**EXHIBIT10.3**

 

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

Corporation and DowHydrocarbons and Resources LLC.

 

THIRDAMENDED AND RESTATED AGREEMENT

 

ThisTHIRD AMENDED AND RESTATED AGREEMENT (“Agreement”), entered into as of March 1,2008, between Union Carbide Corporation (“UCC”), a New York corporation, andDow Hydrocarbons and Resources LLC (“DHR LLC”), a Delaware corporation, amendsand restates that Second Amended and Restated Agreement of April 1, 2005,as amended as of January 1, 2008 (as so amended, the “Second AmendedAgreement”), 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 (asdefined below) with certain products and services under the terms andconditions set forth below.

 

1.              TERM

 

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

 

2.              DEFINITIONS

 

As used in thisAgreement:

 

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

 

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

 

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

 

(d)         “DeliveryPoint” means the point at which product supplied by DHR LLC to a UCC Memberunder this Agreement is received (1) into the facilities of such UCCMember or its designee (including without limitation storage facilitiesoperated by such UCC Member or its designee), or (2) into IntermediaryEquipment directly connected to the facilities of such UCC Member or itsdesignee, or (3) into the facilities of a third party, or a designee ofsuch UCC Member or such third party, in fulfillment of an obligation of suchUCC Member to deliver product to or on behalf of such third party;  for avoidance of doubt, (A) whenreceived into any truck or tank car, the Delivery Point is the point at whichthe product enters the receiving truck or car; (B) when received into anypipeline, the Delivery Point is the point at which the product passes theconnection between the delivering pipeline and receiving pipeline; (C) whenreceived into storage, the Delivery Point is the point at which the productenters a storage tank or cavern; (D) when received by “in-line” transferor “in-storage” transfer, receipt at the Delivery Point occurs immediately uponsuch transfer; or (E) when received by or into any vessel, the DeliveryPoint is at the flange between the vessel’s permanent hose connection and theshore line.

 

(e)          “EffectiveDate” means March 1, 2008.

 

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

 

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

 

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(h)         “IntermediaryEquipment” means, with respect to a UCC Member or its designee, intermediarysystems or equipment, owned or controlled by a third party, used to deliverproducts to such UCC Member’s or designee’s facilities pursuant to a SeparateContract. For avoidance of doubt, the Burnel line connected to UCC’s SeadriftOperations is Intermediary Equipment.

 

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

 

(j)            “NetSupply Cost” means the following costs, to be determined in accordance with thethen-current cost accounting practices applied by DHR LLC consistent with GAAP:(1) for fuels, on a site specific basis, the cost of purchases of suchfuel (and transportation and storage thereof, except as provided otherwise bythe delivery terms of Section 4(b)(2)) under Third-Party Contracts, net ofrelated sales and exchanges, (2) for hydrocarbon feedstocks, the cost ofpurchases of such hydrocarbon feedstocks (and transportation and storagethereof, 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) formonomers and aromatics, the cost of purchases of such monomers and aromatics(and transportation and storage thereof, except as provided otherwise by thedelivery terms of Section 4(b)(2)), using the weighted average price forsuch monomers and aromatics under U.S. Gulf Coast Third-Party Contracts, and (4) forelectricity, on a site specific basis, the cost (including without limitation applicable fees charged by non-Affiliatethird 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)         “SeparateContract” means an agreement, which pre-exists the Effective Date, between oneor more third parties and one or more UCC Members, including without limitationany such agreement (1) for supply, delivery, storage or transportation ofproducts to UCC or its designee, and/or (2) for the swap or exchange ofany products.

 

(l)             “SmallSites” 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-PartyContracts” means contracts between the purchaser (i.e., DHR LLC or a DHR LLCAffiliate) and a third party that is not an Affiliate of such purchaser.

 

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

 

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

 

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

 

3.              PRODUCTS ANDSERVICES TO BE SUPPLIED BY DHRI TO UCC

 

(a)         The following productsand 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 extentotherwise agreed to by DHR LLC and UCC:

 

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

(A)       fuels, primarily naturalgas,

(B)       hydrocarbon feedstocks,

 

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

(D)       electricity,

 

except to the extentsupply of such products is arranged in accordance with Sections 3(a)(2) or3(c), below, or is procured by a UCC Member pursuant to a Separate Contract.

 

(2)         Services.  DHR LLC shall provide: management of the UCCGroup’s hydrocarbon and energy asset base, management of the UCC Group’sEmission Products, and management of the UCC Group’s hydrocarbon and energybusiness matters, including without limitation: (i) management ofhydrocarbon and energy contracts (including without limitation SeparateContracts); (ii) communications, as required, with the UCC Group’smanagement and authorized representatives, as well as with any of the UCC Group’sexternal customers, in connection with such hydrocarbon and energy businessmatters; (iii) monitoring of the UCC Group’s and  industry supply/demand balances ofhydrocarbon and energy products; (iv) the implementation of both short andlong term strategic positions in hydrocarbon and energy products; (v) oversightand consulting regarding markets for Emission Products; and (vi) asmutually determined by UCC and DHR LLC, provision to the UCC Group ofapplicable accounting and computer systems to manage the other servicessupplied to the UCC Group under this Agreement. To the extent a UCC Memberelects to separately arrange the supply of any one or more of the foregoingservices, in whole or in part, such supply is outside the scope of thisAgreement.

 

Except to the extentsupplied by DHR LLC pursuant to Section 3(a)(1) above, or procured bya 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, asdescribed below:

 

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

 

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

 

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

 

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

 

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

 

(c)          With respect to any oneor 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 describedin Section 3(a), above; in the event DHR LLC elects to discontinue supplyof any one or more of such products or services (other than pursuant to otherprovisions of this Agreement which expressly provide for termination of thisAgreement), DHR LLC will reasonably cooperate with UCC to effect a transitionto another supplier of such service or product. For any UCC Group location where

 

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

 

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

 

(e)          The parties’ respectiveobligations under Section 3(a) of this Agreement are subject toSeparate Contracts; for the avoidance of doubt, a UCC Member shall remainresponsible for the payment of any charges payable by such UCC Member under aSeparate Contract.

 

(f)           DHR LLC is authorizedto act as a UCC Member’s delegate with respect to performance of any such UCCMember’s rights or obligations under Separate Contracts; provided that, as adelegate of such UCC Member, DHR LLC will not provide or receive productswithout corresponding compensation (for example, in the form of payment,in-kind product, or a combination thereof) from or to, respectively, such UCCMember or its designee. ***DHR LLC is not liable forClaims (as defined in Section 8(E), below) made by third parties withrespect to the acts or omissions of DHR LLC when acting as delegate for a UCCMember, except to the extent such Claims arise as a result of DHR LLC’s grossnegligence or willful misconduct***.

 

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

 

(h)         Appointmentas agent.

 

(1)         UCC hereby makes,constitutes and appoints DHR LLC as its true and lawful attorney-in-fact andempowers DHR LLC to act for UCC as UCC’s agent during the term of thisAgreement in matters connected with the services (for example, arranging thesupply or sale of products, Emission Products, or utilities, including but notlimited to arrangements between UCC and DHR LLC or UCC and DHR LLC Affiliates)and products supplied under this Agreement. Specifically, DHR LLC has theauthority to issue and execute those business documents and contracts in the nameof UCC which are necessarily issued in conjunction with the services andproducts 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 similarappointment and grant, and DHR LLC hereby accepts such appointment andgrant.  ***DHRLLC is not liable for Claims (as defined in Section 8(E), below) made bythird parties with respect to the acts or omissions of DHR LLC  when acting as agent for a UCC Member, exceptto the extent such Claims arise as a result of DHR LLC’s gross negligence orwillful misconduct.***

 

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

 

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

 

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

 

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

 

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

 

# **4.**              COMPENSATION and DELIVERYTERMS

# ** **

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

 

(1)         ProductCharges

 

(A)       Forhydrocarbon feedstocks supplied by DHR LLC under this Agreement, UCC shall payto DHR LLC the Net Supply Cost thereof.

 

(B)       Forfuels supplied by DHR LLC under this Agreement, UCC shall pay to DHR LLC theNet Supply Cost thereof.

 

(C)       Formonomers and aromatics supplied by DHR LLC under this Agreement, UCC shall payto DHR LLC the Net Supply Cost thereof.

 

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

 

(2)         ServiceCommission – For all of the services supplied under Section 3(a)(2) ofthis Agreement, UCC shall pay a commission to DHR LLC, which shall becalculated as follows:

 

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

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

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

(D)       $1.00 per megawatt hour ofelectricity procured for or sold for the Major Sites (including withoutlimitation electricity supplied to a UCC Member by DHR LLC or purchased from aUCC Member by DHR LLC).

 

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

 

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

 

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(d)         Notwithstanding any otherprovision of this Agreement, DHR LLC shall accept payment from any UCCSubsidiary 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 toDHR LLC under this Agreement.

 

5.     PRODUCT SPECIFICATIONS; LIMITED WARRANTY; ASSUMPTION OF RISK

 

DHR LLC warrants that all product purchased from DHRLLC 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 SERVICESSUPPLIED UNDER THIS AGREEMENT, AND IS MADE EXPRESSLY IN LIEU OF AND EXCLUDESANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULARPURPOSE, AND ALL OTHER EXPRESS OR IMPLIED WARRANTIES INCLUDING WITHOUTLIMITATION THOSE PROVIDED BY STATUTE OR COMMON LAW. DHR LLC MAKES NO OTHERWARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS OR SERVICES SUPPLIEDHEREUNDER. EACH UCC MEMBER, WITH RESPECT TO ANY PRODUCT RECEIVED BY SUCH UCCMEMBER HEREUNDER, ASSUMES ALL RISK, RESPONSIBILITY AND LIABILITY RESULTING FROMTHE USE OR APPLICATION OF SUCH PRODUCT, AND DHR LLC SHALL HAVE NO LIABILITY ORRESPONSIBILITY WHATSOEVER FOR THE USE OR APPLICATION OF ANY SUCH PRODUCT.

 

6.     TERMSOF PAYMENT

 

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

 

7.              MEASUREMENT

 

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

 

8.              CLAIMS, REMEDIES,LIMITATION OF DAMAGES and INDEMNIFICATION

 

(A)             IFANY PRODUCT PURCHASED BY A UCC MEMBER FROM DHR LLC UNDER THIS AGREEMENT DOESNOT MEET APPLICABLE SPECIFICATIONS, DHR LLC SHALL HAVE THE RIGHT IN ITSDISCRETION, AS THE UCC MEMBER’S SOLE REMEDY, EITHER TO REPLACE IT OR REFUNDTHE  PRODUCT CHARGE PAID TO DHR LLC FORTHE 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 ANDALL CLAIMS WHATSOEVER ARISING HEREUNDER WITH RESPECT TO

 

(1)     PRODUCTSPURCHASED 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 TOWHICH SUCH DAMAGES RELATE, AND

 

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

 

(a)         WITHRESPECT 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 WHICHSUCH DAMAGES RELATE;

 

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

 

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

 

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

 

(D)             WITHINSIXTY (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 UNDERTHIS AGREEMENT, UCC OR SUCH UCC MEMBER SHALL INFORM DHR LLC IN WRITING OFTHE CLAIM OR THE CLAIM IS WAIVED.

 

(E)       (1) TOTHE EXTENT PERMITTED BY APPLICABLE LAW, UCC ASSUMES THE ENTIRE RESPONSIBILITYAND LIABILITY FOR, AND SHALL PROTECT, DEFEND, INDEMNIFY, AND HOLD HARMLESS DHRLLC FROM AND AGAINST, ANY AND ALL CLAIMS WHICH ARE MADE, ASSERTED OR ALLEGEDAGAINST DHR LLC BY ANY ONE OR MORE UCC MEMBERS OR ANY OTHER PERSON, OR WHICHARISE IN FAVOR OF ANY ONE OR MORE UCC MEMBERS OR ANY OTHER PERSON, ORIGINATINGFROM ANY SOURCE IN CONNECTION WITH (a) DHR LLC ACTING AS AN AGENT ORDELEGATE FOR ANY ONE OR MORE UCC MEMBERS, AND/OR (b) THE FAILURE OF A UCCSUBSIDIARY TO FULLY ACCEPT, ABIDE BY, OR COMPLY WITH, THE TERMS OF THISAGREEMENT, AND/OR (c) ARRANGED PURCHASES AND/OR ARRANGED SALES, AND/OR (d) THEUSE OR APPLICATION, BY A UCC MEMBER OR ANY OTHER PERSON, OF ANY PRODUCTSUPPLIED UNDER THIS AGREEMENT.

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

 

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

 

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

 

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

 

(2)         NOTWITHSTANDINGTHE FOREGOING, (a) UCC’S OBLIGATIONS UNDER THE PROVISIONS OF SECTION 8(E)(1) SHALLNOT EXTEND TO ANY CLAIMS OF GROSS NEGLIGENCE, WILLFUL

 

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MISCONDUCT, ORBREACH OF THIS AGREEMENT WHICH ARE MADE, ASSERTED OR ALLEGED AGAINST DHR LLC BYANY ONE OR MORE UCC MEMBERS,  AND (b) UCC’SINDEMNITY AND HOLD HARMLESS OBLIGATIONS UNDER THE PROVISIONS OF SECTION 8(E)(1) SHALLNOT EXTEND TO ANY CLAIMS OF PERSONS OTHER THAN UCC MEMBERS WHICH ARISE AS ARESULT OF DHR LLC’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (FOR THE AVOIDANCEOF DOUBT, UCC’S OBLIGATIONS TO PROTECT AND DEFEND SUCH CLAIMS ARE NOT EXCLUDEDBY THIS SECTION 8(E)(2)(b)).

 

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

 

(a) “BODILYINJURY” MEANS ANY BODILY INJURY OF ANY KIND OR CHARACTER, INCLUDING WITHOUTLIMITATION, 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, ASWELL AS ANY PERSONAL INJURY INCLUDING, BUT NOT LIMITED TO, ANY INVASION OFPERSONAL RIGHTS SUCH AS LIBEL OR SLANDER, CIVIL RIGHTS VIOLATION, INVASION OFPRIVACY, TORTIOUS INTERFERENCE WITH A CONTRACT, OR MENTAL SUFFERING OF ANYTYPE.

(b) “CLAIMS”MEANS ALL CLAIMS OF ANY KIND OR CHARACTER, INCLUDING WITHOUT LIMITATION, ANYONE OR MORE OF THE FOLLOWING, COLLECTIVELY AND INDIVIDUALLY: LOSSES, COSTS(INCLUDING, BUT NOT LIMITED TO, ATTORNEYS’ FEES, COURT COSTS, AND OTHER COSTSOF SUIT), DEMANDS, DAMAGES, JUDGMENTS, PENALTIES, LIABILITIES, DEBTS, EXPENSES,LAWSUITS AND CAUSES OF ACTION OF WHATEVER NATURE AND CHARACTER, WHETHER ARISINGOUT OF OR RELATED TO CONTRACT (INCLUDING, WITHOUT LIMITATION, RELATED TODELAYED 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, WITHOUTLIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF, INCLUDING, WITHOUTLIMITATION, CLAIMS ARISING OUT OF OR ALLEGED TO ARISE OUT OF BODILY INJURY ORLOSS OF PROPERTY.

(c)  “PERSON”MEANS ANY NATURAL PERSON, OR ANY COMPANY, CORPORATION, GENERAL OR LIMITEDPARTNERSHIP, 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 ofeither DHR LLC or a UCC Member in performance of any of the obligations imposedupon it shall be excused and such party shall not be liable for damages orotherwise when such failure or delay is beyond the control of DHR LLC or suchUCC Member (“force majeure event”).  Suchevents include, but are not limited to, the following: labor difficulties,total or partial loss or shortage of raw component material or productsordinarily required by DHR LLC; breakdown, either total or partial, of eitherparty’s equipment, or act of God or nature. However, the settlement of strikes or lockouts shall be entirely withinthe 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 otherUCC Members) when experiencing a force majeure event as soon as practicable.

 

Upon cessation of the cause or causes for any suchfailure or delay, performance hereof shall be resumed as soon aspracticable.  Such failure or delay shallnot operate to extend the duration of this Agreement nor obligate either DHRLLC or any UCC Member to make up deliveries or receipts of product.  If, by reason of any such circumstances, DHRLLC’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 allparties share the product in proportion to their take prior to the circumstancereducing availability.

 

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10.       PATENTS

 

***DHR LLC does not assume patentresponsibility for the use by a UCC Member of product delivered hereunder.  The use of product may or may not constitutean infringement of patents. A UCC Member receiving product hereunder assumesfull responsibility and liability for patent infringement in connection withany 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 LLCunder 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) withrespect 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 measuredby DHR LLC’s net income, that are increased or levied, now or in the future, inconnection with the supply of such services.

 

12.       WAIVER

 

No claim or right arising out of a breach of thisAgreement can be discharged in whole or in part unless agreed to in writingexecuted by DHR LLC and UCC.   Any suchwaiver shall not be deemed to be a waiver of any subsequent breach.

 

13.       ASSIGNMENT

 

No right or obligation under, or interest in, thisAgreement 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 anyof its rights or obligations under, this Agreement to any DHR LLC Affiliate atany time without prior written consent from UCC.

 

14.       APPLICABLE LAW

 

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

 

15.       ENTIRETY OF AGREEMENT;SEVERABILITY

 

(a)         ThisAgreement merges all prior understandings between DHRI or DHR LLC and UCCregarding the subject matter of this Agreement. No prior dealings between the parties and no usage of trade shall berelevant to supplement or explain any term used herein.  All obligations, agreements, andunderstanding are expressly set forth herein and are not enforceable unlessembodied herein.  As of the EffectiveDate, (1) the Second Amended Agreement is hereby amended and restated, andneither UCC nor DHR LLC shall have any further rights, duties or obligationsunder the Second Amended Agreement, except for any payment rights andobligations for products and services provided prior to the Effective Date.

 

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

 

(c)          Should anyindemnification provisions set forth in this Agreement be limited by any lawthen applicable to this Agreement, this Agreement shall automatically be deemedamended to provide indemnification under this Agreement to the maximum extentpermitted by such applicable law. However, and in any event, if any provisionof this Agreement is held invalid, the invalidity shall not affect otherprovisions or application of the Agreement which

 

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

 

16.       NOTICE

 

All notices, demands, requests and othercommunications provided for in this Agreement shall be given in writing,delivered in person (including without limitation via commercial courier) orvia Certified or Registered U.S. Mail, with return receipt, and addressed tothe 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 suchother address as such party may hereafter specify by written notice to theother. All such notices, requests and communications shall be effective uponreceipt.

 

INWITNESS WHEREOF, the parties hereto have executed this Agreement effective asof 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 AGREEDas to Section 3(b):

 

THE DOW CHEMICAL COMPANY

 

 
| By:    | /s/ JOHN SUTTLE                                     |   |
|--------|-----------------------------------------------------|--------|
|   |
| Name:  | JOHN SUTTLE                                         |   |
| Title: |      Authorized  Representative |
|        |                                                     |        |  |

 

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EXHIBIT A

 

1. RepresentativeProducts.  The following isrepresentative list of the products to be supplied to the UCC Group inconnection with this Agreement (i.e., some or all of the following products, aswell as products not listed, will be supplied to the UCC Group under thisAgreement):

 
| 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 fromDHR LLC under this Agreement shall meet the then-current DHR LLC productspecification or such specifications as DHR LLC reasonably determines (e.g., inconnection with any of the services or consultation provided by DHR LLC underthis Agreement) will meet such UCC Member’s product quality requirements.

 

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