMES 000974 (( 6 for the same calendar years (1976 and 1977). If such costs of raw materials as may be available to Shell as are needed to manufacture the increased quantities of VCM exceed costs for raw materials not subject to this right. Hooker shall have the option to pay such increased costs and exercise said right of first refusal. Shell will promptly notify Hooker of any contrary indication upon receipt of Hooker's said notice, in which event such right of first refusal shall be inoperative and of no force or effect. Conversion fees for any optional amounts of VCM above the applicable maximum quantity in Paragraph 3.2 shall be determined in the following way: 3.4.1 Shell will specify a conversion fee for the 1976 optional quantity before November 30, 1975. If the "Specified Fee" is not accepted by Hooker before December 15, 1975, then the Hooker right of first refusal on these optional quantities for 1976 and 1977 shall be of no further force or effect and the applicable quantities of VCM shall revert to those designated in Paragraph 3.2. The "Specified Fee" or any other fee for the 1976 and 1977 optional quantity subsequently in effect hereunder shall be subject to increase or decrease any time after it has been in effect for ninety (90) days by Shell giving Hooker at least thirty (30) days prior written notice. Shell warrants that until January 1, 1978 any such increase or decrease in the "Specified Fee" for the optional quantities of VCM provided hereunder will be determined according to the following formula: Optional Quantity Fee = SF+0.0061(A-A2)+0.0014(B-B2)+0.0032(C-C2)+D where the terms used in the formula have the following definitions: SF = Specified Fee as set forth in Paragraph 3.4.1 A = Crude Oil Price in Cents per Barrel B = Average Labor Rate in Cents per Hour OXY/HOLMES 000975 (( 7 C = Commodity Index Number D = Extraordinary Costs in Cents per Pound of VCM These terms are defined more specifically in Appendix I attached hereto and made a part hereof. A^ and are the base numbers as more specifically defined in Appendix from which the Optional Quantity Fee shall be computed. 3.5 If this agreement shall continue subsequent to the calendar year 1977 in effect the optional quantities of VCM shall be the same as those applicable to the calendar year 1977. 4. Conversion Fees - Terms of Payment 4.1 The "Base Conversion Fee" hereunder shall be 5.25 cents ($0.0525) per pound, FOB Shell's plant, for all quantities of VCM as specified in Paragraph 3.2 hereunder which are actually shipped during the term hereof beginning with the calendar year 1975. The Base Conversion Fee shall be subject to increase or decrease January 1, 1975 and as of the first day of each succeeding calendar quarter in accordance with the premises hereof by Shell giving Hooker at least thirty (30) days prior written notice. Shell warrants that until January 1, 1978 any such increase or decrease in the Base Conversion Fee applicable to the conversion of chlorine supplied by Hooker into VCM as provided hereunder in quantities as determined pursuant to Paragraph 3.2 above will be determined according to the following formula: OXY/HOLMES 000976 ( \ ( Escalated Conversion Fee = BCF+0.0061(A-A1)+0.0014(B-B.j)+0.0032(C-C1)+D where the terms used in the formula have the following definitions: BCF = Base Conversion Fee as $et forth above A = Crude Oil Price in Cents per Barrel B = Average Labor Rate in Cents per Hour C = Commodity Index Number D = Extraordinary Costs in Cents per Pound of VCM These terms are defined more specifically in Appendix I attached hereto and made a part hereof. A^, B^ and C^ are the base numbers as more specifically defined in Appendix I from which the Escalated Conversion Fee shall be computed. 4.2 In the event Shell elects to continue the manufacture and marketing of commercial quantities of VCM subsequent to the calendar year 1977, the primary period shall extend to December 31, 1979 or for so long until December 31, 1979 as Shell may so elect and in such event Shell will, before December 31, 1975 or as soon thereafter as it may so reasonably determine, so notify Hooker and the parties hereto will begin negotiations in good faith and endeavor to reach agreement before July 1, 1976 on the basis for establishing conversion fees applicable to the calendar year 1978 and there after. In the event the parties do not reach agreement on the basis for establishing conversion fees for the calendar year 1978 and subsequently, this Agreement shall terminate December 31, 1977. 4.3 For any calendar year after 1974, if Hooker provides Shell satis factory written evidence of any offer from a domestic third party, made without OXY/HOLMES 000977 c( 9 disclosure by Hooker of Shell's applicable conversion fee, of a conversion fee applicable to the receipt by Hooker of at least 75 million pounds of VCM for such calendar year and said offered conversion fee is lower by more than 0.1 cents ($0,001) per pound of VCM in the basis of delivered cost FOB Hooker's plant than Shell's applicable conversion fee plus Hooker's delivery costs in effect for the same time period, then unless Shell elects within thirty (30) days and so advises Hooker in writing to meet such third party conversion fee offer for the quantities so offered, such quantities shall be deducted from the base quantities deliverable to Hooker by Shell hereunder for such calendar year. In the event Shell elects to meet such a competitive offer, it is agreed that no later offer of the same competitor or of the same parcel, made within twelve (12) months of the date of Shell's election, shall be considered to be a competitive offer. 4.4 Payment for VCM shall be made to Shell within thirty (30) days from the date of Shell's invoice for VCM delivered to Hooker or to Hooker's order. In the event that in any calendar year Hooker fails to accept the required minimum quantity of VCM as specified in Paragraphs 2 and 3.2 (as the same may be reduced under Paragraph 9), or as may be modified by Paragraphs 3.3, 3.4 or 3.5 Hooker shall pay Shell within 30 days after the beginning of the next calendar year the sum 0.75? multiplied by a figure equal to the differ ence between the number of pounds actually accepted by Hooker during such calendar year and the required minimum quantity, subject to the following conditions. After it has sold all of the VCM production capacity of its OXY/HOLMES 000978 (( 10 Norco, Louisiana and Houston, Texas Plants for such year, exclusive of Hooker's minimum quantity hereunder for that year. Shell shall use diligent efforts to sell that portion of such minimum quantity not accepted by Hooker; and Hooker will be allowed a credit against the amount due to Shell here under for such unaccepted quantity equal to the amount received by Shell from the sale of such quantity, or any part thereof, to the extent only, however, that the amount so received by Shell from any such sale exceeds Shell's actual cost of chlorine for production of the said quantity of VCM plus an amount determined by subtracting 0.7-5<t per pound from the amount Hooker would have paid Shell for such quantity of VCM had it accepted the same hereunder. Shell shall not be obligated, however, to sell VCM specified in the foregoing sentence at a price which, in Shell's sole judg ment, would b.e lower than fair market value and in no event shall Hooker be allowed a credit exceeding 0.75d per pound for sale by Shell of VCM not accepted by Hooker. It is expressly understood, however, that if during the term of this Agreement Shell supplies VCM produced at its Norco, Louisiana and Houston, Texas Plants to parties other than Hooker under contract requir ing such parties to take minimum annual quantities of VCM so produced, any sales by Shell of minimum quantities not accepted by Hooker and such other parties shall be attributed to such parties ratably for purpose of computing the above credit to Hooker. If for any reason other than provided for in Paragraph 9, Shell fails to deliver VCM up to the required maximum quantity as may be ordered by Hooker in accordance with provisions of this Agreement, Shell shall pay Hooker 0.75<t per pound for such undelivered VCM so ordered by Hooker. OXY/HOLMES 000979 ( n 5. Orders - Deliveries 5.1 Not less than ten (10) days prior to the beginning of each month hereof Hooker shall submit to Shell a notice setting out the quantity of VCM ordered for such month. 5.2 Shell has provided written notice indicating the availability of a connecting chlorine pipeline proposed by Shell hereunder. Therefore, Hooker will provide and maintain necessary facilities, including a pipeline to Hooker's Taft, Louisiana property line at Hooker's cost and expense to deliver such amounts of liquid chlorine as required to produce the appropriate quantity of VCM as specified hereunder. Shell proposes to transport such quantities of chlorine from Hooker's property line to Shell's Norco, Louisiana Plant in a proposed pipeline to be built and maintained at Shell's cost and expense. Hooker shall pay Shell on a monthly basis a reasonable pipeline charge for chlorine transported through Shell's pipeline and used for conversion to Hooker's VCM. Shell's pipeline charge will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing Shell's pipeline and on operating costs both prorated on the basis that Hooker's throughput of chlorine for conversion to Hooker's VCM bears to the total throughput of chlorine through the line provided, however, that such pipeline charge shall not exceed Hooker's equivalent rail cost for movement of chlorine in Hooker's 90 ton rail cars from Hooker's Taft, Louisiana Plant to Shell's Norco, Louisiana Plant. The weight of chlorine delivered by pipeline for conversion to VCM hereunder shall be determined by Hooker's weigh tanks or by other means as may be mutually acceptable. Should Governmental restrictions prevent installation or usage of such pipeline for chlorine transportation, then Hooker shall deliver, at Hooker's expense, the aforementioned chlorine to Shell's OXY/HOLMES 000980 (( 12 Norco, Louisiana Plant by 90 ton rail cars or other means agreeable to both parties. In the event Shell does not have the pipeline available for delivery of chlorine by January 1, 1975 Hopker shall use its best efforts to commence deliveries by 55 and/or 90 ton tank cars at Hooker's expense for so long as said pipeline is not available. Shell shall provide suitable facilities for receipt of such chlorine at the locations described herein. The weight of chlorine, delivered into Shell's facilities by tank car suffi cient to satisfy the conversion ratio stated hereunder, shall be determined as specified in Exhibit C. 5.3 Shell shall deliver all VCM converted (or sold) hereunder FOB Shell's Norco, Louisiana Plant into Hooker's tank cars, of a capacity to be mutually agreed upon. The quantity or weight of VCM delivered into Hooker's tank cars shall be determined by railroad weight scales and certi fied weigh tickets shall be supplied for verification. In the event Hooker elects to verify Shell's measurements of the quantity of VCM delivered here under and differences in excess of 1% are uncovered in any car, such excess overages or shortages, if substantiated, shall be subject to billing adjust ments. Tank Car "heel" allowance for VCM shall be computed on the basis of the standard factor at 5 psig of three (3) pounds per 100 gallons of car capacity provided such tank cars are made available to Shell with a VCM pressure of between five (5) and ten (10) psig prior to loading. OXY/HOLMES 000981 13 6. GOVERNMENTAL CHARGES All new and increased domestic or foreign taxes and other govern mental charges other than those based on income, which are imposed after December 31, 1973 on VCM, or on the feedstocks or process materials used to produce the VCM, or on Shell (including without limitation its VCM manufacturing facilities), or required to be paid or collected by Shell by reason of the sale, production, conversion, transportation, or delivery of the VCM hereunder, shall be paid to Shell by Hooker in addition to the prices and conversion fees herein specified and within fifteen (15) days after receipt of Shell's statement. 7. Title Title to all chlorine delivered to Shell and held by Shell for Hooker's account and all VCM converted hereunder shall be and remain in Hooker, but Shell shall have the right to commingle the same with its own chlorine and VCM or with that held by Shell for a third party. Responsibility for all losses or damage of the chlorine delivered hereunder shall be in Shell after receipt of the same by it in Shell's facilities as stated herein, except where the same arises out of the negligence of Hooker. Responsibility for all losses or damage of the VCM converted (or sold) hereunder shall be in Shell until the same is delivered to Hooker into tank cars as provided for hereunder except where the same arises out of the negligence of Hooker. OXY/HOLMES 000982 (( 14 Any chlorine required for conversion in excess of the conversion ratio shall be supplied by Shell at no cost to Hooker. Title to any chlorine remaining in storage at the end of any calendar year because of conversion efficiencies shall transfer to Shell. 8. Liabilities - Claim Hooker warrants that the chlorine delivered hereunder and Shell warrants the VCM converted (or sold) hereunder will meet the specifications set forth respectively in Exhibit A and Exhibit B, but Shell and Hooker make NO OTHER WARRANTIES hereunder, WHETHER ON MERCHANTABILITY, FITNESS OR OTHER WISE AND NONE SHALL BE IMPLIED. Hooker shall accept Shell's analysis of VCM converted or sold hereunder as determined on the contents of Shell's storage spheres prior to delivery to Hooker and Hooker shall accept Shell's Certifi cate of Analysis therefor as representative of the quality of the VCM delivered hereunder with respect to meeting the specifications warranted. Responsibility for all claims arising directly or indirectly out of the chlorine delivered hereunder shall be in Shell during unloading and discharge and after receipt of the same by Shell in its facilities as stated herein, except where the same arises out of the negligence of Hooker. Responsibility for all claims arising directly or indirectly out of the VCM converted (or sold) hereunder shall be in Shell until the same is delivered to Hooker into tank cars as provided for hereunder, except i where the same arises out of the negligence of Hooker. OXY/HOLMES 000983 15 Shell shall have no liability for, and Hooker shall indemnify Shell against all claims, loss liability and expense on account of, any injury or death of persons (including Hooker's employees) or damage to property (including Hooker's) caused by or happening in connection with Hooker's unloading, storage, handling or use of the VCM delivered hereunder, unless due to negligence of Shell, its agents or employees in the manufacture or loading of the product, or defects in the tank cars furnished for trans portation of the product. Hooker shall have no liability for, and Shell shall indemnify Hooker against all claims, loss liability and expense on account of, any injury or death of persons (including Shell's employees) or damage to prop erty (including Shell's) caused by or happening in connection with Shell's receiving, unloading, transporting, storage, handling, or use of chlorine delivered hereunder, unless due to negligence of Hooker, its agents or employees, in the manufacture or handling of the product or facilities for transportation of the product. Neither Shell nor Hooker shall have any liability to the other for any claims arising directly or indirectly out of or in connection with this Agreement, unless the claimant gives the other party notice of the claim (setting forth fully the facts on which it is based) within sixty (60) days after the date of discovery, or other transaction or occurrence giving rise to the claim. Claims shall in any case be limited to the value of VCM or chlorine as appropriate where for such purpose the value of VCM shall be assumed as if comprised of the conversion fee applicable plus 0.64 multiplied by the value of chlorine and the value of chlorine shall be taken OXY/HOLMES 000984 (( 16 as Hooker's average selling price for bulk chlorine sold under long-term contract for delivery from Hooker's Taft, Louisiana chemical plant; and neither party shall ever be liable for any indirect, special or consequential damages. 9. Excuses for Non-Performance Either Shell or Hooker shall be excused from its obligations here under when and to the extent that performance is delayed, impaired, or prevented (a) by any circumstances (except financial) reasonably beyond its control, or (b) by fire, explosion, breakdown in machinery or equipment, plant shutdown, or failure of catalyst, or riots, strikes, labor disputes, voluntary or involuntary compliance with any law, order, regulation, recommen dation, or request of any governmental authority, (including, without limita tion, those relating to economic stabilization or product allocation), or total or partial failure of the usual means of transportation of chlorine, ethylene, dichloroethane or VCM, or inability or delay in obtaining all or any part of the feedstocks or process materials used in the manufacture of VCM from Shell's earlier planned or established internal or third party sources of supply. As used herein, "labor dispute" means any controversy to which either Shell or Hooker has an interest, involving wages, hours or work ing conditions and includes any strike, picketing, lockout, suspension of construction or any other action taken in connection with or because of the labor dispute. Neither Shell nor Hooker shall have any obligation to partic ipate in any settlement of a labor dispute, or to request its agents or con tractors to do so except where the same is acceptable to such party in its OXY/HOLMES 000985 (( 17 sole judgment. The quantities of VCM consequently undelivered as a result of causes excused hereunder shall not be required to be made up by Shell or Hooker upon resumption of full deliveries of VCM hereunder and such VCM quantities shall be deducted from the obligated quantities applicable to the then calendar year. In the event that Shell is excused from delivering any quantity of VCM due to any of the causes specified above. Shell shall have the right to apportion, solely according to Shell's judgment,-the productive capacity being utilized to include Hooker, and Shell shall have no obliga tion in the event of any excused causes specified above to purchase VCM to perform hereunder or to purchase feedstocks or process materials from sources not previously established or to utilize any internal sources of supply of the same to perform hereunder. If Shell's performance is excused hereunder due to inability to obtain feedstocks or process materials used in the manufacture of VCM from Shell's earlier planned or established sources. Shell shall use diligent efforts to obtain such feedstocks or process materials from other than earlier planned or established sources but fees hereunder shall be adjusted to reflect any increase in cost to Shell. If Shell is unable to obtain such feedstocks. Hooker, at its option, on reasonable notice and at Hooker's cost may provide such feedstocks to Shell by mutually agreeable delivery methods and Shell shall convert VCM from such feedstocks provided by Hooker for delivery to Hooker for so long as Shell's excused performance continues hereunder but fees shall be adjusted to reflect the corresponding decrease in cost of feedstocks to Shell. OXY/HOLMES 000986 ( 18 Should excused deliveries of VCM or chlorine hereunder continue for a period in excess of one hundred twenty (120) days, the party whose performance is not excused during this period may cancel this Agreement effective sixty (60) days after written notice given following expiration of the aforesaid one hundred twenty (120) day period, provided that deliv eries have not resumed at a rate corresponding to the minimum required by this Agreement before expiration of such sixty (60) days. 10. Assignability Neither this Agreement nor any claim arising directly or indirectly out of or in connection therewith shall be assignable by either party or by operation of law without the written consent of the other party, which consent shall not be unreasonably withheld, except that either party may assign its rights hereunder, subject to the obligation thereof, to any successor of substantially all of its business assets pertaining to VCM or chlorine pro duction or the use thereof as a raw material, as applicable. 11. Remedies In the event of any breach by either.party of any of the provisions of this Agreement, the other party shall have the right in addition to any other rights or remedies it may have to suspend or refuse deliveries here under and/or to terminate this Agreement by notice to the defaulting party effective as of the date of such notice. Either party's right to require strict performance of the obligation of the other shall not be affected in any way by any previous waiver, forebearance or course of dealing. OXY/HOLMES 000987 ( 19 12. Notices All notices or demands under this Agreement, whether required by the terms hereof or otherwise, shall be in writing and shall be delivered or mailed by certified or registered mail, return receipt requested, to the following addresses of the parties or to such other addresses as may be hereafter designated in writing by the respective parties: If to Hooker: Hooker Chemical Corporation 345 Third Street Niagara Falls, New York 14302 If to Shell: Shell Chemical Company A Division of Shell Oil Company P. 0. Box 2463 One Shell Plaza Houston, Texas 77001 Attention Manager Chemical Intermediates "13. Laws Governing Contract This Agreement shall be governed under the laws of the State of New York. 14. Entirety - Execution This Agreement comprises the entire Agreement and merges and super sedes all prior agreements, understandings and representations (oral or written) between Shell and Hooker concerning the subject matter hereof, including specifically said previous Agreement of January 24, 1973. Neither this Agreement nor any subsequent Agreement amending or supplementing this Agreement shall be binding on Shell or Hooker unless and until it has been OXY/HOLMES 000988 VV 20 signed on Shell's or Hooker's behalf by a duly authorized representative, and commencement of performance hereunder or under any such subsequent Agreement shall not constitute a waiver of this requirement. IN WITNESS WHEREOF, the parties hereto have signed this Agreement in duplicate as of the day and date first written above. SHELL CHEMICAL COMPANY A Division of Shell Oil Company HOOKER CHEMICALS & PLASTICS CORP. By OXY/HOLMES 000989 EXHIBIT A CHLORINE SPECIFICATIONS Chlorine Chlorinated Compounds Non-Volatile Matter Water Bromine 99.5% Volume 1,000 ppm max. 100 ppm max. 30 ppm max. 100 ppm max. OXY/HOLMES 000990 ( EXHIBIT B SPECIFICATIONS FOR VINYL CHLORIDE SPECIFICATIONS Acetylene, mol ppm Acetaldehyde, mol ppm Butadiene, mol ppm Water, weight ppm Acidity (as HC1), weight ppm Non-Volatiles, weight ppm Iron, weight ppm Color Appearance Stabilizer MAXIMUM 3.0 5:0 10.0 100.0 2.0 200.0 0.5 Colorless Clear and free from suspended matter None added OXY/HOLMES 000991 (( EXHIBIT C Measurements of the net quantity of chlorine shipped to Shell in tank cars shall be made using railroad type weigh scales. The type of scales and their calibration and use in weighing shall conform to require ments as set forth in the National Bureau of Standards in N.B.S. Handbook 44, the latest edition, or a maintenance measuring tolerance of +0.2% of true weight. The weigh scale used shall be the stationary weighing type for weighing cars at rest. The weigh scale weight capacity and weighing plat form length shall enable weighing cars in a single weighing or draft. Cars to be weighed shall be uncoupled from any other railroad equipment when placed on the scale for weighing. The weigh scale shall be calibrated monthly. Shell representatives shall have the privilege of witnessing each weigh scale calibration in addition to the routine weighing of cars. The supplier shall furnish copies of documents that will establish that calibration test weight cars are certi fied by N.B.S. weigh scales. Documents shall also be furnished for evidence and the integrity of all calibration and maintenance work. Copies of N.B.S. certificates shall be furnished by the supplier to Shell for all test weight cars used for weigh scale calibration. Weigh scale calibration shall include using N.B.S. certified weights for 100% of maximum gross weight of cars loaded with chlorine. Weigh scale repeatability shall be determined from three successive weight measurements of a test weight for 100% of the range of measurement. The weighing procedure used, including test weight car placement, re-zeroing OXY/HOLMES 000992 (( of scales, etc., shall be based upon N.B.S. Handbook 44 and should be included in written procedures to be furnished by the supplier for the mutual use of the supplier and Shell in all calibration ,and routine weighing. The weigh scale repeatability shall not exceed the minimum weigh scale indicated weight graduation. Shell shall have the privilege of witnessing or requesting that routine spot checks be made by the supplier of the weigh scale performance by determining the weigh scale repeatability by successively weighing a selected car loaded with chlorine three separate times. Security measures shall include the use of serially numbered security seals. Seals shall be provided to assure that the integrity of measurement is assured by prevention of unauthorized tampering or adjustment of any weigh scale mechanism following its calibration. Sealing devices shall be installed after each weigh scale calibration and this action witnessed by a Shell representative. The supplier shall record all seal serial numbers and Shell shall be contacted and advised whenever removal of a seal is necessary. Verification of seal serial numbers shall be done and witnessed by Shell prior to that removal for weigh scale maintenance and calibration. The number and location of all seals shall be mutually agreed upon by the supplier and Shell to assure realizing adequate security. The tare or light weight of each car to be loaded is to be measured immediately before loading with chlorine. A weigh document for each loaded car shall be furnished to Shell which shall include the time of day, date, weight, weigher and car number for the tare and gross weight. Car seal numbers shall be recorded for the gross weight. In each weighing, the weigh scales shall be re-zeroed before the car to be weighed is placed on the scales. OXY/HOLMES 000993 (( APPENDIX I PAGE 1 A, A,1 AND AZ,,T CRUDE OIL PRICE "A" shall equal the volumetric average delivered cost of the crude oils, condensates, natural gas liquids, and natural gas used as a raw material and processing and blend stocks which are recorded as intakes to Shell's refineries expressed in cents per barrel'where the "current period" shall be the preceding months of September and October for the calendar quarter commencing January 1st, December-January for the calendar quarter commencing April 1st, March-April for the calendar quarter commencing July 1st and June-July for the calendar quarter commencing October 1st. "A-j" is the volumetric average delivered cost for the fourth calendar quarter of 1973 and is 5,63 cents per barrel. 'TL," is the volumetric average delivered value determined and entered as "A" during the months SeptemberOctober 1975 for the determination of the escalated conversion fee to be effective January 1, 1976. These values, in addition to those determined pursuant to "D" as hereinafter described, are considered to be proprietary to Shell and, therefore, the values are not to be revealed to others by Hooker. OXY/HOLMES 000994 APPENDIX I PAGE 2 B, B1 AND LABOR RATES B shall equal the arithmetical average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, reported for the "current period" (as identified below) by the United States Bureau of Labor Statistics in Table C-2 in the publication, "Employment and Earnings". Bj shall be the arithmetical average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, reported for the period October, November, December, 1973 and is 511 cents per hour. The "current period" shall be the preceding months of DecemberFebruary (inclusive) for the calendar quarter commencing July 1st, March-Hay (inclusive) for the calendar quarter commencing October 1st, June-August (inclusive) for the calendar quarter commencing January 1st and SeptemberNovember (inclusive) for the calendar quarter commencing April 1st. B^ shall be the arithmetic average, expressed in cents per hour, of the "average hourly earnings". Industrial Chemicals, entered as B above during the fourth quarter 1975 for the determination of the Escalated Conversion Fee to be effective January 1, 1976. Should the method of computing the hourly earnings referred to herein be changed, or should publication of same be discontinued or substan tially delayed, the parties hereto shall agree upon the use of another similar labor rate compilation and shall adjust the Labor Rate Base to conform to the calculation method of the new compilation. OXY/HOLMES 000995 (( APPENDIX I PAGE 3 C. C.i AND Cr,,r COMMODITY INDICES C shall equal the arithmetical averages of the latest final Wholesale Commodity Price Indices for Industrial Commodities reported for the "current period" (as identified below) by the United States Bureau of Labor Statistics in the publication "Wholesale Prices and Price Indices". C.j shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Commodities reported for the "base period" (as identified below) in the above-mentioned publication and table. The "current period" and the "base period" shall include the iden tical months specified under "Labor Rates" for calculation of B and B-j above. The base period index (C^) is 133.4. shall be the arithmetical average of the final Wholesale Commodity Price Indices for Industrial Commodities entered as C above during the fourth quarter 1975 for the determination of the Escalated Conversion Fee to be effective January 1, 1976. Should the method of computing the Wholesale Commodity Price Index referred to herein be changed, or should publication of same be discontinued or substantially delayed, the parties hereto shall agree upon the use of another similar index and shall adjust the Wholesale Commodity Price Index Base to conform to the calculation method of the new index selected. If a new reference base is established, the Wholesale Commodity Price Index Base shall be converted to the new base by factors published by the Bureau of Labor Statistics. If the weighting structure is revised, the unofficial index will be used until the official index is released. OXY/HOLMES 000996 APPENDIX I PAGE 4 D EXTRAORDINARY COSTS Shell and Hooker each recognize that, owing to the uncertanties in, but not limited to, future Federal, State and Local operation require ments and environmental standards, in new requirements to protect safety and health of employees and the public, and in figure equipment performance from corrosion and maintenance standpoints, it is impractical as of the date of this Agreement to establish a fixed formula for escalation of the Base Conversion Fee to cover these costs on an equitable basis for as many years into the future as the intended duration of this Agreement. Each party agrees, however, that it is their intent such extraordinary costs incurred by Shell after Way 1, 1974 shall be added to the Base Conversion Fee or applicable conversion fee described in Paragraph 4.1 based upon Shell's actual cost experience for the "current period" as specified under "Labor Rates" for calculation of B, B^ and above. Shell's extraordinary cost fee will be computed by Shell and be comprised of a reasonable capital charge based on costs for installing new equipment, if any, and on new opera ting costs, if any, both prorated on the basis that Hooker's VCM conversion quantities during the period for which Shell's extraordinary costs are being computed for purposes of fee adjustment bear to a total VCM production for the period involved at the facility from which Hooker is receiving OXY/HOLMES 000997 /A r ( ( deliveries of VCM as provided hereunder. Costs will not be considered extraordinary unless they exceed $350,000 for the productive capacity being utilized to include Hooker. Shell will give Hooker such advance notice of its non-binding best estimate of such extraordinary costs as soon as reasonably possible, but increases attributed to actual extraordinary costs as computed above will not be effective until notice of such increase is given pursuant to Paragraphs-3.4.1 and 4.1 hereunder. Decisions as to the necessity and type of such extraordinary costs shall reside solely with Shell. OXY/HOLMES 000998 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS .`nfatiPSi SRTERCSAVIGCDH. TtobSpaILclLlaOtoFecLtoAtoDtftaINabGaa-*SanHdOarRtftToiFneOMRaMO-fMttoOetTaaNSGOTIA^StoLaf--MO*fltatGrttNaA^L - o< - - ORIGINAL TO CONSIGNEE HEMICAL COMPANY HOfKER . ..- SHiPPtrS NO. PAGE 01 * OB : HCGRR-UTIX 37248 SHIPPING OAH [CG 7/23/78 > Lft H3H HELP IN EMERGENCIES _ ch as spill, leak, fire or exposure ^ .call toll-free, day or night, ^ ROUTE CODE ROUTE 9001 icffr 800 -424-9300 L> SEAL NO.'S ... NSLGNEO TO \ 9S-52S3S CaeifWMi of TrtaNftoratoYfvtorf a1 HOOKER CHES PLASTICS STEVENS STATION BURLINGTON MJ n*praenydHvMb Of OaCfeapM IfWNn), earner pang wemreooe torpiyiou tea oonRaci m maannq any penon or coinmn <p toe prooaty nMr toa Widi tgr ta carry to n ueuaf Mace of 0>*>i'i at mo aaatoi i. B wmuaay agreed. m * 03016 party ai any Brno if MO Bwly m waoiM---*----t-o- o- r any oefl aaort B or any property, boSowdrditatoo*naeorryyf aaaaaernrtvrrccoaru"tao t-OoaOpBeartdonramaaedn.iawndrwtottoo me ba lutoact to aB toa totna we e_c_r_t_o___aa_nma_e_l _to__a__IUHjnrwdeonnDe*bOwehwIcBScB9dQnN So d Lartng to* tortolllln Unoom rrotgm Qaaadcadon a oftoet on tooa* tola noroof, f tort ntf o a rai araier lapmard. or (2) at 1t-ou-d-to-Q--to-o-to- a"n t"oa"O-o-c-B"to*o-r-oo-f-.a-o-t-fon-r-oto-rit-no_rtooetofrtatottortooootaon^aatorloaomfrilayotontoaeorptrcroeotOoarrnritctetotronadbByBtno0aaooaafftmtooateataaorotoaobnaddnoaofootoeerdataotoBtoQedn.tlooofr- B Baa eoctfnaro awtowoM a Oai w, by npoar'a toed ar Into ootognet i totot. t la naa a M of FREIGHT TERMS COLLECT ---------------------------------------------- NO. * KIND PACKAGES TRUCKT TRAILER NUMRER SPLC . COOES w otscurnoNOFAXTICIES. S>KIALM**Ki"*NOExitrfKJNS- TRUCK/ GALLONS TRAILER _ CAPACITY OUTAGE AT LOADING OR T/C COMPT TEMP. LOADMG TMVZ\Z TEMP. *F U/GAL AT LOAD TEMP. GALLON CORA FACTOR "" ---- NET WEIGHT OR GALLONS AT 0# F GROSS WEIGHT (Subject to correction) ' C> .V f c C 1 T/C VINYL CHLORIDE - FLAMMABLE' 6AS.... ___ __ :___ PLACARDED FLAMMABLE GAS c LINE 01 26000 SAL VCfl C0NV.-HOOKER RUCO-2 BULK ' __ _____ ^ CA 32326 c c ESTIMATED GALLONS *.-r, MAX GROSS VT ON WHEELS NOT TO EXCEED SEAL N3RS 262,400 c r- ' ' '`':K^^?.TTEM?5S82t>*STi*82^-T0iCALVEirTs;'KT:;^|SSS5^ --.--- ------ -as -f-"---1--f^- ( xxxxxxpcwsxxss*v*. xxx53<Jta9&$o&cOi^ . S9Dopoo&ee$qQ$egc NOT SUBJECT TO 10T U2A. 3B^;g.^FS?fiIVfZStiTSXZisrsr * MAIL COPY WEIGHT TICKET TO 2CPIDA CASTRO GARY V ILKIE MAIL CERTIFICATE OF ANALYSIS TO CUST. cj XmMOTN8X2 C ER `r CAJ?/lDV&aEIGHT RETURN TO SHELL CHEM CO. jliL 28 >978 OXY/HOLMES 000999 . \j J- > -' '-r Li-.lvn L CG. ' RUC0 CIV.. n SMWttVi ^^SfKAlDXi^rtjC j yX Xk^i'chXtvcoL^ijiporX X Attirijoo(ciai,^cTVrt<^cA SHIPMENTS psi HAZARDOUS MATERIALS PLACARDS FURNISHED BT: VIA MOTOR SHIPPER CARRIER CARRIER aaOr--fordacW>adkortqfrhaprto>artyii f,rttonaocr*bl'atoadOytoali Bpirtoengiicaadato3>Cp*irP<>MnOwly^y dap^itorw on 2 ^>wrt ftoil uii nr tfton oenf h wq i ai rtiiii Hintooi irrtiiiRrtoin 2 TKa b to oartoy tnot toa afetoa ramad matarart w propart, Lrteartoj, daarrtoarl. paefcapad. martiad and lebrtad and arain Qiopar oortoHit for troraponadan -^v<0 to toa acodcaMa ragutodona of toa Dftoartowic of Ti `WC^DKER " CWITCrtC*ilL CHEMICAL C0MPAfll/ni#f9O b fd>iWY"^4^PVMPAiy. a DELIVERY RECEIPT-Rocoiv*d in good order C-. IW______ ^____/ / 7/s?Z-/2f SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS SHELLS CHEMICAl^COMPANY ?* ^REMITTANCE ADVICE A DIVISION OF SHELL Oil COMPANY ; i3ii,qap.rM-ny.imrnr4<ira ivos^eox HCKCM STkET STATION?' Erf YO^i^t MEW YORK.: 10244 NVOlCE 0AT DATE SHlTpfi?*1 PEOFROM *ctr , *=;* IN REMITTING REFER TOj ' -' ' ? FREIGHI: V^JNVOICE NO.' laii^B:^- i~ l^ws-cir TRANS. DST. CUSTOMER OfST. NUMBER city STATE JH5. 2_ Qfc606 050 UO*R CiitM i* LA ST ICS T EVE MS STATION *. UHL1MGTCM NJ - rtOUKcR Cue* t PuAillCS kuo civ PU 3 ill isUSLlftGTLM MJ WS Cr'* r:*i THAt T-: CO*pa*OD'I cS Wri* 05oCED in CC-mP;u;;C{ wT* al. a*i C*3'.! ?0'JiS:n*c**'S Os f:-* ** L;C> $7ANG*3Gi *CT T-Cic O* StCS t>. * AN'O ;r. AS a:*O*0. anO **Gl.'.a'<CnS a*o oC*S SSV;D r-fnC.;>nO *-0Sf SrC ' R5CT AU CORRESPONDENCE TO. PAY THIS | AMOUNT ! OXY/HOLMES 001000 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS HOOKER CHEMICAL CO. RAILROAD DRILL SLIP . NO. //-- / SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS VC CAR UNLOADING REPORT Car Number, flCFX ffoZH ^________ Date Unloaded 9~ ~^ffl-7/7 **** Air Mask Must Be Worn OPERATION 1. Brakes, chocks and derailers positioned**** Unloaded By-------------------Operator I 2. VC Unloading signs in position on tracks -0 ct 3. Transfer lines connected with ground straps placed 4. Sphere level before (inches) .. (Do not unload if sphere level is above 20 ft. in cold weather or IS ft. in warm weather Time Started GPM Reading (average) 07/0 /dTD ~f~ 5. Conditions met for vapor cycle a. Belly of car warm b. Pump Suction & Discharge Pressure equal c. Pressure when car switched over d. Time switched over (vapor) (Must be switched within 30 minutes of liquid transfer) e. Pressure when car finished and time f. Sphere Level when car is finished 'S3 0 7X.5 ___ 3_______ 24 6. Transfer lines removed. Plugs replaced. Hatch secured. 7. Signs turned around on four sides of car 8. Chocks and derailers removed & unloading siqns removed from tracks 9. Alarms or leaks i/. i/ */ 10. All valves in proper position. Car finished, and ready to move 11. Car moved to track No. 5 beyond derailer (and coupled to other car on track No. 5) and wheels blocked on last car 12. Car brakes are applied -irks - - 13. Derailer on track No. 5 positioned COMMENTS OXY/HOLMES 001002 ****When VC car to be unloaded is positioned, no other car may be in the area enclosed by the derailer SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS Il hooker B.A. purchase order RUCO D.v.s.o~ BU RUNGTON, N.J. 08016 RELEASE WHSE. RECEIVED AT RECEIVING REPORT 58325 HOPPER CAR fr REC ^blloH__ i)S UyA^iAj/LS,, , DELIVER to. I _____________________________ 1 1 II 1 1 1 1 1 t i i v-d. h j . ITEM NO. _L MATERUU. cooe 11 111 rrt!/Ls. ___________________________________ /u/r' QUANTITY # OF UNITS DESCRIPTION /li li i 1 1 V6 NET WGT. Nft* P/C p _____ L 1 1-1 1 _____ L i___ 1-1 .1.1 11 III l _____ Mill ti i -..J- 1 II 1 _____ L. 1 i _____ Mill 11 - II III _J______ _____ Mill 11 _____ L-l--LI 1 1 l-l II 1 _____ L._ 1 1 I III DELIVERING CARRIER l _____ Mill PRO. NO. 11 GROSS WGT. FREIGHT >8-20004 (10/74) p f. Nf) AMT. 3 COLL. PD. ACCOUNTS PAYABLE Pressure when car finished and time Sphere Level when car is finished 6. Transfer lines removed. Plugs replaced. Hatch secured. 7. Signs turned around on four sides of car 8. Chocks and derailers removed & unloading sians removed from tracks 9. Alarms or leaks DATE REC'D. MO. DAY YEAR fjan ns <& i^ECp, BY , < ^ -'/ -'***-> ----- 2----------- Oil c/ \/. i/ / 10. All valves in proper position. Car finished, and ready to move 11. Car moved to track No. 5 beyond derailer (and coupled to other car on track No. 5) and wheels blocked on last car A/ 12. Car brakes are applied 13. Derailer on track No. 5 positioned COMMENTS OXY/HOLMES 001003 ****Hhen VC car to be unloaded is positioned, no other car may be in the area enclosed by the derailer SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS )OKC CMS MICAC COW^OWATtON Niagara falls, n. y. t 'Pl< UL>7>fr' ; June 29. 1973 *rr. 0. P. Jones Account .Mansrer Cnc-mical Sales Shell Chetsical Ccopany GOO Suinsner Street Stafford, Connecticut 06904 Dear Oud: Our vinyl chloride mone^-er contract provides that licoker nust notify Shell of its estimated annual reouiresents not less tr.an six rcenths prior to calendar year. Further, that tnese requirements snail be within the isininus ana raaxiraua amounts per calendar year as specified in this agree ment. Hooker's estiriated re-quire?nents for calendar year 1574 are 193,000,000 lbs. of vinyl chi nri do ucr.cu.sr. Our interpretation cf the contract is that Hooker is then coaraitied to take 962. of this quantity or 163,350,000 lbs. and Shell Is ccasicted to deliver up to 1067. of this quantity or 202,650,000 lbs Rsonwrer for the calender year 975 end succeeding years of the contract. Very truly yours n. /-i. Barber iianager of Purchases Raw istends a Containers Ik cc: R. V. Lucks W. E. Sholl OXY/HOLMES 001004 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS ... ..,-AU CORPCHATION . . . ,,<* rAuLS. N r. July 1C. 0,0 r*. V. Luck Burlington Optional VCH - Shall Contract 'jr.Jer the terss of the S?-.t-U contract Hooker nas a rir.bt of first refusal to In crease toe H7c and 1577 r.:infs:um and maxi tcnnanes to Z\Z:. los. minlr.'ua ana 2CJ*-'M lbs. &sx1&:tra* Existing nin.-&ax. ior 14/6 ore le/A-- - kd.n;; end for 1577 ere 171:t'i - 20?'" lbs. Tc exercise to is right, hooker cost give Shell written notice prior to -iarsh l, 1574. If Shall has an epportuni ty to utilize caned tv rer-reseraed t*y these quantities orior to any notivicooion v-y -coker. Snolt < ust edvisc nooxer d: v.riting of quantities involved tr.a Hooker Acs tmv-, '.iron Ins v;*o>:^ ti.se ooio it wishes tnc r*tral end col ivories so a 11 tiert to renws fred tr- cate cf Sibil's notice. Option is subject to raw &:aaerial availed iity to She 11. pricing for optional amounts ill be ceternincd os follows. Shell proposes a i-riIn conversion .ces or cue io/v oucrit.ty y - ri 1 Jo, i -.n. e nc<a until Jwno 33. 13/4 to ocrcc in writing on tno rc ;<]. K no fail t:. agree tno option is rovok^ci end we revert to the s-ax. and tons, for isft enc si-77 as written in toe csr.trcet. Prorui.nnp ?qrsecrjnt on ranqw we novo -nti ` --.v : -fi , 13/:, r.o tic-recults exact conversion vc tr two c-ntic-c oeauc; tv. It v o.:.;o;ot an rot on too f 1 W-yO t'.c V- , C T OH CV '.: 0 T : ' i ' S's : V ", i -O' . r v _S-.iV.,'.- . UV. , ,,JUt (..id Cpt.CCOi V0 t l 1.1 'VO COO . V . . ..J - y wl t J..' y*o. w_}- t jV ! SI 1 MIV ,. . , ..^i, liO.iCt P. i ti to April 15, ;v7d. It o ;-.j.-ears tost; you have no tiring to lose in tv of o ;n,A- ,,4 c-uanti ties by co- inp coding ends sate recru ary of iv74. if anyunjnn i-y uu Siieii's sico thev rest tot ps fcrov end v.e can toon act. H. .5. Airier iAnrcar of Purchssc-s o' T'oric 1 ? c uevnihor:. i`- c:o: A. 27cc; V. :.. V: -il r , i1 = . A. 1. k-r-ctaker OXY/HOLMES 001005 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS OjPA V/T \Q^ C- ^ Shell Chemical Company A Ovtton Ot/pbmpany One Shell Plaza P.O. Box 2463 Houston, Texas 77001 December 19, 1984 Mr. Craig W. Hull, Jr. Vice President, Commercial Occidental Chemical Company P. 0. Box 4020 RiverPark Darien, CT 06820 w. ry. nL/LL- JR. Dear Craig: Attached hereto are copies of our proposed VCM agreement according to conditions and terms as discussed with you previously and a copy of Rider No. 104 covering certain rail cars between Union Tank Car Company and Shell Oil Company. After the first of the year, we will forward to you a copy of the proposed contract covering ethylene requirements in 1985 and sublease agreements covering the remaining rail cars. Union Tank Car Company has advised us that they would prefer that Occidental accept an assignment of Rider No. 104 and that all future transactions regarding that rider be between Union Tank Car Company and Occidental. Occidental is to send a letter to Union Tank Car Company accepting an assignment of this rider. Should you have any questions regarding these matters, please call me at your convenience. Very truly yours, R. F. Weigle Manager, Corporate Accounts Attachments cc: L. A. Wheeler (w/attach. ) BRHK8435401 OXY/HOLMES 001006 SEPARATOR SHEET SHEET INTENTIONALLY LEFT BLANK TO SEPARATE DOCUMENTS