Document:

WebFilings | EDGAR view

 

                                               Exhibit 10.1
 
 Momentive Performance Materials Holdings LLC 
2011 INCENTIVE COMPENSATION PLAN (the “Plan”)
 
 
Purpose of the Plan
 
The purpose of the Plan is to reward associates of Momentive Specialty Chemicals Inc. and Momentive Performance Materials Inc. and their subsidiaries (“Momentive”) for delivering increased value by profitably growing the business and controlling costs.  The Plan is designed to link rewards with critical financial metrics for the purposes of promoting actions which are the most beneficial to the company's short-term and long-term value creation.
 
Plan Year
 
1 January 2011 - 31 December 2011
 
Eligibility
 
Participation is based on each individual associate's scope of responsibility and contribution within the organization, as well as the market prevalence for incentive in the country where they are employed. 
 
Associates must be employed in an incentive eligible position for at least three consecutive full months during the Plan Year and must be actively employed by Momentive on the final day of the Plan Year and, unless involuntarily terminated without cause,  on  the incentive payment date, in order to receive an incentive payment.
 
Eligible compensation for incentive calculation is based on the participant's eligible base rate of pay as of April of the Plan Year.  The participant's incentive calculation will be prorated if a change in salary or incentive target occurs after April of the Plan Year.
 
 
Plan Performance Measures
 
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization and excluding restructuring and certain non-cash or non-recurring charges such as gains/losses from the sale of businesses and integration expenses (same as 'Segment' EBITDA).
 
The achievement of EBITDA growth is the critical measure on which the investment community and future shareholders will evaluate Momentive's performance in 2011.  As a result, the participants should be focused and incentivized to manage the business to achieve growth in EBITDA.
 
Participants at the Global Momentive and Division level have 50% of their incentive target based on the achievement of the EBITDA targets.  Participants at the Business Unit/Region level have 60% of their incentive target based on the achievement of EBITDA targets.
 
EBITDA will be measured for Global Momentive, each Division and specified Business Unit/Region.
 
EHS:  Measures the Occupational Incidents Injury Rate (OIIR) and Lost Time Injuries
 
5% of the participant's incentive target will be based on the achievement of the OIIR goal.
5% of the participant's incentive target will be based on the achievement of the Lost Time Injury goal.
 
Each of these EHS goals are measured and paid independently of each other and must be achieved at 100% or better in order to be eligible to receive that portion of the incentive award. EHS will be measured for Global Momentive, each Division and specified Business Units/Regions.  Payment of each of the EHS measures is contingent upon the EBITDA results of the participant's primary area of responsibility (Global Momentive, Division or Business Unit/Region) meeting the minimum financial payout threshold. 
 
Cash Flow:  Represents the amount of cash generated by business operations. Cash flow is defined as Segment EBITDA, net trading capital improvement and/or usage, capital spending and interest paid along with other operating cash flow items such as income taxes paid and pension contributions. The purpose of this component is to increase focus on cost control and cost reduction actions to preserve an adequate amount of liquidity to fund operations and capital expenditures, service debt and ultimately sustain the business through difficult economic cycles. 
 
30% of the participant's incentive target will be based on the achievement of Cash Flow targets.
 
Cash Flow will be separately calculated from EBITDA for payout. Even if the EBITDA target is not achieved, it is still possible to meet or exceed Cash Flow targets for partial payout.
 
Cash Flow will be measured for Global Momentive and the Divisions at the end of the Plan Year.

 

 

 
Synergies:  Represents cost savings achieved through the Momentive combination that have improved EBITDA.  These cost savings will come from a combination of raw material and logistic savings based on our combined purchasing leverage and reduction of administrative costs based on shared services. 
 
Participants at the Global Momentive and Division level have 10% of their incentive target  based on the achievement of Synergy targets.  Participants at the Business Unit/Region level do not have Synergy incentive targets.
 
Synergies will be separately calculated from EBITDA for payout.  Even if the EBITDA target is not achieved, it is still possible to meet or exceed Synergy targets for partial payout. 
 
Synergies will be measured for Global Momentive at the end of the Plan Year.
 
 
Target Incentive
 
Each eligible participant will have a target incentive opportunity expressed as a percent of their base salary.  Targets are determined by the associate's, country/region of employment, the scope of their role and contributions within the organization.
 
 
Plan Structure
 
The structure of each participant's incentive is determined by the individual's role in the organization and whether they report at a business unit/region level, a divisional level or at the Global Momentive level.  
 
	
							
	 
	Global Momentive EBITDA
	Division EBITDA
	Business Unit EBITDA
	EHS Goals
(Funds through EBITDA achievement)
	Cash Flow
(Funds Independently)
	Synergies       (Funds Independently)

	Global Momentive  Level
	50%
(Funds EHS Goals)
	 
	 
	10%
Global Measure
	30%
Global Measure
	10%              Global           Measure

	Division 
Level & Regional Leaders
	10%
	40%
(Funds EHS Goals)
	 
	10%
Division Measure
	30%
Division Measure
	 10%              Global           Measure

	Business Unit/Region
Level
	10%
	10%
	40%
(Funds EHS Goals)
	10%
Business Unit /Region Measure
	30%
Division Measure
	 

 
Calculation of Incentive Payments
 
The EBITDA measure will have the following relationship towards incentive award payout at Global Momentive level:
 
	
				
	2011 Plan
	Minimum
	Target
	Maximum

	EBITDA performance as % of Target
	90%
	100%
	110%

	Incentive Payout %
	50%
	100%
	175% or 200%

 
For actual performance between the Minimum, Target and Maximum points above, a straight line calculation will be made, rounded to the nearest 1/10th percent. There is no additional payment made for performance above the maximum. The final financial award will be determined when the 2011 audited financial performance results are available.
 
Note:  If the maximum EBITDA, Cash Flow, Synergies and EHS performance targets are attained, the Plan will pay 175% or 200% of the Target Incentive Award depending on the participant's position in the organization.  
 

 

 

Basis for Award Payouts
 
Financial Results: Incentive payments will be based on audited and approved financial results. No incentive payment will be made until formal results have been approved by the appropriate Momentive Audit and Compensation Committees. 
 
Limitations: All incentive payments must be self-funded from profits generated at the corporate, divisional, or business unit / regional level. The Compensation Committee of the Board of Managers may elect to modify the annual EBITDA targets based on acquisitions or divestitures that occur during the calendar year.  Momentive has the right to amend or terminate this Plan at any time.
 
Employment: Associates must be employed in an incentive eligible position for at least three consecutive full months during the Plan Year and must be actively employed by Momentive on the final day of the Plan Year and, unless involuntarily terminated without cause,  on  the incentive payment date, in order to receive an incentive payment.
 
Performance-Related Issues: Participants who are subject to a disciplinary review of performance, or receive a “Does Not Meet” performance rating are not eligible to receive an incentive award.
 
Incentive Payments: Payments are subject to applicable taxes and garnishment/wage orders, and if the associate participates in the Momentive Specialty Chemicals Retirement Savings Plan, all incentive payments are subject to deferral and to plan provisions.
 
Proration:  Awards are normally calculated on the participant's base salary as of April of the Plan Year.
 
A participant's incentive payment will be prorated for any of the following conditions
 
		
	a.
	New Hires: Awards to participants who commenced employment during the Plan Year will be prorated and must start on or before October 1, 2011 to be eligible to receive any payout. Rehires will be treated as a new hire.

 
		
	b.
	Salary/Incentive Target Changes: Awards to participants whose base rate of pay and/or incentive plan changes after April of the Plan Year will be prorated.

 
		
	c.
	Transfers: Awards to participants transferring between Divisions/Business Units/Regions during the Plan Year will be prorated.

 
		
	d.
	Leaves of Absence/Disability: Approved leaves of absence for 12 weeks or less in the Plan Year will not be excluded from the incentive payment, i.e. the associate will be eligible to receive the full incentive payment. If an associate is absent or on a leave that exceeds 12 cumulative weeks, then any time not worked beyond the 12 weeks will be excluded for the Plan Year and the associate will receive a prorated incentive.

 
Note:  Employee changes on or before the 15th of any month will be considered to have a full month's service for that month.  Employee changes after the 15th of any month will be considered to have started on the 1st of the next month.
 
Timing of Payments:  Typically, financial results are announced in March following the end of the Plan Year and any earned incentive payments are made in April.  In no event shall payments be made prior to the final audited year end financial results being formally announced and the subsequent Incentive Compensation Plan payout approval by the Compensation Committee of the Board of Managers. 
 
 
The Momentive Incentive Compensation Plan remains at the total discretion of the Company.  Momentive retains the right to amend or adapt the design and rules of the plan.  Local legislation will prevail where necessary.WebFilings | EDGAR view

 

Exhibit 10.2
 
AMENDMENT TWO TO SECOND AMENDED AND RESTATED NORCO SITE SERVICES, UTILITIES, MATERIALS AND FACILITIES AGREEMENT BETWEEN SHELL CHEMICAL LP 
AND MOMENTIVE SPECIALTY CHEMICALS INC.
 
This Amendment Two (“Amendment”) to the Second Amended and Restated Norco Site Services, Utilities, Materials and Facilities Agreement Between Shell Chemical LP and Resolution Performance Products LLC, dated effective November 1, 2004, as amended by that certain Amendment One to Second Amended and Restated Norco Site Services, Utilities, Materials and Facilities Agreement between Shell Chemical LP and Hexion Specialty Chemicals, Inc. dated effective January 1, 2006 (the “SUMF Agreement”) is entered into between Momentive Specialty Chemicals Inc. (f/k/a Hexion Specialty Chemicals, Inc.) (“Momentive”) as successor-in-interest to Resolution Performance Products LLC and Shell Chemical LP (“Shell”).  Shell and Momentive may be referred to individually as a “Party” and collectively as the “Parties”.
 
IN CONSIDERATION of the premises and mutual covenants contained herein, the Parties agree as follow:
 
ARTICLE ONE
DEFINITIONS
 
SECTION 1.1.  Definitions in Other Instruments.  Capitalized terms used herein and not defined herein have the meanings ascribed to them in the SUMF Agreement.
 
ARTICLE TWO
AMENDMENT TO THE SUMF AGREEMENT
 
All reference in the SUMF Agreement to “Hexion Specialty Chemicals,Inc” shall be replaced with “Momentive Specialty Chemicals Inc.”, and all references to “Hexion” shall be replaced with “Momentive”.
 
SECTION 2.1.  Deletion and replacement of Schedule 3.2 C to the SUMF Agreement.
 
Schedule 3.2 C to the SUMF Agreement is hereby deleted and replaced to read in its entirety as set forth by Schedule 3.2 C (v2011), attached hereto as Exhibit A.  All references to “Schedule 3.2 C” in the SUMF Agreement shall be replaced with “Schedule 3.2 C (v2011)”.
 
SECTION 2.2.  Definition of Infrastructure Charge.
 
The definition of “Infrastructure Charge” is hereby deleted in its entirety and replaced with the following:
 
“Infrastructure Charge” means the charge related to infrastructure used to provide SUMF Items which is a charge in lieu of depreciation and capital required for the continuing operation of existing SUMF Assets.  For the avoidance of doubt, capital required to comply with changes to Environmental Law that is not attributable to one Party under Article 12 of the SUMF Agreement shall be considered as being required for the continuing operation of existing SUMF Assets.
 
SECTION 2.3.  Addition to Schedule 3.2 D to the SUMF Agreement.
 
The following paragraph is added to Schedule 3.2 D to the SUMF Agreement as Paragraph 6 (e):
In the event that the storm water ditches located throughout the West Site are inspected and waste and/or wastewater is discovered to be in the ditches, then the responsible Party will cease operation of any contributing activity and make best efforts to isolate and block in the source of such ingress.  The responsible Party will then remove said material and be accountable for its contributive share of all defined costs related to cleaning up the specific incident.
 
ARTICLE THREE
MISCELLANEOUS
 
SECTION 3.1.  Execution of Counterparts.  This Amendment may be executed in counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
 
SECTION 3.2.  Applicability of the Original Agreement.  Except as amended and supplemented by this Amendment, all of the provisions of the SUMF Agreement shall remain in full force and effect.
 
SECTION 3.3.  Governing Law.  This Amendment shall be governed by and construed in accordance with the law of the State of Louisiana, without regard to the conflict of law thereof.
 
SECTION 3.4.  Effective Date.  This Amendment shall be effective as of January 1, 2011.
 

1

 

IN WITNESS WHEREOF, the Parties hereto have caused this amendment to be executed by their duly authorized representatives.
 
MOMENTIVE SPECIALTY CHEMICALS INC.
 
 
By: _________________________________
 
 
Title: _______________________________
 
                        
Date: ________________________________
 
 
SHELL CHEMICAL LP
 
 
By: _________________________________
 
 
Title: _______________________________
 
                        
Date: ________________________________
 
             
 

2

 

EXHIBIT A OF AMENDMENT TWO TO SECOND AMENDED AND RESTATED NORCO SITE SERVICES, UTILITIES, MATERIALS AND FACILITIES AGREEMENT
SCHEDULE 3.2 C (v2011)
 
		
	1.
	Biotreater System Services

 
		
	2.
	Purchaser: Momentive

Supplier: Shell
 
		
	3.
	“Biotreater System” shall mean all equipment utilized to receive, adjust and treat all waste water including the primary and secondary biotreaters, and the solid incinerator, in each case outside the first block valve off the supply header servicing a consuming unit, any buildings and structures used for the purpose of operating such equipment, and any modifications, additions or improvements thereto.  A process flow diagram with demarcations of the systems collectively described as the primary and secondary biotreaters, and the solid incinerator, is included in Appendix A.

 
		
	4.
	Specifications:

 
The following is a list of plant components that may be discharged into the effluent system for treatment at the Biotreater System.  In an effort to comply with the effluent treatment system capacity and environmental regulations, the corresponding maximum limits will be enforced.  Shell shall notify Momentive of any additional or revised limits within a reasonable time before the changes are effective.  Momentive and Shell agree to amend this schedule to incorporate such revised limits.
 
API BASIN**
	
			
	PARAMETER
	LIMIT*

	AVERAGE
	MAXIMUM

	Isopropyl Alcohol (IPA)
	28 ppm
	450 ppm

	Methyl Ethyl Ketone (MEK)
	9.8 ppm
	450 ppm

	Methyl Isobutyl Ketone (MIBK)
	14 ppm
	144 ppm

	Epichlorohydrin (ECH)
	8.8 ppm
	150 ppm

	2,3 Dichloro 1-propanol (2,3 DCH)
	1 ppm
	75 ppm

	1,3 Dichloro 2-propanol (1,3 DCH)
	1 ppm
	75 ppm

	Toluene
	0.35 ppm
	6 ppm

	Ethylene Dichloride (EDC)
	0.70 ppm
	15 ppm

	Flow
	2,495 gpm
	2,495 gpm

	Temperature (annual average)
	85 deg F

 
ECH STRIPPER BOTTOMS
	
			
	PARAMETER
	LIMIT*

	AVERAGE
	MAXIMUM

	Isopropyl Alcohol (IPA)
	0.15 ppm
	1.5 ppm

	Methyl Ethyl Ketone (MEK)
	0.22 ppm
	2.2 ppm

	Epichlorohydrin (ECH)
	13 ppm
	50 ppm

	2,3 Dichloro 1-propanol (2,3 DCH)
	15 ppm
	25 ppm

	1,3 Dichloro 2-propanol (1,3 DCH)
	25 ppm
	50 ppm

	Flow
	1,800 gpm
	2,127 gpm

	Temperature
	105 deg F
	119 deg F

	Total Organic Compounds (operational limit)
	24,000 lbs/day

3

 

HPRU EFFLUENT**
	
			
	PARAMETER
	LIMIT*

	AVERAGE
	MAXIMUM

	Isopropyl Alcohol (IPA)
	500 ppm
	1000 ppm

	Methyl Ethyl Ketone (MEK)
	60 ppm
	902 ppm

	Methyl Isobutyl Ketone (MIBK)
	10 ppm
	2360 ppm

	Epichlorohydrin (ECH)
	30 ppm
	387 ppm

	2,3 Dichloro 1-propanol (2,3 DCH)
	3590 ppm
	3590 ppm

	1,3 Dichloro 2-propanol (1,3 DCH)
	3590 ppm
	3590 ppm

	Toluene
	60 ppm
	500 ppm

	Flow
	45 gpm
	50 gpm

 
* The limits listed above are taken from Title V Permit 2889-V1, issued 11/26/07.  Please note that all of the components included in the permit are not represented in the above tables, as some components are either not tested frequently or not known to cause a concern for source control limits.  For a comprehensive list of all permitted components, refer to Permit No. 2889-V1.  
** For the avoidance of doubt, the limits listed above for the API Basin and the HPRU Effluent shall only apply to the equipment numbered A-T201 and A-T501, respectively, and not to the streams entering into these vessels.
 
Per the LPDES LA #0005762 water permit, a pH specification range of 6-9 is applicable for the effluent stream(s) of the Biotreater System.  Both Parties will proactively monitor their various feed streams to the Biotreater System, communicate pH excursions, and collaborate to control, mitigate and recover from these excursions.
 
Except as otherwise set forth below, the following limits apply for purposes of compliance with 40 CFR 63 Subpart DD, National Emission Standard for Hazardous Air Pollutants from Off-Site Waste and Recovery Operations (OSWRO MACT).
 
	
		
	 STREAM
	  LIMIT*

	 TiCl4 Abatement Unit
	 < 500 ppm total volatile organic hazardous air pollutants (VOHAP) on an annual, flow weighted average as measured at meter F5623.  A listing of VOHAPs is included in Section 7 (k) below.

	 HPRU Effluent
	HPRU wastewaters are subject to and must meet the control standards specified in 40 CFR 63 Subpart FFFF, MON MACT.  Shell facilities are exempt from the monitoring requirements in OSWRO MACT per 40 CFR 63.683(b)(2)(i) as there are no longer any Group 1 process wastewater streams from HPRU routed to Shell.

	C Unit Effluent
	C Unit wastewaters are subject to and must meet the control standards specified in 40 CFR 63 Subparts G, HON MACT.  Therefore, as per 40 CFR 63.680(b)(2)(v)(A), this stream does not meet the definition of offsite waste in OSWRO MACT.

 
* The limits above are based on the treatment of the East Side feed stream at an average flow rate of 2,200 gpm.  The parameters are subject to change if applicable regulations change.
 
5.     Firm Capacity Reservation and Biotreater System capacity:
		
	a)
	Primary Biotreater (flow):  Momentive Firm Capacity Reservation, annualized = 1,576,800 Kgal; Primary Biotreater (flow) max capacity = 5000 gpm; Momentive Firm Capacity Reservation share = 60.00%

		
	b)
	Primary Biotreater (solids):  Momentive Firm Capacity Reservation, annualized = 15,200 Klbs; Primary Biotreater (solids) max capacity = 126 Klbs/day; Momentive Firm Capacity Reservation share = 33.05%

		
	c)
	Secondary Biotreater:  Momentive Firm Capacity Reservation, annualized = 6950 Klbs; Secondary Biotreater (TOC) max capacity =  38.16 Klbs/day; Momentive Firm Capacity Reservation share = 49.90%

		
	d)
	Solids Incinerator:  Momentive Firm Capacity Reservation, annualized = 104,200 Klbs (wet basis); Solids Incinerator max capacity = 392.64 Klbs/day (wet basis); Momentive Firm Capacity Reservation share = 72.71%

 
6.    Curtailment:  Consistent with Article 7 of the SUMF agreement.
 

4

 

7.     Delivery Terms and Conditions: 
		
	(a)
	Momentive acknowledges that hazardous materials contained in its waste materials delivered to the Biotreater System shall be owned by Momentive at all times.

		
	(b)
	In the event Biotreater System capacity is increased, de-rated or otherwise decreased on a long term basis at Shell's sole discretion, Momentive's Firm Capacity Reservation will remain the same except in the case where Momentive elects to fund Improvement Capital that expands Biotreater System capacity, as provided in Article 12 of the SUMF agreement and as defined in Paragraph 8(c) below.  In the event that Momentive elects to fund (in whole or in part) Improvement Capital, Momentive's Firm Capacity Reservation per Paragraph 5 of this Schedule will be adjusted to reflect such changes in Biotreater System capacity, the results of such change to be documented and appended to this Schedule.  Should Biotreater System capacity be increased, de-rated or otherwise decreased on a long term basis at the Parties' mutual agreement, Momentive's Firm Capacity Reservation per Paragraph 5 of this Schedule will be adjusted to reflect such changes in the Biotreater System capacity, the results of such change to be documented and appended to this Schedule.

		
	(c)
	After review and consultation with Momentive, Shell shall not refuse to store, handle, treat or dispose of any Momentive hazardous materials that, as of the date hereof are currently being handled if such hazardous materials (i) are being generated on site by Momentive Facilities and (ii) are not in excess of the Momentive's Firm Capacity Reservation.  Correspondingly, except after consultation and review with Momentive, Shell will not store, handle, treat or dispose of any Shell hazardous materials that as of the date hereof are not currently being handled if such hazardous materials (i) are not being generated on site by the Shell Facilities or by any facilities of Shell or its Affiliates, or (ii) are not being evaluated by the same criteria as hazardous waste is being evaluated for Momentive.

		
	(d)
	Shell shall be responsible for notifying Governmental Authorities regarding all aspects of the Biotreater System operation.  If a release at Shell is caused by Momentive, then Momentive will assist Shell in all follow-up requirements in such a manner that will allow Shell to provide agency reports in the allotted timeframe.  This includes the notification of the Shell Site Supervisor promptly after Momentive becomes aware that it may be responsible for such release.  If an odor from the Biotreater System is detected of unknown origin, Momentive will assist Shell in determining the responsible Party.  Each Party will assist the other in all routine environmental reporting activities as needed.

		
	(e)
	Unit source control limits will be developed based on the control limits for the Biotreater System or other Environmental Law.  Momentive and Shell will each monitor these limits in their respective unit labs.

		
	(f)
	If any new chemicals are introduced into any part of Momentive that may be introduced into the waste water, Momentive will be required to alert the Shell Biotreater System Technical Department and the Shell Environmental Department to determine the treatability and permit impacts of this new chemical in the Biotreater System.  This includes, but is not limited to, any new process materials, any new chemicals introduced into the cooling water system, and any new waste material. This notification to Shell must be made 12 months in advance or as soon as practicable.  In no case will Momentive commence the use of this new material prior to written concurrence from Shell, which consent will not be unreasonably withheld.

		
	(g)
	Samples run at the Biotreater System for Momentive exclusively will be at Momentive's expense.

		
	(h)
	In the event of an unusual excursion from normal operating parameters resulting in repair and/or clean up costs, including costs to provide temporary services and equipment, the Party responsible for such excursion shall pay all such defined costs related to such unusual excursion.  The root cause(s) for the excursion must be directly and wholly attributable to one Party, and the incremental defined costs must be greater in sum than a deminimus amount of $50,000, for this clause to take effect.  Both Parties must agree on the cause of such an excursion, and on the incremental repair and/or clean up costs associated with any such excursion.  Written notification of said event and resulting costs must be made by Shell within 60 days of the unusual excursion event.  Any disputes and dispute resolution proceedings shall be handled pursuant to Article 18 of the SUMF agreement.

		
	(i)
	Since the start-up of the 400 section of the ECH unit could adversely affect the Biotreater System, the following start-up schedule with respect to the ECH unit will be enforced:

5

 

 Start-up rates for <12 hours shutdown
	
		
	GPM to loops
	Duration

	30
	For 12 hours

	40
	After 12 hours

	Max
	After 24 hours

 
Start-up rates for 12-24 hours shutdown
	
		
	GPM to loops
	Duration

	25
	For 8 hours

	30
	After 8 hours

	35
	After 16 hours

	40
	After 24 hours

	45
	After 32 hours

	Max
	After 40 hours

 
Start-up rates for 24-48 hours shutdown
	
		
	GPM to loops
	Duration

	20
	For 8 hours

	25
	After 8 hours

	30
	After 16 hours

	35
	After 24 hours

	40
	After 32 hours

	45
	After 40 hours

	Max
	After 48 hours

 
Start-up rates for 48-96 hours shutdown
	
		
	GPM to loops
	Duration

	15
	For 12 hours

	20
	After 12 hours

	25
	After 24 hours

	30
	After 36 hours

	35
	After 48 hours

	40
	After 60 hours

	45
	After 72 hours

	50
	After 85 hours

	55
	After 96 hours

	Max
	After 108 hours

6

 

Start-up rates for >96 hours shutdown
	
		
	GPM to loops
	Duration

	15
	For 18 hours

	20
	After 18 hours

	25
	After 36 hours

	30
	After 54 hours

	35
	After 72 hours

	40
	After 90 hours

	45
	After 108 hours

	Max
	After 126 hours

 
The above rates may be accelerated depending on the state of the Biotreater System.  There will be no alterations to the rate schedule without the approval of the Shell Utilities Production Unit Manager.
 
		
	(j)
	Meters that are used to characterize feeds to the Biotreater System include:

 
         F9046 from C-Unit Effluent Pit to the Primary Biotreater
         F9076 from the Solvent Recovery Column (HPRU) to the Primary Biotreater
         F1004 from ECH stripper bottoms to the Primary Biotreater 
         F1006 from CaCl tank to the LPDES 001 outfall 
         F5623 from TiCl Abatement Unit
         F0998 from the Solvent Recovery Column (HPRU) to the Primary Biotreater
  
		
	(k)
	The determination of the annual, flow-weighted average concentration of VOHAPs for wastewaters from the TiCl4               Abatement Unit will be made by Shell per 40 CFR 63.683(b)(1)(iii).

 
		
	1.
	A written sampling plan shall be maintained on-site in the Shell plant site operating records.

		
	2.
	Sampling shall be done for all of the VOHAPs listed in table 1 of 40 CFR 63 Subpart DD reproduced below and expected to be present unless otherwise noted.

 
	
			
	CAS
	OSWRO VOHAP CHEMICAL
	Possible present in wastewater basis Process Knowledge?

	71-55-6
	1,1,1-Trichloroethane (Methyl chloroform)
	NO

	79-34-5
	1,1,2,2-Tetrachloroethane
	NO

	79-00-5
	1,1,2-Trichloroethane (Vinyl trichloride)
	NO

	120-82-1
	1,2,4-Trichlorobenzene
	NO

	12/8/1996
	1,2-Dibromo-3-chloropropane
	NO

	106-88-7
	1,2-Epoxybutane
	NO

	75-55-8
	1,2-Propylenimine (2-Methyl aziridine)
	NO

	106-99-0
	1,3-Butadiene
	NO

	542-75-6
	1,3-Dichloropropene
	NO

	106-46-7
	1,4-Dichlorobenzene
	NO

	123-91-1
	1,4-Dioxane (1,4-Diethyleneoxide)
	NO

	540-84-1
	2,2,4-Trimethylpentane
	NO

	95-95-4
	2,4,5-Trichlorophenol
	NO

	6/2/1988
	2,4,6-Trichlorophenol
	NO

	94-75-7
	2,4-D, salts and esters
	NO

	51-28-5
	2,4-Dinitrophenol
	NO

	121-14-2
	2,4-Dinitrotoluene
	NO

7

 

	
			
	79-46-9
	2-Nitropropane
	NO

	75-07-0
	Acetaldehyde
	NO

	5/8/1975
	Acetonitrile
	NO

	98-86-2
	Acetophenone
	NO

	2/8/107
	Acrolein
	NO

	107-13-1
	Acrylonitrile
	NO

	5/1/107
	Allyl chloride
	NO

	71-43-2
	Benzene (includes benzene in gasoline)
	YES

	7/7/1998
	Benzotrichloride (isomers and mixture)
	YES

	100-44-7
	Benzyl chloride
	YES

	92-52-4
	Biphenyl
	NO

	542-88-1
	Bis(chloromethyl)ether
	NO

	75-25-2
	Bromoform
	NO

	75-15-0
	Carbon disulfide
	NO

	56-23-5
	Carbon tetrachloride
	NO

	43-58-1
	Carbony sulfide
	NO

	133-90-4
	Chloramben
	NO

	108-90-7
	Chlorobenzene
	YES

	67-66-3
	Chloroform
	NO

	107-30-2
	Chloromethyl methyl ether
	NO

	126-99-8
	Chloroprene
	NO

	98-82-8
	Cumene
	NO

	334-88-3
	Diazomethane
	NO

	132-64-9
	Dibenzofurans
	NO

	111-44-4
	Dichloroethyl ether (Bis(2-chloroethyl ether)
	NO

	64-67-5
	Diethyl sulfate
	NO

	79-44-7
	Dimethyl carbamoyl chloride
	NO

	77-78-1
	Dimethyl sulfate
	NO

	106-89-8
	Epichlorohydrin (1-Chloro-2,3-epoxypropane)
	NO

	140-88-5
	Ethyl acrylate
	NO

	100-41-4
	Ethyl benzene
	YES

	75-00-3
	Ethyl chloride (Chloroethane)
	YES

	106-93-4
	Ethylene dibromide (Dibromoethane)
	NO

	6/2/107
	Ethylene dichloride (1,2-Dichloroethane)
	NO

	151-56-4
	Ethylene imine (Aziridine)
	NO

	75-21-8
	Ethylene oxide
	NO

	75-34-3
	Ethylidene dichloride (1,1-Dichloroethane)
	NO

	 
	Glycol ethers {d} that have a Henry's Law constant value equal to or greater than 0.1 Y/X (1.8 x 10[6] atm/gm-mole/m[3]) at 25oC
	NO

8

 

	
			
	118-74-1
	Hexachlorobenzene
	NO

	87-68-3
	Hexaclorobutadiene
	NO

	67-72-1
	Hexachloroethane
	NO

	110-54-3
	Hexane
	NO

	78-59-1
	Isophorone
	NO

	58-89-9
	Lindane (all isomers)
	NO

	67-56-1
	Methanol
	NO

	74-83-9
	Methyl bromide (Bromomethane)
	NO

	74-87-3
	Methl chloride (Chloromethane)
	NO

	78-93-3
	Methyl ethyl ketone (2-Butanone)
	NO

	74-88-4
	Methyl iodide (Iodomethane)
	NO

	10/1/108
	Methyl isobutyl ketone (Hexone)
	NO

	624-83-9
	Methyl isocyanate
	NO

	80-62-6
	Methyl methacrylate
	NO

	4/4/1634
	Methyl tert butyl ether
	NO

	9/2/1975
	Methylene chloride (Dichloromethane)
	NO

	121-69-7
	N,N-Dimethylaniline
	NO

	91-20-3
	Naphthalene
	NO

	98-95-3
	Nitrobenzene
	NO

	95-53-4
	o-Toluidine
	NO

	82-68-8
	Pentachloronitrobenzene (Quintobenzene)
	NO

	87-86-5
	Pentachlorophenol
	NO

	75-44-5
	Phosgene
	NO

	123-38-6
	Propionaldehyde
	NO

	78-87-5
	Propylene dichloride (1,2-Dichloropropane)
	NO

	75-56-9
	Propylene oxide
	NO

	100-42-5
	Styrene
	NO

	9/3/1996
	Styrene oxide
	NO

	127-18-4
	Tetrachloroethylene (Perchloroethylene)
	NO

	108-88-3
	Toluene
	YES

	1/6/1979
	Trichloroethylene
	NO

	121-44-8
	Triethylamine
	NO

	5/4/108
	Vinyl acetate
	NO

	593-60-2
	Vinyl bromide
	NO

	1/4/1975
	Vinyl chloride
	NO

	75-35-4
	Vinylidene chloride (1,1-Dichloroethylene)
	NO

	1330-20-7
	Xylenes (sum of isomers and mixture)
	YES

 
This table applies only to TiCL4 abatement. The HPRU is no longer subject to the OSWRO VOHAP rule.
 

9

 

		
	3.
	Sampling frequencies and analysis should be done at intervals deemed appropriate as agreed by Shell and Momentive, to meet the requirements of 40 CFR 63.694.

		
	4.
	Momentive will grant Shell access to Momentive process areas as needed to procure any required samples.  Shell will follow all Momentive-required notification and permitting requirements for access to such areas.

		
	5.
	A summary of all sample results and associated calculations shall be sent to Momentive within 30 days following the sampling event.  Momentive and Shell will in good faith take all necessary steps to reduce flow/concentration of the wastewater until the annual average, flow-weighted VOHAP concentration is projected to be < 500 ppmw for the 12-month period.

 
8. Pricing: 
 
		
	(a)
	(1) Variable Cost: Momentive will be charged Variable Costs based on its utilization-based allocation of each and all Biotreater Systems.  Momentive shall pay for its utilization-based share of solids disposal as a Variable Cost.  Momentive shall also pay for its utilization-based share of chemicals usage as a Variable Cost.  Momentive's utilization-based allocation of Variable Cost charges, with calculation/estimation basis drawn from actual usage data, is detailed in Appendix B, for each Biotreater System, as defined in Appendix A, and is summarized below.

 
Primary biotreater (flow) = 91.50%
Primary biotreater (solids) = 100.0%
Primary biotreater, composite, weighted by 40% flow and 60% solids = 96.60%
 
Secondary biotreater (TOC) = 78.95% 
 
Solids incinerator (solids, dry) = 95.11%
 
(2) These Variable Cost allocation percentages are applied to the various categories of Variable Costs as follows.
 
	
			
	Variable Cost Category
	Momentive variable cost allocation, %
	Basis for allocation

	Natural Gas
	95.11
	Used to fire solids incinerator

	Nitrogen
	10.00
	Primarily used in nitrogen sweep for TT-206 for East Site feed to the primary biotreater (90%), plus intermittent decon use in all areas (10%)

	Electricity
	88.94
	Used in all areas, weighted 20-40-40 for primary biotreater-secondary biotreater-solids incinerator

	Air
	88.94
	Used in all areas, weighted 20-40-40 for primary biotreater-secondary biotreater-solids incinerator

	Steam
	88.94
	Used in all areas, weighted 20-40-40 for primary biotreater-secondary biotreater-solids incinerator

	Water
	95.60
	Used in primary biotreater and solids incinerator (firewater, potable water, desuperheating water), weighted 33-67 for primary biotreater-solids incinerator

	Cooling Water
	—
	From C Unit cooling water tower, used for East Site feed cooling

	Flare
	—
	Used primarily for butylene sphere venting

	Acid/Caustic
	59.4
	Mutually agreed number based upon 2004 and 2006 primary biotreater firm capacity reservation percentages

	Process Chemicals
	88.94
	Comprising settling chemicals (secondary biotreater), filter press polymer (solids incinerator), urea and phosphoric acid (primary/secondary biotreater), weighted 20-40-40 primary biotreater-secondary biotreater-solids incinerator

	Solids Disposal
	95.11
	Alternative to solids incineration, hence tied to solids incinerator

10

 

 
(3) The Parties agree to review, and revise as necessary, the utilization patterns and premises, as described in Appendix B, used to determine these Variable Cost allocations.  In turn, these Variable Cost allocation percentages will be changed upon mutual agreement of the Parties, the results of such change to be documented and appended to this Schedule.  This review shall take place whenever there is a material and sustained shift in utilization patterns, or annually upon the effective date of this Schedule, whichever is sooner.
 
(4) If it becomes necessary to employ the services of a Third Party to handle any streams outlined in this Schedule, Momentive will share the cost of the Third Party based on its utilization-based Variable Cost percentage for that Biotreater System which would ordinarily process/treat the affected stream.  Shell shall review and consult with Momentive prior to employing such Third Parties if the Third Party is to handle Momentive's Hazardous Substances.
 
		
	(b)
	(1) Fixed Costs: Momentive will be charged $289,358 per month as the Fixed Costs Charge, subject to escalation each year as described in Paragraph 9 below.

 
(2) In addition, any fines or other environmental remediation costs paid by Shell as a result of non specification feedstocks shall be charged to Momentive as additional Fixed Costs, but only if Shell demonstrates such fines or other environmental remediation costs result from or are caused by the non specification feedstock of Momentive.
 
		
	(c)
	Capital Costs: Momentive will be charged $68,069 per month as the Infrastructure Charge.  Capital expenditure that expands capacity or increases capability and that is not required for the continuing operation of existing assets or related to regulatory change is defined as “Improvement Capital” which either Party can choose to decline to participate under Article 12 of the SUMF Agreement.  Consistent with Paragraph 7(b) of this Schedule and only for this category of capital expenditure, Momentive's Firm Capacity Reservation to the system or systems that are to be affected by the Improvement Capital expenditure will be modified and any corresponding cost recovery formulas including, but not limited to, those related to Variable Costs, Infrastructure Charges, and Fixed Operating Costs, may be renegotiated.

 
		
	(d)
	Exceedance Costs: In the event Momentive's usage of any of the Biotreater System services described in Paragraph 5 above in any calendar year exceeds its Firm Capacity Reservation for such service for such year, then Momentive shall pay, in addition to the other charges set forth in this Schedule, an additional amount of Fixed Costs for such year, determined in the following manner:  

 
		
	a.
	If the exceedance is 105% or less: by multiplying the percentage by which Momentive's usage of such service exceeds 100% of its Firm Capacity Reservation for such service times 80% of the total Fixed Costs Charge for such year as set out in clause b (1) above times Y where in the case of 5(a) Y = 10%; 5(b) Y=10%; 5(c) Y=40%; and 5(d) Y=40%.

		
	b.
	If the exceedance is greater than 105%: by multiplying the percentage by which Momentive's usage of such service exceeds 100% of its Firm Capacity Reservation for such service times the total Fixed Costs Charge for such year as set out in clause b (1) above times Y where in the case of 5(a) Y = 10%; 5(b) Y=10%; 5(c) Y=40%; and 5(d) Y=40%.

 
9.      Escalation:  The Fixed Costs Charge will be adjusted beginning April 1, 2012, and annually thereafter on the anniversary of such date, according to the following formula.  (For avoidance of doubt, the following formula shall be used for the adjustment to be made on April 1, 2012.  Adjustments on the anniversary dates of April 1, 2012 shall be made using the same formula, with the variables adjusted to correspond to the calendar year for which the adjustment is to be made.  The Example Hypothetical Calculation is provided for the purpose of illustration based on an April 1, 2013 adjustment using hypothetical numbers.)
 
ADJUSTMENT(2012) = 
(0.75 * WAGE(2011)) + 0.25 * {(NELSON(2011) - NELSON(2010))}
                                                           NELSON(2010)
 
CHARGES(2012) = CHARGES(2011) + {ADJUSTMENT(2012)*CHARGES(2011)}
 
The numeric value of the ADJUSTMENT and CHARGES shall be rounded to four decimal places.
 
Where:
 
      ADJUSTMENT(2012) is the 2012 adjustment to the Fixed Costs Charge.
 
      CHARGES(2012) is the annual Fixed Costs Charge for 2012.
 
      CHARGES (2011) is the annual Fixed Costs Charge for 2011.
 
      WAGE(2011) is Shell's Norco 2011 average annual non-union staff salary percentage increase expressed as a decimal.
 

11

 

      NELSON is the Nelson Refining Construction Index published in the Oil and Gas Journal.
 
      NELSON(2011) is the average monthly value of NELSON for 2011.
 
      NELSON (2010) is the average monthly value of NELSON for 2010.
 
EXAMPLE hypothetical calculation for April 1, 2013
 
WAGE(2012) = 4.5%
NELSON(2012) = 410
NELSON (2011) = 400
CHARGES(2012) = $4.2640 mln$
ADJUSTMENT(2013) = 0.75*0.045 + 0.25*{(410-400)/400} = 0.0400
CHARGES(2013) = 4.2640 mln$ + (4.2640 mln$ * 0.0400) = 4.4346 mln$
 
10.   Term:  This Schedule 3.2 C (v2011) shall terminate without further notice on December 31, 2015 at 11:59:59 pm; provided, however, that Momentive and Shell shall meet no later than June 1, 2015 to attempt to agree on the terms and conditions for renewing this Schedule.  Neither Party shall be obligated to reach agreement on the terms and conditions of such renewal and may reject any terms or conditions for renewal for any reason at its sole discretion, including, but not limited to, renewing the terms of this Schedule without change.  If for any reason Momentive and Shell are unable to agree on the terms of renewal of this Schedule by December 31, 2015 then the terms of this Schedule will continue on a month-to-month basis until a new agreement is reached, subject to the following modification:  the Escalation formula in Paragraph 9 will be suspended. 

12

 

APPENDIX A
 
PROCESS FLOW DIAGRAM
DEMARCATING BOUNDARIES FOR 
SUMF AGREEMENT DEFINED
BIOTREATER SYSTEMS

13

 

 

14

 

APPENDIX B
CALCULATION BASIS USED TO DETERMINE 
VARIABLE COST ALLOCATION PERCENTAGES
 
Units of Measure
 
All mass flow rates are corrected to a dry basis and are in Klbs/day, or 1,000 lbs/day.
All volumetric flow rates are in gallons per minute.
 
Primary Biotreater
 
Refer to Appendix A for the grouping of equipment included in this system.  The boundaries are drawn such that the Primary Biotreater begins with the API basin, and ends at the discharge of 
P-T216/217/501/502/251/252. 
 
FIRM CAPACITY
		
	•
	Maximum flow capacity - Estimated at 5,000 gpm, based upon the historical maximum for Primary Biotreater flow.  This includes storm water flow from the West Site.  This flow is measured using F2018.TU, which records flow from T-T252 to the mix tank 

		
	•
	T-T251.

 
		
	•
	Maximum solids capacity - 126 Klbs/day.  A-T213's underflow pumps have a documented design capacity of 150 gpm.  The average solids concentration of this underflow (WSBTPRIMUN!NONE!TSS_VSSWS TSS@limsnrc) is 7%, based upon lab data from October 2008 to September 2010.

 
150 gpm (8.34 lb/gal)(60 min/ 1hr)(24 hrs/ 1 day)*0.07 = 126 Klbs/day
 
 
USAGE
		
	•
	East Site (Shell) flow - The East Site has only one metered stream to the Primary Biotreater, F2051.TU, which measures spent caustic flow to the Primary Biotreater.  Average spent caustic flow from the East Site between October 2008 and September 2010 is 35 gpm.  

		
	•
	West Site (Shell) flow - 220 gpm.  Contributions from the West Site groundwater wells and the T-Unit control room sanitary sewer are estimated to total 20 gpm.  Since Shell has facilities or assets located on approximately 25% of the land on the West Site, and West Site storm water flow is estimated to be 800 gpm (on average), Shell's proportion of storm water flow to the Primary Biotreater is an estimated 200 gpm.

		
	•
	West Site (Momentive) flow - 2,745 gpm.  This is derived mathematically by subtracting Shell flows from both the East and West sites from the total flow to the Primary Biotreater, F2018.TU.  The average flow recorded by F2018.TU between October 2008 and September 2010 is 3,000 gpm.  This flow data is compiled only from periods of time when the C-Unit is operational.

 
3,000 gpm - 35 gpm - 220 gpm = 2,745 gpm
 
		
	•
	East Site (Shell) solids - Insignificant and estimated to be zero in all East Site streams to the Primary Biotreater.

		
	•
	West Site (Shell) solids - Contribution from Shell operations at the West Site is estimated to be zero.

		
	•
	West Site (Momentive) solids - This is derived mathematically by subtracting the biomass generated by Momentive's TOC load in the Secondary Biotreater (as documented below) from total Momentive solids fed to the Solids Incinerator (as documented below).  Per the original biotreater design, 1 lb of TOC produces approximately 0.5 lb of biomass.

 
        42.0 Klbs/day - 16.2 Klbs TOC/day (0.5 lb biomass/ 1 lb  TOC) = 33.9 Klbs/day
 
		
	•
	Momentive Usage Percentage - For the Primary Biotreater, this percentage is derived by dividing the quantity of Momentive usage by the total quantity used.  The percentage usage related to flow forms 40% of the overall usage, and the percentage usage related to solids froms 60% of the overall usage.  Hence Momentive's usage percentage for the Primary Biotreater is calculated to be:

 
2745 gpm/ 3000 gpm * 40% + 33.9 Klbs/day / 33.9 Klbs/day * 60% = 96.60%
 

15

 

Secondary Biotreater
 
Refer to Appendix A for the grouping of equipment included in this system.  The boundaries are drawn such that the Secondary Biotreater begins at the discharge of P-T251/252, and ends at the final outfall and the discharge of P-T716.
 
FIRM CAPACITY
		
	•
	Maximum TOC (Total Organic Carbon) capacity - 38.16 Klbs/day, based upon the  biotreater design specifications.

 
USAGE
		
	•
	East Site (Norco) TOC loading - This is calculated using the average TOC content of the East Site stream (A002-TU-SX-NET-ES_FEED_11AM,TOC,LOG,SAMPLE,ENVIRO@otterhdc) and the average flow rate of the same stream, as measured by F2000.TU.  TOC data recorded between May 2010 and September 2010 is used to establish the average East Site feed TOC content of 200 ppm, excluding periods in 2009-2010 when East Site feed composition was not representative due to large unit outages.  The average flow rate of the East Site feed stream (1800 gpm) is from this same May-September 2010 timeframe, so as to preserve data consistency.

 
200 ppm TOC x 1,800 gpm x 0.012 x 1Klb/1000 lb = 4.32 Klbs/day
    
		
	•
	West Site (Shell) TOC loading - Contribution from Shell operations at the West Site is estimated to be zero.

 
		
	•
	West Site (Momentive) TOC loading - This is calculated using the average TOC content of the West Site stream (OTR146198 .. A002-TU-A-T213_5,TOC,LOG,SAMPLE,ENVIRO@otterhdc) and the average flow rate of the same stream, as measured by F2018.TU.  Data is compiled from 2009-2010 operations, excluding periods when the C-Unit was shutdown.  The average TOC concentration is 450 ppm, and the average flow rate is 3,000 gpm.

 
450 ppm TOC x 3,000 gpm x 0.012 x 1Klb/1000 lb = 16.2 Klbs/day
    
		
	•
	Momentive Usage Percentage - For the Secondary Biotreater, this percentage is derived by dividing the quantity of Momentive usage by the total quantity used.

 
16.2 Klbs/day / (16.2 + 4.32 ) Klbs/day * 100% = 78.95%
 
Solids Incinerator
 
Refer to Appendix A for the grouping of equipment included in this system.  The boundaries are drawn such that the Solids Incinerator begins at the discharge of P-T716 and ends at the roll-off containers or the incinerator stack.
FIRM CAPACITY
		
	•
	Maximum incineration capacity - 90.31 Klbs/day, on a dry basis.  This is calculated by multiplying 392.64 Klbs/day (the incineration capacity on a wet basis, per the environmental compliance limit) by the average solids content of the biotreater feed (23%), as referenced below. 

 
USAGE
		
	•
	East Site (Shell) solids loading - This is calculated using the total East Site TOC loading, and assumes there are zero inorganic solids included.  Per the original biotreater design, 1 lb of TOC produces approximately 0.5 lb of biomass.

 
4.32 Klbs TOC/day ( 0.5 lb biomass / 1 lb TOC ) = 2.16 Klbs/day solids (dry basis)
    
		
	•
	West Site (Shell) solids loading - Contribution from Shell operations at the West Site is estimated to be zero. 

 
		
	•
	West Site (Momentive) solids loading - This is calculated by subtracting the East Site and West Site solids loading attributable to Shell from the total amount of solids fed to the solids incinerator, as measured by F7030.TU.  The resultant quantity represents the sum total of solids loading attributable to Momentive.  The average flow measured by F7030.TU between May 2009 and September 2010 was 4 tons/hr.  The average solids concentration was 23%, recorded between October 2008 and September 2010 (WSBTBLTPCK!NONE!SOLIDSPCT Percent Solids@limsnrc).

4 tons/hr ( 2Klb / 1 ton)( 24 hrs / 1 day ) (0.23) - 2.16 Klbs/day = 42.0 Klbs/day solids (dry basis)
    
		
	•
	Momentive Usage Percentage - For the Solids Incinerator, this percentage is derived by dividing the quantity of Momentive usage by the total quantity used.

 
42.0 Klbs/day / (42.0 + 2.16 ) Klbs/day * 100% = 95.11%                                                                

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]