Exhibit 10.45

 

Note: An asterisk (*) indicates that material has been omitted pursuant to a
request for confidential treatment. Such material has been filed separately.

 

MEMORANDUM OF AGREEMENT

 

UNION PACIFIC RAILROAD COMPANY

 

And

 

KOPPERS INC.

 

 

 

August 1, 2003

 

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INDEX

 

TOPIC

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   PAGE

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PRODUCTS AND SERVICES; MINIMUM QUANTITIES

   1

CERTAIN RESPONSIBILITIES; SPECIFICATIONS

   2

SUPPLIER RUN WAREHOUSE AT NORTH LITTLE ROCK

   3

COMPENSATION

   3

RIGHT TO REJECTION AND INSPECTION

   4

INVENTORY

   4

FORCE MAJEURE

   5

WARRANTY – LIABILITY

   6

LOSS – DAMAGE

   6

ENVIRONMENTAL AND OTHER CONCERNS

   7

TERM

   8

CERTAIN PERFORMANCE GOALS

   8

FORECAST FOR CAPITAL EXPENDITURES

   9

ASSIGNMENT

   9

NOTICE

   9

NOTIFICATION OF FOLLOWING YEARS’ REQUIREMENTS

   10

BINDING EFFECT

   10

WAIVER

   10

SEVERABILITY

   11

AMENDMENTS

   11

EXECUTION IN COUNTERPARTS

   11

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CAPTIONS

   11

ENTIRE AGREEMENT

   12

INTERPRETATION

   12

ARBITRATION OF DISPUTES

   12

GOVERNING LAW

   12

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SCHEDULES

 

SCHEDULE A - SPECIFICATIONS

 

SCHEDULE B - PRICE LIST

 

SCHEDULE C - PRICE ADJUSTMENTS - ANNUAL RATE REVISIONS

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MEMORANDUM OF AGREEMENT

UNION PACIFIC RAILROAD COMPANY AND KOPPERS INC.

 

WHEREAS, Union Pacific Railroad Company (hereinafter referred to as “UP” or
“Railroad”) desires to have Koppers Inc. (hereinafter referred to as “Koppers”)
(i) procure untreated cross ties and switch ties for treatment with wood
preservative by Koppers, (ii) treat untreated cross ties, switch ties and
timbers with preservative at the Koppers facility at North Little Rock,
Arkansas, and (iii) treat untreated cross ties with preservative at the Koppers
facility at Denver, Colorado. (Kopper’s North Little Rock and Denver facilities
are sometimes each referred to hereinafter as the “Facility” and collectively as
the “Facilities”. Cross ties and switch ties together are sometimes hereinafter
referred to as “Forest Products”.)

 

WHEREAS, Koppers desires to provide the Railroad with untreated Forest Products
and to provide various treating and handling services related to the treatment
of Forest Products.

 

NOW, THEREFORE, the parties herein agree to the following terms and conditions:

 

1.    PRODUCTS AND SERVICES; MINIMUM QUANTITIES

 

(a) Commencing with calendar year 2004 and for each calendar year thereafter
during the term of this Agreement, Koppers agrees to purchase and procure on
behalf of Railroad, and Railroad agrees to purchase from Koppers, a guaranteed
minimum volume of (i) * untreated Forest Products for use by Koppers in the
treatment of Forest Products on behalf of the Railroad at the North Little Rock
Facility and (ii) * untreated Forest Products for use by Koppers in the
treatment of Forest Products on behalf of the Railroad at the Denver Facility.

 

(b) Commencing with calendar year 2004 and for each calendar year thereafter
during the term of this Agreement, Railroad agrees to purchase from Koppers a
guaranteed minimum volume of (i) * treated cross ties and * switch ties from the
North Little Rock Facility, and (ii) subject to Section 1(c), below, * treated
cross ties from the Denver Facility (the “Denver Treated Cross Tie Guaranteed
Minimum”); provided, however, that in no event shall Koppers be obligated to
treat and supply in excess of 2,200,000 treated Forest Products to Railroad in
any given calendar year; except that Railroad shall have the right of first
refusal to purchase Forest Products in excess of 2,200,000 if additional
capacity becomes available at the Facilities. In the event Railroad purchases
Forest Products from Koppers that are treated at facilities owned and/or
operated by Koppers other than the Facilities or the Koppers Grenada,
Mississippi facility, the quantities of Forest Products treated at such other
facilities will apply against the guaranteed minimum volumes set forth in this
Subsection 1(b). As used herein, the

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term “treated Forest Products” shall mean Forest Products meeting the
Specifications (as hereinafter defined).

 

(c) If Railroad fails to purchase the Denver Treated Cross Tie Guaranteed
Minimum during any calendar year during the term of this Agreement and Koppers
is not in breach of any material obligation under this Agreement, including,
without limitation, its obligation to provide untreated Forest Products as set
forth in Section 1(a), above, Railroad shall pay Koppers as liquidated damages
an amount equal to $* times the difference between the Denver Treated Cross Tie
Guaranteed Minimum and the number of treated Forest Products from the Denver
Facility actually purchased by Railroad during such year. For example, Railroad
would pay Koppers $* as liquidated damages if during calendar year 2004 Railroad
purchased a total of * treated Forest Products from the Denver Facility and
Koppers were not in breach of any material obligation hereunder ( *).

 

(d)] Koppers’ obligation to supply treated Forest Products in the above
quantities shall at all times be subject to Railroad’s ability to deliver wood
preservative and untreated Forest Products sufficient to enable Koppers to treat
untreated Forest Products at said volumes.

 

2.    CERTAIN RESPONSIBLITIES; SPECIFICATIONS

 

(a) In connection with its procurement responsibilities for untreated Forest
Products under this Agreement, Koppers will: (i) arrange and be responsible for
transportation to the Facilities of all untreated Forest Products procured by
Koppers under this Agreement that Railroad is not required to transport under
Section 2(c) of this Agreement; and (ii) unload, inspect and season untreated
Forest Products at the Facilities. Title to untreated Forest Products procured
by Koppers shall pass to Railroad upon unloading, inspection and stacking or
boultonizing at the applicable Facility.

 

(b) In connection with the supply to Railroad of treated Forest Products under
this Agreement, Koppers shall: (i) unload, inspect and season untreated Forest
Products; and (ii) unload wood preservative delivered by Railroad; and (iii)
provide the other services specified on Schedule B, including pressure treating
of untreated Forest Products with wood preservative in accordance with the
Specifications (as hereinafter defined); and (iv) load treated Forest Products
onto transportation provided by Railroad. It is understood that these services
will be provided for both cross ties, switch ties and timbers at North Little
Rock and for cross ties only at Denver. If Railroad determines that it is
necessary to store treated Forest Products at a Facility, Koppers will store the
treated Forest Products; provided, however, Koppers shall not be obligated to
store at the Facilities at any given time more than the following total
quantities of treated Forest Products:

 

North Little Rock Facility:

1,500,000 cubic feet of treated cross ties and switch ties (approximately
400,000 cross ties and switch tie equivalents).

 

2

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Denver Facility

   600,000 cubic feet of treated cross ties (approximately 150,000 cross ties).

 

The foregoing maximum Facility storage quantities are based upon limits imposed
by current permits applicable to the Facilities. If, subsequent to the execution
of this Agreement, Koppers is not permitted, in its reasonable judgment, to
store the foregoing quantities at the Facilities, the foregoing quantities shall
be reduced accordingly. Likewise, in the event Koppers, in its reasonable
judgment, becomes permitted to store more than the foregoing quantities at the
Facilities, it will so inform Railroad, and upon Railroad’s request, will make
reasonable efforts to accommodate increased storage, not to exceed permitted
quantities. Koppers shall provide to Railroad a monthly report for each
Facility, setting forth a detailed inventory of all treated Forest Products
stored at each Facility.

 

(c) Railroad will: (i) at its own cost and expense, deliver to the Facilities
all untreated Forest Products and other timber not procured by Koppers
sufficient to meet the orders placed; and (ii) to the maximum extent possible,
deliver untreated Forest Products procured by Koppers to the Facilities at no
cost to Koppers, it being understood and agreed that Railroad will, at its own
cost and expense, deliver to the Denver Facility substantially all of the
untreated Forest Products procured by Koppers for use at that Facility and will
deliver to the North Little Rock Facility as many untreated Forest Products
procured by Koppers for use at that Facility as possible; and (iii) deliver to
the Facilities wood preservative to be used in the treatment of Forest Products
at Railroad’s own cost and expense (it being understood that costs and expenses
of switching railcars onto Railroad’s lines are included in the price for wood
preservative); and (iv) arrange and provide transportation for and deliver
treated Forest Products from the Facilities to Railroad’s destination(s) at
Railroad’s own cost and expense; provided, however, that Koppers will pay UP for
UP’s cost to transport to a Facility untreated Forest Products procured for UP
by Koppers that are rejected by UP for quality-related reasons.

 

(d) Koppers will ensure that any Forest Products at either Facility that are
owned by UP are (i) clearly identified (e.g., by signs) as the property of UP
and (ii) segregated from other Koppers production with access thereto limited to
Koppers’ personnel with a need for such access to comply with Koppers’
obligations under this Agreement.

 

(e) As used herein, the term “Specifications” shall refer to the Grading Rules
and Guidelines as set forth in Schedule A– Union Pacific Railroad Grading Rules
and Guidelines for Forest Products dated September 18, 2003, or such later
revisions thereof as may be mutually agreed upon in writing by the parties from
time to time. Should any condition develop not covered by the Specifications,
Koppers agrees to consult with the Railroad representative to reach a mutually
agreeable conclusion.

 

3.   SUPPLIER RUN WAREHOUSE AT NORTH LITTLE ROCK

 

3

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Koppers will continue to provide “supplier run warehouse” services to Railroad
at its North Little Rock Facility during the term of this Agreement in
accordance with the current course of conduct between the parties, and Railroad
shall compensate Koppers for said service as set forth on Schedule B; provided,
however, Railroad may terminate the provision of these services by Koppers upon
thirty (30) days’ written notice to Koppers.

 

4. COMPENSATION

 

Schedule B to this Agreement prescribes agreed upon prices which UP shall pay to
Koppers for treated Forest Products and related services rendered by Koppers.
Such prices shall be revised as provided in Schedule C. All prices relating to
the supply of treated Forest Products are F.O.B. Koppers’ Facilities. Invoices
for treated Forest Products and related services shall be presented by Koppers
on a monthly basis to a designated representative of UP at each Facility (the
“UP Representative”) for approval and forwarding to UP’s Omaha headquarters,
with signed, correct invoices paid electronically within * days of receipt by
the Accounting Department in Omaha, NE. Said invoices shall include applicable
charges for Forest Products treated and related services performed during said
month.

 

Pricing for procurement of untreated Forest Products shall be the applicable
market price for untreated Forest Products at the time of their procurement, as
determined by Koppers and Railroad in writing from time to time. Koppers’
obligation and ability to purchase and procure the minimum annual volumes
established in Section 1(a) hereof is contingent and predicated upon
establishment of competitive market pricing for untreated Forest Products.
Koppers and Railroad agree to monitor the competitive issues relating to the
procurement of untreated Forest Products and to adjust pricing as may be
necessary to enable Koppers to fulfill its minimum annual procurement
obligations established in Section 1(a). Correct invoices for procurement of
untreated Forest Products shall be presented on a daily basis and shall be paid
electronically within * days of receipt.

 

5. RIGHT TO REJECTION AND INSPECTION

 

UP shall have the right (i) to reject, prior to shipment from either Facility,
any treated Forest Products not meeting the Specifications, (ii) of reasonable
access to each Facility, (iii) to inspect and test the Forest Products at each
Facility, (iv) to inspect the handling and treatment of all Forest Products at
each Facility, including the right to test the strength of the treating
solutions, the purity of the chemicals employed and the amounts absorbed by each
charge, and (v) to inspect the fire protection and security measures provided by
Koppers at each Facility. The basic treating records of Koppers, insofar as they
relate to this Agreement, shall be open at all reasonable times to inspection by
the Railroad during regular office hours. UP, its agents, employees or others
entering for or on behalf of UP upon the Facilities shall at all times be
subject to Koppers’ rules and regulations applicable to visitors to the
Facilities.

 

4

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UP agrees to defend, indemnify and hold harmless Koppers against all loss
resulting from personal injury (including death), to the extent caused by UP,
its agents, employees or other entering for or on behalf of UP upon the Facility
pursuant to this Agreement. Koppers agrees to defend, indemnify and hold
harmless UP against all loss resulting from personal injury (including death),
to the extent caused by Koppers, its agents, employees or others entering for or
on behalf of Koppers upon the property of UP pursuant to this Agreement.
Notwithstanding the foregoing provisions of this Section 5, it is agreed that
neither party shall be liable for any indirect or consequential loss or damage,
including, but not limited to, loss of use, loss of profit or business
interruption.

 

6.    INVENTORY

 

UP shall retain ownership of, and Koppers shall assume custodial responsibility
for, all Forest Products tendered to Koppers for treatment pursuant to this
Agreement. UP and Koppers shall jointly conduct annual physical inventory and
monthly reconciliation of Forest Products at each Facility and shall be jointly
responsible for the accuracy thereof. Koppers assumes custodial responsibility
for Forest Products inventory owned by UP and stored on Koppers’ property. All
treated and untreated Forest Products of UP at the Facility (1) shall be
segregated by Koppers from other material/product at the Facility, (2) shall not
be co-mingled with any other inventory, and (3) shall be clearly identified as
the property of UP. Upon termination of this Agreement for any reason, or if
Koppers otherwise for any reason ceases to provide treating services to UP at a
Facility, UP shall have the right to immediate possession of Forest Products
owned by UP and stored at the Facilities.

 

7.    FORCE MAJEURE

 

Neither party shall be liable for any delay in the shipment or acceptance of the
Forest Products, or for any other interruption, delay, loss, or damage which is
incurred or suffered as a result of a Force Majeure occurrence (as hereinafter
defined), and the obligations of the party subject to a Force Majeure occurrence
shall be excused and suspended during the period such Force Majeure remains in
effect, but only to the extent made necessary by such Force Majeure; provided
that both parties shall perform in accordance with this Agreement when any such
interfering causes shall have been removed. “Force Majeure” as used herein shall
mean a condition or cause beyond the reasonable control of a party which
reasonably shall prevent the affected party from performing its obligations in
the usual and normal course of its business or shall make the performance of its
obligations commercially unreasonable, unfeasible or impracticable, including
but not limited to: (a) acts of God, including floods, storms, earthquakes,
hurricanes, tornadoes, or other severe weather or climatic conditions; (b) acts
of public enemy, war, blockade, insurrection, embargo or riot; (c) fire, wreck,
washout, equipment failure or explosion; (d) strike, lockout, or labor dispute;
(e) shortage of energy; (f) law, ordinance, regulation, directive, order,
interpretation or enforcement policy presently existing or hereinafter
promulgated by any federal, state or local authority, or any agency or division
thereof (relating by way of example, but not of limitation, to the environment

 

5

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or protection of environmental or ecological conditions) (hereinafter
collectively the foregoing referred to as “law”), including any law affecting
the operation of Koppers’ Facilities or its ability to produce, sell and treat
with wood preservative; (g) shortage of or inability to obtain suitable raw
materials (including wood preservative) from usual sources of supply; or (h)
other circumstance beyond a party’s control not enumerated in the foregoing. It
is agreed that each party shall use due diligence, good faith, and all
reasonable efforts to remove such Force Majeure conditions, but that no party
shall have to settle a strike contrary to its best interests. The occurrence of
a Force Majeure situation shall act to suspend performance under this Agreement
to the extent of and for the duration of the event of Force Majeure; provided,
however, that (i) the duty of the Railroad to pay for delivered treated Forest
Products shall never be suspended, and (ii) in the event of an event of Force
Majeure affecting one of the facilities that has, or is reasonably expected to
have, a duration of in excess of sixty (60) days, Koppers will, upon Railroad
request, use reasonable efforts to provide treatment of UP’s Forest Products at
another of Koppers’ treatment facilities acceptable to Railroad on terms and
conditions mutually agreed upon by the parties at the prices set forth on
Schedule B.

 

8.     WARRANTY – LIABILITY

 

Koppers warrants to UP that it will perform the services in a good and
workmanlike manner and that the treated Forest Products delivered to UP under
this Agreement will meet the Specifications and will be free from material
defects in workmanship. KOPPERS MAKES NO OTHER REPRESENTATIONS OR WARRANTIES OF
ANY KIND OR NATURE WITH RESPECT TO THE SERVICES PROVIDED HEREUNDER OR WITH
RESPECT TO MATERIALS SUPPLIED IN CONNECTION WITH THIS AGREEMENT, INCLUDING THE
TREATED FOREST PRODUCTS, WHETHER THEY ARE USED ALONE OR IN COMBINATION WITH
OTHER MATERIALS AND HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES,
INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.

 

The maximum liability arising from failure to meet the above warranties shall be
refund of the price paid by UP for the treated Forest Products not meeting such
warranties or, at Koppers’ option, replacement of nonconforming treated Forest
Products actually shipped. As a condition of any such refund or replacement, UP
shall give Koppers written notice of a claim within one hundred and twenty (120)
days of shipment from the Facility; provided, however, that a claim that the
treated Forest Products are a species or quality not meeting the Specifications
may be made anytime within seventy-two (72) months after shipment from the
Facility. Failure to give such notice shall constitute a waiver of all claims in
respect thereto.

 

It is agreed that Koppers shall not be liable for any indirect or consequential
loss or damage, including, but not limited to, loss of use, loss of profit or
business interruption.

 

6

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The parties intend and agree that the above limitations of liability are to be
effective whether the liability involved is founded on Koppers’ breach of
contract, breach of warranty, tort (including active negligence and strict
liability) or whether the liability involved is founded on Koppers’ sole
negligence.

 

9.    LOSS – DAMAGE

 

All untreated Forest Products after inspection and acceptance, and all treated
Forest Products while at the Facility, shall be and remain property of UP, and
UP shall be responsible for the filing of all tax returns with respect to such
property and the payment of all taxes, if any, thereon. Koppers shall be liable
for the destruction, loss of or damage to the Forest Products and other property
of UP at the Facility to the extent such destruction, loss or damage is caused
by the negligence of Koppers, its employees or agents. Koppers agrees to
maintain the area in which the Forest Products and treated Forest Products are
stored with such reasonable protection against fire and theft as is commensurate
with the values involved. Koppers shall develop and implement written security
and spill prevention control and countermeasure (SPCC) plans as may be required
by applicable laws and regulations and shall otherwise comply with applicable
laws and regulations concerning Facility security. Risk of loss for treated
Forest Products shall transfer to Railroad upon loading of such Forest Products
onto railcars or other means of transportation.

 

10.    ENVIRONMENTAL AND OTHER CONCERNS

 

In the event any law, ordinance, regulation, directive, order, interpretation or
enforcement policy presently existing or hereinafter promulgated by any federal,
state or local authority, or any agency or division thereof (relating by way of
example, but not of limitation, to the environment or protection of
environmental or ecological conditions) requires, in the reasonable opinion of
Koppers, (a) changes in the manner in which a Facility is presently being
operated, or requires an expenditure of monies for capital improvements that
Koppers, in its sole and absolute judgment, determines will make the continued
operation of this Agreement undesirable or (b) prohibits the use of the wood
preservative or makes the use of such wood preservative commercially
unreasonable, unfeasible or impracticable, Koppers may, upon one hundred eighty
(180) days’ prior written notice to UP, terminate this Agreement. In the event
of a termination under clause (a) above, Koppers will, upon request, use
reasonable efforts to provide treatment of UP’s Forest Products at another of
Koppers’ treatment facilities acceptable to UP, all of which treatment shall be
done on terms and/or conditions to be mutually agreed upon by both parties at
prices set forth in Schedule B. In the event of a termination under this Section
10, all minimum treating requirements as set forth in the “Minimum Quantities”
section of this Agreement are eliminated for the year of termination, and
Koppers agrees to waive the charge for yard to car or truck on all untreated
Forest Products returned to UP on account of such termination.

 

7

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Nothing contained herein shall be construed or interpreted as making UP a
generator of hazardous substances or wastes or an operator of a treatment,
storage or disposal facility pursuant to the provisions of the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), the Resource
Conservation Recovery Act, (RCRA) or any state statute governing the generation,
treatment, storage and disposal of hazardous substances or wastes.

 

Koppers shall assume and be responsible for all compliance with the provisions
of RCRA, CERCLA and any state statute governing the generation and handling of
hazardous substances or wastes at the Facilities.

 

If, notwithstanding the provisions of this section, UP shall be interpreted to
be a hazardous substance or waste generator or operator of a treatment, storage
or disposal facility under RCRA, CERCLA or any state statute governing the
treatment, storage and disposal of hazardous waste, as a result of the
activities provided for hereunder which occur at the Facilities, Koppers agrees
to indemnify, hold harmless and defend UP for any and all costs, damages or
expenses of any sort resulting from such an interpretation.

 

If, at a future date after execution of this Agreement, the environmental
regulatory authorities make it mandatory that treated Forest Products be stored
in a manner other than outdoors, such as on concrete pads and under roof, for
example, and the UP is desirous of storing such treated materials, it is
understood that the pricing portion of this Agreement is subject to change and
that an equitable method for recovering the added operating cost entailed in
such a “protected storage” situation shall be negotiated and agreed by both
parties.

 

11.    TERM

 

The term of this Agreement shall commence on August 1, 2003 and shall continue
through December 31, 2009 (the “Initial Term”), unless earlier terminated as
specifically provided in this Agreement. Thereafter, this Agreement shall
automatically renew for successive periods of two (2) years each (each, a
“Renewal Term”) unless (i) Koppers gives two years’ written notice to Railroad
of its intention to terminate the Agreement upon expiration of the Initial Term
or any Renewal Term, as applicable, or (ii) Railroad gives twelve (12) months’
written notice to Koppers of its intention to terminate this Agreement upon
expiration of the Initial Term or any Renewal Term, as applicable.

 

12.    CERTAIN PERFORMANCE GOALS

 

During the term of this Agreement Railroad and Koppers will work jointly in an
effort to find, develop and implement cost savings in the procurement of
untreated Forest Products and treating process at the Facilities. Any such cost
savings jointly agreed upon by the parties that are implemented by Koppers shall
be shared equally between Railroad and Koppers.

 

8

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If requested by the UP Representative, Koppers will use reasonable efforts to
achieve or exceed the performance goals set forth below to the extent reasonably
possible in light of the applicable circumstances. :

 

North Little Rock Facility:

 

  (a)   Band 25,000 Ties/Week

  (b)   Treat – 25,000 Dry Ties/Week or Treat – 17,500 Green Ties/Week

  (c)   Load – 42,000 Treated Ties/Week

  (d)   Maintain banded inventory of 15,000 8' ties and 75,000 9' Ties and
rotate inventory at a minimum of once per year. Old inventory will have a
preference over new production for shipment.

  (e)   Process all uninspected crossties within 15 working days of receipt. In
a crisis mode (crosstie deliveries exceeding 150,000 ties per month), Koppers
will process all Forest Products within 20 working days of receipt, barring
other extraordinary circumstances.

  (f)   Complete end-plating of Forest Products within 15 working days of when
decision was made to end-plate.

  (g)   All inbound cars unloaded within six (6) working days, with a goal of
achieving unloading in five (5) days.

 

Denver Facility:

 

  (a)   Band 17,300 Ties/Week

  (b)   Treat – 17,300 Dry Ties/Week or Treat – 12,110 Green Ties/Week

  (c)   Load – 30,000 Treated Ties/Week

  (d)   Maintain banded inventory of 50,000 9' Ties and rotate inventory at a
minimum of once per year. Old inventory will have a preference over new
production for shipment.

  (e)   Process all uninspected crossties within 15 working days of receipt. In
a crisis mode (crosstie deliveries exceeding 100,000 ties per month), Koppers
will process all Forest Products within 20 working days of receipt, barring
other extraordinary circumstances.

  (f)   Complete end-plating of Forest Products within 15 working days of when
decision was made to end-plate.

  (g)   All inbound cars unloaded within six (6) working days, with a goal of
achieving unloading in five (5) days.

  (h)   Place banding station in loading area to allow direct loading into cars
thus reducing yard to car charges.

 

For information purposes only, the parties acknowledge that currently the North
Little Rock Facility has the maximum capacity to produce approximately * cross
ties per year and approximately * switch ties per year.

 

13.   FORECAST FOR CAPITAL EXPENDITURES

 

9

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Koppers estimates that during the Initial Term it will spend a minimum of $* at
its North Little Rock Facility (to, among other things, undertake a good faith
effort to establish end plating operations prior to air seasoning of crossties)
and a minimum of $* million at its Denver Facility (to, among other things, give
it the ability to inspect and stack eight foot (8’) ties). These expenditures
are expected to provide each of these Facilities with ongoing safety, quality
and productivity improvements to meet or exceed UP requirements. Koppers shall
provide to Railroad’s Director-Forest Products a copy of its December “Additions
& Replacements in Progress” each year to support expenditures at the Facilities.

 

14.    ASSIGNMENT

 

This Agreement may not be assigned, in whole or in part, by either party without
the prior written consent of the other party, which consent shall not be
unreasonably withheld.

 

15.    NOTICE

 

All notices, certificates, consents or other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed properly served (a) if by hand delivery, telecopy or other facsimile
transmission, on the day and at the time on which delivered to the intended
recipient at the address or telecopier number set forth in this Agreement,
provided, however, in the case of telecopy or facsimile transmission, said
notices, certificates, consents or other communications must also be sent the
same day via certified or registered mail delivery; (b) if sent by mail, on the
third business day after the day on which deposited in certified or registered
mail, postage prepaid, return receipt requested, addressed to the intended
recipient at its address set forth in this Agreement; or (c) if by Federal
Express or other reputable express mail service for overnight delivery, on the
next business day after delivery to such express mail service, addressed to the
intended recipient at its address set forth in this Agreement. All notices
required or permitted to be served upon either party hereunder will be directed
to:

 

KOPPERS INC.

Sales Manager, Class I Railroads

436 7th Avenue

Koppers Building, Room 2050

Pittsburgh, PA 15219

 

UNION PACIFIC RAILROAD COMPANY

Director—Forest Products

1416 Dodge Street, Room 200

Omaha, NE 68179-0200

 

Either party may, from time to time by written notice to the other, change its
address or any designated representative for receipt of notices.

 

10

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16.    NOTIFICATION OF FOLLOWING YEARS’ REQUIREMENTS

 

On or around November 15 of each year, UP shall advise Koppers of its
approximate estimate of the number of treated Forest Products required by it
from Koppers for the following year and the anticipated amount of untreated
Forest Products to be shipped by UP to the Facilities. This estimate is to be
updated on a monthly basis by a Railroad setup detailing all treated Forest
Products required for the Facility for that given month. Railroad will advise
Koppers during the course of the year as its plans change and the parties will
work together reasonably to accommodate rescheduling necessitated by such
changes; provided, however, that nothing in this Section shall operate to
relieve the Railroad of its minimum purchase obligations under this Agreement.

 

17.    BINDING EFFECT

 

This Agreement shall inure to the benefit of and shall be binding upon the
parties and their respective successors and permitted assigns, subject, however,
to the limitations contained herein. No provision hereof shall, however, be
construed to impose any personal or pecuniary liability upon any officer or
employee of the parties. This Agreement shall not confer or be construed as
conferring any rights, benefits or remedies on any person or entity not named as
a party hereto.

 

18.    WAIVER

 

To the extent permitted by law, no delay or omission to exercise any right or
power accruing upon any event of default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be expedient. Any such waiver
shall be in writing and signed by the party against whom it is to operate. In
order to entitle either party to exercise any remedy hereunder, it shall not be
necessary to give any notice other than as may be required in this Agreement. If
any covenant contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
under this Agreement.

 

19.    SEVERABILITY

 

If any term or provision of this Agreement or the application thereof to any
party or circumstance be judged invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such terms and provisions to
persons or circumstances other than those to which it is held invalid or
unenforceable shall not be affected thereby, except as it might be necessary to
effectuate the intent of the parties, and each provision of this Agreement shall
be valid and be enforceable to the fullest extent permitted by law.

 

11

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20.     AMENDMENTS

 

This Agreement may not be amended or altered except by the written agreement of
the parties. Unless otherwise explicitly provided therein, no such amendment
shall be deemed to extend to any prior or subsequent matter, whether or not
similar to the subject matter of such amendment. Any printed term contained in
any purchase order or other form or document used by Railroad to order treated
Forest Products or in any acknowledgment or other form or other document used by
Koppers shall be null and void and of no force and effect, and this Agreement
will take precedence over and supercede any such terms, unless such terms have
been agreed to in writing by both parties.

 

21.     EXECUTION IN COUNTERPARTS

 

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which shall constitute but one and the same
instrument.

 

22.     CAPTIONS

 

The captions or headings in this Agreement are for convenience only and in no
way define, limit or describe the scope or intent of any provisions of this
Agreement.

 

23.     ENTIRE AGREEMENT

 

This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior oral or written
agreements and understandings between the parties relating to the subject matter
hereof. Any Schedule referenced herein is attached hereto and incorporated
herein by such reference.

 

24.     INTERPRETATION

 

If any provision in any Schedule provided with the original executed copy of
this Agreement or as amended and signed by both parties, is inconsistent with
the terms of the body of this Agreement, the provision in the Schedule shall be
controlling. All words used in this Agreement will be construed to be of such
gender or number, as the circumstances require. Unless otherwise expressly
provided, the word “including” does not limit the preceding words or terms.

 

25.     ARBITRATION OF DISPUTES

 

Any controversy or claim arising out of or relating to this Agreement, or breach
thereof, shall be settled in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Any
arbitration

 

12

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hereunder shall take place (i) in Pittsburgh, Pennsylvania if UP makes the
demand for arbitration, and (ii) in Omaha, Nebraska if Koppers makes the demand
for arbitration. To the extent reasonably practicable, both parties agree to
continue performing their respective obligations under this Agreement while the
dispute is being resolved. All matters relating to any arbitration hereunder
shall be maintained in confidence. Nothing contained in this Section shall
prohibit either party from seeking equitable relief without first resorting to
arbitration under such circumstances as that party’s interests hereunder and in
its property will be otherwise compromised.

 

26. GOVERNING LAW

 

All questions with respect to the construction of this Agreement and the rights
and liabilities of the parties hereunder shall be determined in accordance with
the laws and regulations of the State of Nebraska, except any such laws or
regulations that would require the law or regulation of another jurisdiction to
apply.

 

WHEREOF, the parties hereto have executed this Agreement this 3rd day of
November, 2003, to be effective as of August 1, 2003.

 

[SIGNATURES APPEAR ON NEXT PAGE.]

 

KOOPERS INC. By:                                      
                                                           

Name

Title                                     
                                                     

 

UNION PACIFIC RAILROAD COMPANY By:                                      
                                                               

 

13

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Name

                                                                               
                       

        Title  

 

14

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SCHEDULE A

 

Union Pacific Railroad Grading Rules and Guidelines for Forest Products dated  

September 18, 2003

 

VIEW ON UPRR WEBSITE

http://www.uprr.com/suppliers/sup_ovr/forest_prod.pdf

 

15

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SCHEDULE B

 

Pricing

 

16

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

SCHEDULE B (Denver)

 

Union Pacific Railroad—Wood Treating & Preservative Price Schedule

 

1. PRESERVATIVE:

   P2 Solution deadhead    * Gallon      P1 Coal Tar creosote deadhead    *
Gallon                  SEE ITEM #12.                 

2. TREATING CROSSTIES:

   FIRST 600,000 CROSSTIES           6x8x8'    * EA      7x9x8'    * EA     
7x9x8'6    * EA      7x9x9'    * EA                  600,001 - 800,000          
6x8x8'    * EA      7x9x8'    * EA      7x9x8'6    * EA      7x9x9'    * EA     
            OVER 800,000           6x8x8'    * EA      7x9x8'    * EA     
7x9x8'6    * EA      7x9x9'    * EA            

***

   An additional charge of $0.10 per tie will be effective for all pre bored
ties.                 

***

   A credit of $0.75 per tie will be applied for the non handling of pre
inspected/pre processed ties.                 

3. END PLATING 7" GREEN CROSSTIES: for air seasoning (Includes Robbins/Chemstar
plate price f.o.b. Denver of $0.275/ea & labor cost of $0.87/tie. Plate price is
based on current end plate pricing and is subject to change.)

  

* TIE

           

Note: Plates to be ordered in full truckload quantities (71,280 plates per
truck). Plates to be invoiced upon application.

                

4. TREATING PILING & POLES: (includes handling & sorting)

  

* CF

           

5. CREDIT REJECT TIES: (rail shipments only)

  

* EA

           

6. ARTIFICIAL SEASONING:

  

* CF/HR

           

7. LOADING MATERIAL:

  

YARD TO GONS - CROSSTIES

  

* EA

    

YARD TO GONS - PILING & POLES

  

* LF

    

ON BULKHEAD FLAT CARS

  

* MBF

    

ON CENTER BEAMS

  

* CAR

 

Page 1 of 2

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

8. UNLOADING MATERIAL:

  TREATED TIES    * EA     TREATED SWITCHTIES    * MBF     LUMBER & TIMBER   
* MBF     PILING & POLES    * LF

9. LIFT TRUCK/PRENTICE:

       * HR

10. BUNDLING:

  CROSSTIES    * TIE

11. MISC. SERVICES:

 

COST OF MATERIAL + 10% & LABOR

(including fringes) + 25% for supervision

    

12. ESCALATION:

             *     

2004

  *     

2005 & 2006

  *     

2007 & beyond

  *     

 

TAXABLE ITEMS @ 02.9% COLORADO TAX

@ 00.7% ADAMS COUNTY

@ 00.8% TRANSIT TAX

 

ALL OTHER ITEMS ARE NON-TAXABLE.

 

Page 2 of 2

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SCHEDULE B (North Little Rock)

 

Union Pacific Railroad—Wood Treating & Preservative Price Schedule

 

1. 1. STAFF SUPPORT:

       *    MONTH

2.     PRESERVATIVE:

  (P2 Solution deadhead)         * Gallon     (P1 Solution deadhead—To be used
with    * Gallon     UPRR approval only.)               ALL PRICES ARE A PASS
THROUGH
COST WITH NO ADDITIVES.          SEE ITEM #29.          

3.    TREATING CROSSTIES:

  FIRST 650,000 CROSSTIES                   6x8x8'         * EA         7x9x8'
        * EA         7x9x8'6         * EA         7x9x9'         * EA        
650,001—800,000                   6x8x8'         * EA         7x9x8'         *
EA         7x9x8'6         * EA         7x9x9'         * EA        
800,001—1,000,000                   6x8x8'         * EA         7x9x8'         *
EA         7x9x8'6         * EA         7x9x9'         * EA        
1,000,001—1,300,000                   6x8x8'         * EA         7x9x8'        
* EA         7x9x8'6         * EA         7x9x9'         * EA         OVER
1,300,000                   6x8x8'         * EA         7x9x8'         * EA    
    7x9x8'6         * EA         7x9x9'         * EA     ***   An additional
charge of $0.10 per tie will be
effective for all pre bored ties.

4.     TREATING SWITCHTIES: (includes handling & sorting)

   * MBF

5.     END PLATING SWITCHTIES: (Includes Robbins plate price f.o.b. NLR of
$0.27/ea & labor price of $3.89/tie. Plate price is based on current end plate
pricing and is subject to change.)

   * TIE

6.     END PLATING 7" GREEN CROSSTIES: for air seasoning (Includes Robbins plate
price f.o.b. NLR of $0.27/ea & labor cost of $1.61/tie. Plate price is based on
current end plate pricing and is subject to change.)

  

* TIE

END PLATING DRY CROSSTIES: for treatment (Includes Robbins plate price f.o.b.
NLR of $0.27/ea & labor cost of $0.93/tie. Plate price is based on current end
plate pricing and is subject to change.)

  

* EA

Note: Plates to be ordered in full truckload quantities (71,280 plates per
truck). Plates to be invoiced upon application.

    

 

Page 1 of 3

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7. TREATING LUMBER & TIMBER: (includes handling & sorting)

   *    MBF

 

8. TREATING PILING & POLES: (includes handling & sorting)

 

   *    CF

9. CROSSING HARD WARE: (5/8x13 spikes-Koppers invoice + 10%)

   *    EA

10. TREATING CROSSINGS:

   112#-119#    *    MBF     

131#-136#

   *   

MBF

 

11. RELOAD REJECT TIES:

        *    EA

 

12. CREDIT REJECT TIES: (rail shipments only)

 

   *    EA

13. ARTIFICIAL SEASONING:

        *    CF/HR

14. INCISING LUMBER & TIMBER:

 

        *    MBF

15. RETREATMENT:

        *    CYL.
CHG.

16. LOADING MATERIAL:

   YARD TO GONS-CROSSTIES    *    EA      YARD TO GONS-SWITCHTIES    *    MBF  
   YARD TO GONS-LUMBER & TIMBER    *    MBF      YARD TO GONS-PILING & POLES   
*    LF      YARD TO GONS-CROSSINGS    *    MBF      ON BULKHEAD FLAT CARS    *
   MBF      ON CENTER BEAMS    *   

CAR

 

17. UNLOADING MATERIAL:

  

TREATED TIES

TREATED SWITCHTIES

LUMBER & TIMBER

PILING & POLES

  

*

*

*

*

  

EA

MBF

MBF

LF

18. FRAMING LUMBER: (elevation/dapping/sizing/drilling)

 

   *    MBF

19. DRESSING/END TRIMMING:

  

BRIDGE TIES

STRINGERS & CAPS

  

*

*

  

MBF

MBF

20. LIFT TRUCK/PRENTICE:

 

        *    HR

21. BUNDLING: MANUAL

 

 

MECHANIZED

  

CROSSTIES

SWITCHTIES

POLES/PILING

CROSSTIES

10' SWITCHTIES

  

*

*

*

*

*

  

TIE

MBF

PC

TIE

TIE

22. MISC. SERVICES:

  

COST OF MATERIAL + 10% & LABOR

(including fringes) + 25% for supervision

         

 

Page 2 of 3

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23. RECLASS SWITCHTIES:

   *    MBF

24. TAXABLE ITEMS: THIS SECTION ELIMINATED ON 5-24-99.

 

         

25. HANDLING & LOADING MISC. PRE-PLATE ITEMS (PLATES,SPIKES)

FOR DISPOSITION, PER MATERIAL MANAGER-TIES REQUEST.

   *    CARLOAD

26. INSTALLATION & STEEL MATERIALS FOR BULKHEAD FLAT CARS:

 

   *    CAR

27. REMOVE REINFORCING BARS FROM COAL CARS:

   *    CAR

28. SUPPLIER RUN WAREHOUSE:

 

   *    MONTH

29. ESCALATION:

               *     

2004

   *     

2005 & 2006

   *     

2007 & beyond

   *     

 

TAX EXEMPT ITEMS & SERVICES:

TREATMENT SERVICE OF ALL COMMODOTIES

EXTRA HANDLING

SPECIAL PACKAGING AND/OR BANDING ETC…

YARDING CHARGES

LOADING CHARGES

INSPECTION OF ALL MATERIAL

ANY OTHER SERVICES PERFORMED.

 

Page 3 of 3

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SCHEDULE C

 

ANNUAL RATE REVISIONS – Denver

 

The rates set forth in this contract for treating services shall be revised
upward or downward in accordance with the following formula on February 1 of
each contract year, beginning February 1, 2004:

 

v   *

 

v   L = The percentage change in the Average Hourly Earnings of Employees on
Manufacturing Payrolls, as reported by the United States Department of Labor,
Bureau of Labor Statistics, Employment and Earnings for the State of Colorado
Annual Average of the immediately preceding year compared to the Annual Average
of the second preceding year (See Hypothetical Example below).

 

v   PPI = The percentage change in the Producer Price Index for Total
Manufacturing Industry as reported by the United States Department of Labor,
Bureau of Labor Statistics the Annual Average for the immediately preceding year
compared to the Annual Average of the second preceding year (See Hypothetical
Example below).

 

v   A = The adjustment made to charges in the contract.

 

The annual adjustment will be capped at *and the adjustment cannot decrease the
rates beneath the base rates.

 

In calculating the adjustments, all percent changes (both intermediate and
final) will be rounded to the nearest hundredth of a percent and all rates will
be rounded to the nearest whole cent. The rounding rule used will be that any
fraction less than on-half of the noted precision will be dropped, while an
fraction equal to or greater than one-half will be rounded up to the next higher
value.

 

If the Bureau of Labor Statistics rebases either the Average Hourly Earnings of
Employees on Manufacturing Payrolls or the Producer Price for Total
manufacturing Industry, the rebased values will be used in subsequent adjustment
calculations.

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

HYPOTHETICAL EXAMPLE OF ADJUSTMENT CALCULATION

For February 1, 2004 Adjustment

 

*

 

All index values and percentage changes are for illustrative purposes only.

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

SCHEDULE C

 

ANNUAL RATE REVISIONS – Little Rock

 

The rates set forth in this contract for treating services shall be revised
upward or downward in accordance with the following formula on February 1 of
each contract year, beginning February 1, 2004:

 

v   *

 

v   L = The percentage change in the Average Hourly Earnings of Employees on
Manufacturing Payrolls, as reported by the United States Department of Labor,
Bureau of Labor Statistics, Employment and Earnings for the State of Arkansas
Annual Average of the immediately preceding year compared to the Annual Average
of the second preceding year (See Hypothetical Example below).

 

v   PPI = The percentage change in the Producer Price Index for Total
Manufacturing Industry as reported by the United States Department of Labor,
Bureau of Labor Statistics the Annual Average for the immediately preceding year
compared to the Annual Average of the second preceding year (See Hypothetical
Example below).

 

v   A = The adjustment made to charges in the contract.

 

The annual adjustment will be capped at * and the adjustment cannot decrease the
rates beneath the base rates.

 

In calculating the adjustments, all percent changes (both intermediate and
final) will be rounded to the nearest hundredth of a percent and all rates will
be rounded to the nearest whole cent. The rounding rule used will be that any
fraction less than on-half of the noted precision will be dropped, while an
fraction equal to or greater than one-half will be rounded up to the next higher
value.

 

If the Bureau of Labor Statistics rebases either the Average Hourly Earnings of
Employees on Manufacturing Payrolls or the Producer Price for Total
manufacturing Industry, the rebased values will be used in subsequent adjustment
calculations.

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

HYPOTHETICAL EXAMPLE OF ADJUSTMENT CALCULATION

For February 1, 2004 Adjustment

 

*

 

All index values and percentage changes are for illustrative purposes only.