EXHIBIT 10.3

 

Third Amended and Restated Agreement (to Provide Materials and Services),
between the

Corporation and Dow Hydrocarbons and Resources LLC.

 

THIRD AMENDED AND RESTATED AGREEMENT

 

This THIRD AMENDED AND RESTATED AGREEMENT (“Agreement”), entered into as of
March 1, 2008, between Union Carbide Corporation (“UCC”), a New York
corporation, and Dow Hydrocarbons and Resources LLC (“DHR LLC”), a Delaware
corporation, amends and restates that Second Amended and Restated Agreement of
April 1, 2005, as amended as of January 1, 2008 (as so amended, the “Second
Amended Agreement”), which amended and restated that certain agreement of
February 6, 2001, as amended and restated as of July 1, 2003 .  DHRI agrees to
supply the UCC Group (as defined below) with certain products and services under
the terms and conditions set forth below.

 

1.              TERM

 

The term of this Agreement shall commence on the Effective Date and shall extend
until December 31, 2008, and shall continue from year-to-year thereafter, unless
earlier terminated in accordance with the provisions of this Agreement (the
“Term”).  Either UCC or DHR LLC may elect at any time to terminate this
Agreement by providing the other with at least six (6) months’ advance written
notice of termination.

 

2.              DEFINITIONS

 

As used in this Agreement:

 

(a)         An “Affiliate” with respect to any entity means any other entity
directly or indirectly controlling, controlled by or under common control with,
such entity, where “control” of an entity (including, with correlative meaning,
the terms “controlling, “controlled by” and “under common control with”) shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise.

 

(b)         “Arranged Sales” has the meaning given to it in Section 8(B)(2)(b).

 

(c)          “Arranged Supply” has the meaning given to it in
Section 8(B)(2)(a).

 

(d)         “Delivery Point” means the point at which product supplied by DHR
LLC to a UCC Member under this Agreement is received (1) into the facilities of
such UCC Member or its designee (including without limitation storage facilities
operated by such UCC Member or its designee), or (2) into Intermediary Equipment
directly connected to the facilities of such UCC Member or its designee, or
(3) into the facilities of a third party, or a designee of such UCC Member or
such third party, in fulfillment of an obligation of such UCC Member to deliver
product to or on behalf of such third party;  for avoidance of doubt, (A) when
received into any truck or tank car, the Delivery Point is the point at which
the product enters the receiving truck or car; (B) when received into any
pipeline, the Delivery Point is the point at which the product passes the
connection between the delivering pipeline and receiving pipeline; (C) when
received into storage, the Delivery Point is the point at which the product
enters a storage tank or cavern; (D) when received by “in-line” transfer or
“in-storage” transfer, receipt at the Delivery Point occurs immediately upon
such transfer; or (E) when received by or into any vessel, the Delivery Point is
at the flange between the vessel’s permanent hose connection and the shore line.

 

(e)          “Effective Date” means March 1, 2008.

 

(f)           “Emission Products” means emission reduction credits, emission
allowances, emission reduction certificates, emission off-sets, renewable energy
credits and certificates, and any other emission product.

 

(g)          “GAAP” means generally accepted accounting principles.

 

21

--------------------------------------------------------------------------------

 

(h)         “Intermediary Equipment” means, with respect to a UCC Member or its
designee, intermediary systems or equipment, owned or controlled by a third
party, used to deliver products to such UCC Member’s or designee’s facilities
pursuant to a Separate Contract. For avoidance of doubt, the Burnel line
connected to UCC’s Seadrift Operations is Intermediary Equipment.

 

(i)             “Major Sites” means the following four sites: UCC’s West
Virginia Operations in the vicinity of South Charleston, WV; UCC’s St. Charles
Operations, in the vicinity of Hahnville, LA; UCC’s Texas City Operations in
Texas City, TX; and UCC’s Seadrift Operations in the vicinity of Seadrift, TX.

 

(j)            “Net Supply Cost” means the following costs, to be determined in
accordance with the then-current cost accounting practices applied by DHR LLC
consistent with GAAP: (1) for fuels, on a site specific basis, the cost of
purchases of such fuel (and transportation and storage thereof, except as
provided otherwise by the delivery terms of Section 4(b)(2)) under Third-Party
Contracts, net of related sales and exchanges, (2) for hydrocarbon feedstocks,
the cost of purchases of such hydrocarbon feedstocks (and transportation and
storage thereof, except as provided otherwise by the delivery terms of
Section 4(b)(2)) under Third-Party Contracts, using the weighted average cost of
DHR LLC’s U.S. Gulf Coast pooled inventory and purchases, net of related sales
and exchanges, (3) for monomers and aromatics, the cost of purchases of such
monomers and aromatics (and transportation and storage thereof, except as
provided otherwise by the delivery terms of Section 4(b)(2)), using the weighted
average price for such monomers and aromatics under U.S. Gulf Coast Third-Party
Contracts, and (4) for electricity, on a site specific basis, the cost 
(including without limitation applicable fees charged by non-Affiliate third
parties) of purchases of such electricity (and transmission thereof), based on
market prices, Third-Party Contract prices, or a combination thereof, as
applicable, net of related sales of electricity.

 

(k)         “Separate Contract” means an agreement, which pre-exists the
Effective Date, between one or more third parties and one or more UCC Members,
including without limitation any such agreement (1) for supply, delivery,
storage or transportation of products to UCC or its designee, and/or (2) for the
swap or exchange of any products.

 

(l)             “Small Sites” means the UCC Group’s locations other than the
Major Sites.

 

(m)     “TDCC” means The Dow Chemical Company.

 

(n)         “Term” has the meaning given to it in Section 1.

 

(o)         “Third-Party Contracts” means contracts between the purchaser (i.e.,
DHR LLC or a DHR LLC Affiliate) and a third party that is not an Affiliate of
such purchaser.

 

(p)         “UCC Group” means UCC and the UCC Subsidiaries, collectively.

 

(q)         “UCC Member” means a member of the UCC Group.

 

(r)            “UCC Subsidiary” means a direct or indirect wholly-owned U.S.
subsidiary of UCC (such as, but not limited to, Amerchol Corporation, Seadrift
Pipeline Corporation, UCAR Pipeline Incorporated, and UCAR Louisiana Pipeline
Company).

 

3.              PRODUCTS AND SERVICES TO BE SUPPLIED BY DHRI TO UCC

 

(a)         The following products and services will be supplied by DHR LLC to
the UCC Group, as described below, in connection with the UCC Group’s U.S.
locations except to the extent otherwise agreed to by DHR LLC and UCC:

 

(1)         Products:  100% of the UCC Group’s procurement requirements for

(A)       fuels, primarily natural gas,

(B)       hydrocarbon feedstocks,

 

22

--------------------------------------------------------------------------------

 

(C)       monomers and aromatics (to supplement the UCC Group’s production of
monomers and aromatics),  and

(D)       electricity,

 

except to the extent supply of such products is arranged in accordance with
Sections 3(a)(2) or 3(c), below, or is procured by a UCC Member pursuant to a
Separate Contract.

 

(2)         Services.  DHR LLC shall provide: management of the UCC Group’s
hydrocarbon and energy asset base, management of the UCC Group’s Emission
Products, and management of the UCC Group’s hydrocarbon and energy business
matters, including without limitation: (i) management of hydrocarbon and energy
contracts (including without limitation Separate Contracts);
(ii) communications, as required, with the UCC Group’s management and authorized
representatives, as well as with any of the UCC Group’s external customers, in
connection with such hydrocarbon and energy business matters; (iii) monitoring
of the UCC Group’s and  industry supply/demand balances of hydrocarbon and
energy products; (iv) the implementation of both short and long term strategic
positions in hydrocarbon and energy products; (v) oversight and consulting
regarding markets for Emission Products; and (vi) as mutually determined by UCC
and DHR LLC, provision to the UCC Group of applicable accounting and computer
systems to manage the other services supplied to the UCC Group under this
Agreement. To the extent a UCC Member elects to separately arrange the supply of
any one or more of the foregoing services, in whole or in part, such supply is
outside the scope of this Agreement.

 

Except to the extent supplied by DHR LLC pursuant to Section 3(a)(1) above, or
procured by a UCC Member pursuant to a Separate Contract, and subject to
Section 3(c), below, DHR LLC shall also arrange the supply and sales of fuels,
feedstocks, monomers, aromatics, electricity, steam. utilities, and Emission
Products, as described below:

 

(A)       Arrange the supply to the UCC Group of 100% of the UCC Group’s
procurement requirements for fuels (such as natural gas and coal) and
hydrocarbon feedstocks, and arrange any storage or transportation needed to
effectuate such supply.

 

(B)       Arrange (1) the supply to the UCC Group of 100% of the UCC Group’s
procurement requirements for monomers and aromatics, to supplement the UCC
Group’s production of monomers and aromatics, (2) the sale of 100% of the UCC
Group’s surplus monomers, aromatics, and hydrocarbon co-products and
by-products, and (3) any storage or transportation needed to effectuate such
supply or sales.

 

(C)       Arrange (1) the supply to the UCC Group of 100% of the UCC Group’s
procurement requirements for electricity, steam and other utilities, (2) the
sale of 100% of the UCC Group’s surplus electricity, steam and other utilities,
and (3) any transportation needed to effectuate such supply or sales; however,
to the extent UCC or any other UCC Member elects to separately arrange the
supply, sale, or transportation of a UCC Member’s procurement requirements for
electricity, steam or other utilities, such supply or sales are outside the
scope of this Agreement.

 

(D)       Arrange (1) the supply to the UCC Group of 100% of the UCC Group’s
procurement requirements for Emission Products, to supplement the UCC Group’s
production of Emission Products and (2) the sale of 100% of the UCC Group’s
surplus Emission Products.

 

(b)         Where DHR LLC arranges product to be supplied to a UCC Member by
TDCC or a TDCC Affiliate, TDCC or such TDCC Affiliate shall (and TDCC shall
cause such Affiliate to) supply such product at Net Supply Cost.

 

(c)          With respect to any one or more of the Small Sites, DHR LLC may
elect to not supply or, to discontinue (at any time) supply of, any one or more
of the products or services described in Section 3(a), above; in the event DHR
LLC elects to discontinue supply of any one or more of such products or services
(other than pursuant to other provisions of this Agreement which expressly
provide for termination of this Agreement), DHR LLC will reasonably cooperate
with UCC to effect a transition to another supplier of such service or product. 
For any UCC Group location where

 

23

--------------------------------------------------------------------------------

 

DHR LLC does not supply a product or service as described in Section 3(a),
above, then upon request of a UCC Member, DHR LLC may, at its option, consult
with a UCC Member regarding the member’s procurement of such product or service
from third parties.

 

(d)         A representative list of products to be supplied to the UCC Group in
connection with this Agreement is set forth in Exhibit A, attached to and hereby
made part of this Agreement (“Exhibit A”).

 

(e)          The parties’ respective obligations under Section 3(a) of this
Agreement are subject to Separate Contracts; for the avoidance of doubt, a UCC
Member shall remain responsible for the payment of any charges payable by such
UCC Member under a Separate Contract.

 

(f)           DHR LLC is authorized to act as a UCC Member’s delegate with
respect to performance of any such UCC Member’s rights or obligations under
Separate Contracts; provided that, as a delegate of such UCC Member, DHR LLC
will not provide or receive products without corresponding compensation (for
example, in the form of payment, in-kind product, or a combination thereof) from
or to, respectively, such UCC Member or its designee. DHR LLC is not liable for
Claims (as defined in Section 8(E), below) made by third parties with respect to
the acts or omissions of DHR LLC when acting as delegate for a UCC Member,
except to the extent such Claims arise as a result of DHR LLC’s gross negligence
or willful misconduct.

 

(g)          UCC shall cause the UCC Subsidiaries to fully accept, abide by, and
comply with, the terms and conditions of this Agreement.

 

(h)         Appointment as agent.

 

(1)         UCC hereby makes, constitutes and appoints DHR LLC as its true and
lawful attorney-in-fact and empowers DHR LLC to act for UCC as UCC’s agent
during the term of this Agreement in matters connected with the services (for
example, arranging the supply or sale of products, Emission Products, or
utilities, including but not limited to arrangements between UCC and DHR LLC or
UCC and DHR LLC Affiliates) and products supplied under this Agreement.
Specifically, DHR LLC has the authority to issue and execute those business
documents and contracts in the name of UCC which are necessarily issued in
conjunction with the services and products being provided by DHR LLC to UCC
under this Agreement.  DHR LLC accepts such appointment and grant. To the extent
applicable, UCC shall cause each UCC Subsidiary to make a similar appointment
and grant, and DHR LLC hereby accepts such appointment and grant.  DHR LLC is
not liable for Claims (as defined in Section 8(E), below) made by third parties
with respect to the acts or omissions of DHR LLC  when acting as agent for a UCC
Member, except to the extent such Claims arise as a result of DHR LLC’s gross
negligence or willful misconduct.

 

(2)         (A) For DHR LLC to provide electricity-related services to UCC
Members in an efficient manner, DHR LLC may from time to time enter energy
related agreements in DHR LLC’s name and/or in a UCC Member’s name that affect,
or otherwise relate to, such UCC Member’s electricity matters (“Power
Agreements”).

 

(B) UCC, for itself and on behalf of the UCC Subsidiaries, hereby authorizes and
gives consent to DHR LLC to enter Power Agreements in DHR LLC’s and/or a UCC
Member’s name.  The Power Agreements provide for electricity-related matters
applicable to one or more UCC Members which may include, without limitation,
commitments regarding a QSE, REP, scheduling, pooling, ancillary services and
marketing services.

 

(C) UCC, for itself and on behalf of the UCC Subsidiaries, hereby (i) authorizes
and consents to DHR LLC taking actions for a UCC Member with respect to Power
Agreements regarding such UCC Member’s electricity matters, (ii) agrees to
comply with Power Agreements and with DHR LLC’s requests related thereto, and
(iii) acknowledges and agrees that DHR LLC is entering Power Agreements and
providing, coordinating or arranging for electricity-related services under
Power Agreements within the scope of the services contemplated under this
Agreement.

 

24

--------------------------------------------------------------------------------

 

(D) UCC, for itself and on behalf of the UCC Subsidiaries, hereby acknowledges
that any prior Power Agreements entered into by Dow Hydrocarbons and Resources
Inc. (“DHRI”), and related actions by DHRI of the nature described in this
Agreement that are applicable to a UCC Member’s electricity matters, are fully
ratified, authorized and accepted by UCC, the UCC Subsidiaries, and DHR LLC.

 

(E) Notwithstanding the termination, expiration or cancellation of this
Agreement, it is hereby agreed that, with respect to any UCC Group locations,
(i) as long as any Power Agreement has not yet fully expired, been fully
cancelled, or been otherwise fully terminated, the provisions of
Section 3(h)(2)(C) above shall remain in full force and effect, and shall not
expire, be cancelled or otherwise be terminated, and (ii) for the time period
any Power Agreement extends beyond the termination, expiration or cancellation
of this Agreement, UCC will reimburse, or cause the applicable UCC Member to
reimburse, DHR LLC for any third party costs incurred by DHR LLC with respect to
such Power Agreement and the products and services provided to UCC Group
thereunder.

 

4.              COMPENSATION AND DELIVERY TERMS

 

(a)         As compensation for the products and services supplied by DHR LLC
under this Agreement, UCC (subject to Section 4(e), below) shall pay Product
Charges and a Service Commission, as follows:

 

(1)         Product Charges

 

(A)       For hydrocarbon feedstocks supplied by DHR LLC under this Agreement,
UCC shall pay to DHR LLC the Net Supply Cost thereof.

 

(B)       For fuels supplied by DHR LLC under this Agreement, UCC shall pay to
DHR LLC the Net Supply Cost thereof.

 

(C)       For monomers and aromatics supplied by DHR LLC under this Agreement,
UCC shall pay to DHR LLC the Net Supply Cost thereof.

 

(D)       For electricity supplied by DHR LLC under this Agreement, UCC shall
pay to DHR LLC the Net Supply Cost thereof.

 

(2)         Service Commission – For all of the services supplied under
Section 3(a)(2) of this Agreement, UCC shall pay a commission to DHR LLC, which
shall be calculated as follows:

 

(A)       0.65 cents per pound ($6.50 per thousand pounds) of ethylene and
propylene consumed by UCC at the Major Sites; plus

(B)       3.0 cents per million BTUs of natural gas consumed by UCC at the Major
Sites; plus

(C)       2.5% of the total price for all trades of Emission Products arranged
by DHR LLC; plus

(D)       $1.00 per megawatt hour of electricity procured for or sold for the
Major Sites (including without limitation electricity supplied to a UCC Member
by DHR LLC or purchased from a UCC Member by DHR LLC).

 

(b)         Delivery terms: (1) Product Charges include delivery of products
supplied by DHR LLC to the applicable Delivery Point, and title to and risk of
loss for product supplied by DHR LLC hereunder shall pass at the applicable
Delivery Point. (2) The UCC Group shall not pay separate charges for pipeline
transportation or storage in Texas- or Louisiana-based assets of DHR LLC or DHR
LLC Affiliates.

 

(c)          Renegotiation of Product Charges or Service Commission – Either UCC
or DHR LLC may request a re-negotiation of Product Charges and/or the Service
Commission upon  thirty (30) days prior written notice, and the parties shall
promptly negotiate in good faith to establish such new Product Charges and/or a
new Service Commission.

 

25

--------------------------------------------------------------------------------

 

(d)         Notwithstanding any other provision of this Agreement, DHR LLC shall
accept payment from any UCC Subsidiary for some or all of any amount due to DHR
LLC under this Agreement, but UCC shall remain fully responsible and liable for
any unpaid amounts due to DHR LLC under this Agreement.

 

5.     PRODUCT SPECIFICATIONS; LIMITED WARRANTY; ASSUMPTION OF RISK

 

DHR LLC warrants that all product purchased from DHR LLC by a UCC Member
hereunder shall meet the specifications set forth in Exhibit A. THE FOREGOING IS
DHR LLC’S SOLE WARRANTY REGARDING PRODUCTS AND SERVICES SUPPLIED UNDER THIS
AGREEMENT, AND IS MADE EXPRESSLY IN LIEU OF AND EXCLUDES ANY AND ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL
OTHER EXPRESS OR IMPLIED WARRANTIES INCLUDING WITHOUT LIMITATION THOSE PROVIDED
BY STATUTE OR COMMON LAW. DHR LLC MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PRODUCTS OR SERVICES SUPPLIED HEREUNDER. EACH UCC MEMBER,
WITH RESPECT TO ANY PRODUCT RECEIVED BY SUCH UCC MEMBER HEREUNDER, ASSUMES ALL
RISK, RESPONSIBILITY AND LIABILITY RESULTING FROM THE USE OR APPLICATION OF SUCH
PRODUCT, AND DHR LLC SHALL HAVE NO LIABILITY OR RESPONSIBILITY WHATSOEVER FOR
THE USE OR APPLICATION OF ANY SUCH PRODUCT.

 

6.     TERMS OF PAYMENT

 

UCC shall make payments to DHR LLC for product purchased and services rendered
hereunder within five (5) business days of the receipt of DHR LLC’s invoice.
Invoices shall be issued once per month as soon as possible after the end of
such month.

 

7.              MEASUREMENT

 

The determination of quantity and quality of product purchased by a UCC Member
from DHR LLC hereunder shall be made in accordance with the customary procedures
and practices of the industry.

 

8.              CLAIMS, REMEDIES, LIMITATION OF DAMAGES and INDEMNIFICATION

 

(A)             IF ANY PRODUCT PURCHASED BY A UCC MEMBER FROM DHR LLC UNDER THIS
AGREEMENT DOES NOT MEET APPLICABLE SPECIFICATIONS, DHR LLC SHALL HAVE THE RIGHT
IN ITS DISCRETION, AS THE UCC MEMBER’S SOLE REMEDY, EITHER TO REPLACE IT OR
REFUND THE  PRODUCT CHARGE PAID TO DHR LLC FOR THE PRODUCT WHICH IS THE SUBJECT
OF THE CLAIM.

 

(B)             HOWEVER, AND IN ANY EVENT, DHR LLC’S MAXIMUM LIABILITY FOR
DAMAGES IN RESPECT OF ANY AND ALL CLAIMS WHATSOEVER ARISING HEREUNDER WITH
RESPECT TO

 

(1)     PRODUCTS PURCHASED BY A UCC MEMBER FROM DHR LLC UNDER THIS AGREEMENT
SHALL NOT EXCEED, IN THE AGGREGATE, THE PRODUCT CHARGE PAID TO DHRI FOR THE
AMOUNT OF PRODUCT TO WHICH SUCH DAMAGES RELATE, AND

 

(2)     SERVICES SUPPLIED BY DHR LLC TO A UCC MEMBER UNDER THIS AGREEMENT SHALL
NOT EXCEED, IN THE AGGREGATE, THE FOLLOWING AMOUNTS:

 

(a)         WITH RESPECT TO ARRANGING THE SUPPLY OF FUELS, HYDROCARBON
FEEDSTOCKS, MONOMERS, AROMATICS, ELECTRICITY, STEAM AND UTILITIES (“ARRANGED
SUPPLY”), TWO PERCENT (2%) OF THE AMOUNT PAID BY THE UCC MEMBER FOR THE ARRANGED
PURCHASES TO WHICH SUCH DAMAGES RELATE;

 

26

--------------------------------------------------------------------------------

 

(b)         WITH RESPECT TO ARRANGING THE SALE OF MONOMERS, AROMATICS,
ELECTRICITY, STEAM AND UTILITIES (“ARRANGED SALES”), TWO PERCENT (2%) OF THE
AMOUNT RECEIVED BY THE UCC MEMBER FOR THE ARRANGED SALES TO WHICH SUCH DAMAGES
RELATE; AND

 

(c)          FOR ALL OTHER SERVICES INVOLVED IN SUCH CLAIMS, ONE HUNDRED
TWENTY-FIVE THOUSAND DOLLARS ($125,000.00) PER MONTH (A MINIMUM OF ONE MONTH)
FOR EACH MONTH OF THE TERM FALLING WITHIN THE PERIOD TO WHICH SUCH DAMAGES
RELATE.

 

(C)             NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IN NO
EVENT SHALL DHR LLC BE LIABLE FOR (1) PROSPECTIVE OR LOST PROFITS, (2) SPECIAL,
INDIRECT, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR (3) ANY
CLAIM BASED ON PRODUCT QUALITY WITH RESPECT TO PRODUCT WHICH, FOLLOWING DELIVERY
TO A UCC MEMBER, HAS BEEN MIXED WITH ANY OTHER MATERIAL OF ANY KIND (WHETHER OR
NOT SUPPLIED IN CONNECTION WITH THIS AGREEMENT), OR HAS BEEN PROCESSED IN ANY
MANNER.

 

(D)             WITHIN SIXTY (60) DAYS AFTER A UCC MEMBERS LEARNS, OR SHOULD
REASONABLY HAVE LEARNED, OF ANY CLAIM WITH RESPECT TO THE PRODUCTS OR SERVICES
SUPPLIED BY DHR LLC UNDER THIS AGREEMENT, UCC OR SUCH UCC MEMBER SHALL
INFORM DHR LLC IN WRITING OF THE CLAIM OR THE CLAIM IS WAIVED.

 

(E)       (1) TO THE EXTENT PERMITTED BY APPLICABLE LAW, UCC ASSUMES THE ENTIRE
RESPONSIBILITY AND LIABILITY FOR, AND SHALL PROTECT, DEFEND, INDEMNIFY, AND HOLD
HARMLESS DHR LLC FROM AND AGAINST, ANY AND ALL CLAIMS WHICH ARE MADE, ASSERTED
OR ALLEGED AGAINST DHR LLC BY ANY ONE OR MORE UCC MEMBERS OR ANY OTHER PERSON,
OR WHICH ARISE IN FAVOR OF ANY ONE OR MORE UCC MEMBERS OR ANY OTHER PERSON,
ORIGINATING FROM ANY SOURCE IN CONNECTION WITH (a) DHR LLC ACTING AS AN AGENT OR
DELEGATE FOR ANY ONE OR MORE UCC MEMBERS, AND/OR (b) THE FAILURE OF A UCC
SUBSIDIARY TO FULLY ACCEPT, ABIDE BY, OR COMPLY WITH, THE TERMS OF THIS
AGREEMENT, AND/OR (c) ARRANGED PURCHASES AND/OR ARRANGED SALES, AND/OR (d) THE
USE OR APPLICATION, BY A UCC MEMBER OR ANY OTHER PERSON, OF ANY PRODUCT SUPPLIED
UNDER THIS AGREEMENT.

IT IS DHR LLC AND UCC’S INTENT REGARDING SUCH CLAIMS THAT, SUBJECT TO
SECTION 8(E)(2) BELOW, TO THE EXTENT PERMITTED BY APPLICABLE LAW, UCC SHALL
PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS DHR LLC AGAINST ALL OF THE
CONSEQUENCES OF

 

(X)  (I) THE NEGLIGENCE, FAULT, AND/OR STRICT LIABILITY OF DHR LLC OCCURRING
JOINTLY, CONCURRENTLY, AND/OR COMPARATIVELY WITH THE NEGLIGENCE, FAULT, AND/OR
STRICT LIABILITY OF A UCC MEMBER AND/OR ANY PERSON OTHER THAN DHR LLC, OTHER
THAN THE SOLE NEGLIGENCE, IMPUTED SOLE NEGLIGENCE, SOLE FAULT AND/OR SOLE STRICT
LIABILITY OF DHR LLC ADDRESSED IN SECTION 8(E)(2)(X)(II) BELOW; AND

 

(X)  (II) THE SOLE NEGLIGENCE, IMPUTED SOLE NEGLIGENCE, SOLE FAULT, AND/OR SOLE
STRICT LIABILITY OF DHR LLC, UNMIXED WITH NEGLIGENCE, GROSS NEGLIGENCE, FAULT,
AND/OR STRICT LIABILITY OF A UCC MEMBER AND/OR ANY PERSON OTHER THAN DHR LLC;
AND

 

(Y)       THE NEGLIGENCE, GROSS NEGLIGENCE, FAULT, AND/OR STRICT LIABILITY OF A
UCC MEMBER AND/OR ANY PERSON OTHER THAN DHR LLC, INCLUDING BUT NOT LIMITED TO
JOINT, COMPARATIVE, AND/OR CONCURRENT NEGLIGENCE, FAULT, AND/OR STRICT LIABILITY
OF SUCH UCC MEMBER AND/OR ANY PERSON OTHER THAN DHR LLC.

 

(2)         NOTWITHSTANDING THE FOREGOING, (a) UCC’S OBLIGATIONS UNDER THE
PROVISIONS OF SECTION 8(E)(1) SHALL NOT EXTEND TO ANY CLAIMS OF GROSS
NEGLIGENCE, WILLFUL

 

27

--------------------------------------------------------------------------------

 

MISCONDUCT, OR BREACH OF THIS AGREEMENT WHICH ARE MADE, ASSERTED OR ALLEGED
AGAINST DHR LLC BY ANY ONE OR MORE UCC MEMBERS,  AND (b) UCC’S INDEMNITY AND
HOLD HARMLESS OBLIGATIONS UNDER THE PROVISIONS OF SECTION 8(E)(1) SHALL NOT
EXTEND TO ANY CLAIMS OF PERSONS OTHER THAN UCC MEMBERS WHICH ARISE AS A RESULT
OF DHR LLC’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (FOR THE AVOIDANCE OF DOUBT,
UCC’S OBLIGATIONS TO PROTECT AND DEFEND SUCH CLAIMS ARE NOT EXCLUDED BY THIS
SECTION 8(E)(2)(b)).

 

(3)         DEFINITIONS - AS USED IN THIS SECTION 8(E):

 

(a) “BODILY INJURY” MEANS ANY BODILY INJURY OF ANY KIND OR CHARACTER, INCLUDING
WITHOUT LIMITATION, ANY ONE OR MORE OF THE FOLLOWING, COLLECTIVELY AND
INDIVIDUALLY:  PHYSICAL PAIN AND SUFFERING, ILLNESS, SICKNESS, DISEASE,
IMPAIRMENT OF PHYSICAL CONDITION OF THE BODY, OR DEATH, AS WELL AS ANY PERSONAL
INJURY INCLUDING, BUT NOT LIMITED TO, ANY INVASION OF PERSONAL RIGHTS SUCH AS
LIBEL OR SLANDER, CIVIL RIGHTS VIOLATION, INVASION OF PRIVACY, TORTIOUS
INTERFERENCE WITH A CONTRACT, OR MENTAL SUFFERING OF ANY TYPE.

(b) “CLAIMS” MEANS ALL CLAIMS OF ANY KIND OR CHARACTER, INCLUDING WITHOUT
LIMITATION, ANY ONE OR MORE OF THE FOLLOWING, COLLECTIVELY AND INDIVIDUALLY:
LOSSES, COSTS (INCLUDING, BUT NOT LIMITED TO, ATTORNEYS’ FEES, COURT COSTS, AND
OTHER COSTS OF SUIT), DEMANDS, DAMAGES, JUDGMENTS, PENALTIES, LIABILITIES,
DEBTS, EXPENSES, LAWSUITS AND CAUSES OF ACTION OF WHATEVER NATURE AND CHARACTER,
WHETHER ARISING OUT OF OR RELATED TO CONTRACT (INCLUDING, WITHOUT LIMITATION,
RELATED TO DELAYED DELIVERY, NON-DELIVERY, PRODUCT QUALITY OR DEFECTIVE
PRODUCT), TORT, STRICT LIABILITY, BREACH OF WARRANTY, PRODUCTS LIABILITY,
MISREPRESENTATION, VIOLATION OF APPLICABLE LAW, AND/OR ANY SOURCE OR CAUSE
WHATSOEVER, WITHOUT LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF,
INCLUDING, WITHOUT LIMITATION, CLAIMS ARISING OUT OF OR ALLEGED TO ARISE OUT OF
BODILY INJURY OR LOSS OF PROPERTY.

(c)  “PERSON” MEANS ANY NATURAL PERSON, OR ANY COMPANY, CORPORATION, GENERAL OR
LIMITED PARTNERSHIP, LIMITED LIABILITY COMPANY, JOINT VENTURE, ORGANIZATION,
ASSOCIATION, OR OTHER ENTERPRISE OR ENTITY.

 

9.              FORCE MAJEURE

 

Failure (in whole or in part) or delay on the part of either DHR LLC or a UCC
Member in performance of any of the obligations imposed upon it shall be excused
and such party shall not be liable for damages or otherwise when such failure or
delay is beyond the control of DHR LLC or such UCC Member (“force majeure
event”).  Such events include, but are not limited to, the following: labor
difficulties, total or partial loss or shortage of raw component material or
products ordinarily required by DHR LLC; breakdown, either total or partial, of
either party’s equipment, or act of God or nature.  However, the settlement of
strikes or lockouts shall be entirely within the discretion of the party having
the difficulty.  DHR LLC agrees to give written notice to UCC, and UCC agrees to
give written notice (for itself and on behalf of the other UCC Members) when
experiencing a force majeure event as soon as practicable.

 

Upon cessation of the cause or causes for any such failure or delay, performance
hereof shall be resumed as soon as practicable.  Such failure or delay shall not
operate to extend the duration of this Agreement nor obligate either DHR LLC or
any UCC Member to make up deliveries or receipts of product.  If, by reason of
any such circumstances, DHR LLC’s supply of product shall be insufficient to
meet all of its requirements, DHR LLC shall apportion among any and all existing
contract purchasers, including without limitation its Affiliates, in an
equitable manner so that all parties share the product in proportion to their
take prior to the circumstance reducing availability.

 

28

--------------------------------------------------------------------------------

 

10.       PATENTS

 

DHR LLC does not assume patent responsibility for the use by a UCC Member of
product delivered hereunder.  The use of product may or may not constitute an
infringement of patents. A UCC Member receiving product hereunder assumes full
responsibility and liability for patent infringement in connection with any use
of such product by such UCC Member.

 

11.       TAXES

 

In addition to the amounts to be paid under Section 4, above, (a) with respect
to products purchased by a UCC Member from DHR LLC under this Agreement, such
UCC Member shall also pay all taxes and duties, other than taxes measured by
DHRI’s net income, that are increased or levied, now or in the future, in
connection with the manufacture, sale, use, consumption, storage, transportation
or disposal of such products, and (b) with respect to services supplied by DHR
LLC to a UCC Member under this Agreement, such UCC Member shall also pay all
taxes and duties, other than taxes measured by DHR LLC’s net income, that are
increased or levied, now or in the future, in connection with the supply of such
services.

 

12.       WAIVER

 

No claim or right arising out of a breach of this Agreement can be discharged in
whole or in part unless agreed to in writing executed by DHR LLC and UCC.   Any
such waiver shall not be deemed to be a waiver of any subsequent breach.

 

13.       ASSIGNMENT

 

No right or obligation under, or interest in, this Agreement shall be assigned
without prior written consent of both DHR LLC and UCC; provided, however, that
DHR LLC may assign any part of its interest in, or any of its rights or
obligations under, this Agreement to any DHR LLC Affiliate at any time without
prior written consent from UCC.

 

14.       APPLICABLE LAW

 

This Agreement shall be governed by the laws of the State of Texas, without
regard to the conflict of laws principles thereof.

 

15.       ENTIRETY OF AGREEMENT; SEVERABILITY

 

(a)         This Agreement merges all prior understandings between DHRI or DHR
LLC and UCC regarding the subject matter of this Agreement.  No prior dealings
between the parties and no usage of trade shall be relevant to supplement or
explain any term used herein.  All obligations, agreements, and understanding
are expressly set forth herein and are not enforceable unless embodied herein. 
As of the Effective Date, (1) the Second Amended Agreement is hereby amended and
restated, and neither UCC nor DHR LLC shall have any further rights, duties or
obligations under the Second Amended Agreement, except for any payment rights
and obligations for products and services provided prior to the Effective Date.

 

(b)         To the degree that a party finds it convenient to employ their
standard forms of purchase order or acknowledgement of order in administering
their terms of this Agreement, such party may do so but none of the terms and
conditions printed or otherwise appearing on such form shall be applicable
except to the extent that it specifies information required to be furnished
hereunder.

 

(c)          Should any indemnification provisions set forth in this Agreement
be limited by any law then applicable to this Agreement, this Agreement shall
automatically be deemed amended to provide indemnification under this Agreement
to the maximum extent permitted by such applicable law. However, and in any
event, if any provision of this Agreement is held invalid, the invalidity shall
not affect other provisions or application of the Agreement which

 

29

--------------------------------------------------------------------------------

 

can be given effect without the invalid provision or application, and to this
end the provisions of this Agreement are declared to be severable.

 

16.       NOTICE

 

All notices, demands, requests and other communications provided for in this
Agreement shall be given in writing, delivered in person (including without
limitation via commercial courier) or via Certified or Registered U.S. Mail,
with return receipt, and addressed to the party to be notified as follows:

 

DHR LLC

UCC

Dow Hydrocarbons and Resources LLC

Union Carbide Corporation

Houston Dow Center

400 West Sam Houston Parkway South

400 West Sam Houston Parkway South

Houston, Texas 77042

Houston, Texas 77042

Attn: President

Attn: Legal Department

 

 

or, in the case of either UCC or DHR LLC, to such other address as such party
may hereafter specify by written notice to the other. All such notices, requests
and communications shall be effective upon receipt.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the Effective Date.

 

UNION CARBIDE CORPORATION

 

DOW HYDROCARBONS AND

 

 

 

RESOURCES LLC

 

 

 

By:

/s/ EDWARD W. RICH

 

 

By:

/s/ RICHARD A. WELLS

 

Name:

    E.W. Rich

 

 

Name:

Richard A. Wells

Title:

    Chief Financial Officer,

 

Title:

Executive Vice President

 

    Vice President, and Treasurer

 

 

 

ACKNOWLEDGED and AGREED as to Section 3(b):

 

THE DOW CHEMICAL COMPANY

 

 

By:

/s/ JOHN SUTTLE

 

 

Name:

JOHN SUTTLE

 

Title:

     Authorized Representative

 

30

--------------------------------------------------------------------------------

 

EXHIBIT A

 

1. Representative Products.  The following is representative list of the
products to be supplied to the UCC Group in connection with this Agreement
(i.e., some or all of the following products, as well as products not listed,
will be supplied to the UCC Group under this Agreement):

 

B-P Mix

 

Hydrocarbon Residual

Benzene

 

Mixed Butanes

Butadiene

 

N-butane

Coal

 

Naphtha

Condensate

 

Natural Gas

Crude Butadiene

 

Propane

Cumene

 

Propylene

E-P Mix

 

Pyrolysis Gasoline

Ethane

 

Styrene

Ethylene

 

Toluene

Fuel Oil

 

Electricity

Steam

 

Utilities

 

2. Specifications.  All products purchased by a UCC Member from DHR LLC under
this Agreement shall meet the then-current DHR LLC product specification or such
specifications as DHR LLC reasonably determines (e.g., in connection with any of
the services or consultation provided by DHR LLC under this Agreement) will meet
such UCC Member’s product quality requirements.

 

31

--------------------------------------------------------------------------------